Archive for July, 2009
Southern Comfort Pours Entire Media Budget Into Digital
Move Allows Brand to Buy Popular Network Shows Online Instead of Overcrowded Cable Fare
CHICAGO (AdAge.com) — Brown-Forman’s Southern Comfort brand — weary of jostling for notice with other spirits brands during the narrow nightly window when they are permitted to advertise on cable — is taking its entire media buy digital, allowing it access to programs online it couldn’t touch on TV.
Last year, SoCo spent $6 million of its $8 million measured media outlay on cable TV, and another $1.5 million on magazine ads. This year, both those numbers will drop to zero in favor of online properties such as Facebook, Spin, Fader, Pitchfork, Thrillist and Hulu.
Lena DerOhannessian, the brand’s U.S. marketing director, said SoCo’s tight focus on the youngest legal-drinking-age consumers drove the shift. “As we’ve focused more on 21 to 29, TV becomes less and less effective at reaching that audience,” she said. “It was getting harder and harder to hit our target without so much waste.”
The issue, Ms. DerOhannessian said, was the intense crowding of spirits brands within a few nightly cable shows, a result of restrictive rules about where and when spirits companies are permitted to advertise. (National networks still do not accept liquor advertising, although a growing number of affiliates have been breaking with that practice of late.)
“You’re usually in the same program, if not the same pod, with another spirits advertiser,” she said. “That was just a game we didn’t want to keep playing.” Instead, SoCo is opting to grab digital properties where it can be the sole alcohol sponsor. And those include network programs that the brand would’ve been forbidden from touching on TV (see the full list at the bottom of this story).
It’s also cheaper. Ms. DerOhannessian said savings from the switch to a 100% digital media buy will allow the brand to bolster its presence in bars and at retail, as well as through events. It will also give it a significant footprint online, where a $10 million budget stretches very far.
The media-budget shift comes amid tough sales trends for the brand. It suffered a mid-single-digit sales decline during the fiscal year that ended April 30, Brown-Forman Chief Financial Officer Don Berg told Wall Street analysts on a June earnings call. “Southern Comfort has suffered from the consumer switch to the off-premise, where consumers are less inclined to make complicated drinks,” he said.
The brand’s media agency is Interpublic’s Universal McCann, and its creative shop is Havas’ Arnold Worldwide.
Southern Comfort’s digital partnerships
Facebook: Fan page featuring custom video, exclusive events, party pics, SMS programs, news, recipes and video clips.
Spin: Sponsorship of the top 50 cover songs of all time, with 10 free downloads, “tab covered by” Southern Comfort.
Playboy: Presenting sponsorship of the Playboy “Uncovered” series highlighting artists paying tribute to legends who have inspired them.
The Fader: “At the Bar” with Southern Comfort series featuring 10 pop-up sessions with local artists performing acoustically and discussing their musical influences.
Pitchfork: “Faces in the Crowd” series featuring artist interviews by fans, Pitchfork Music Festival, Monolith Festival and Voodoo Experience.
Thrillist: E-newsletters touting the brand, story, events and drinks.
NBC: Online spots running in and around prime-time NBC shows such as “30 Rock,” “The Office,” “Jay Leno,” “The Tonight Show With Conan O’Brien” and “Saturday Night Live,” among others.
NBC Local: Friday-through-Sunday takeover of the “What You’re Doing Tonight” section, with home-page coverage before each Southern Comfort music-series event.
Break.com: “Southern Comfort House Rules!” original series featuring a cast of characters showcasing how they prepare for, host and entertain during various themed house parties.
My Damn Channel: Sponsorship of “Grace Crashers,” an original series starring Grace Helbig as the ultimate party crasher as she and her crew show up unannounced at parties around Halloween, Holiday and Mardi Gras
Comedy Central: “Holiday Survival Guide” featuring Comedy Central comedians providing tips for getting out of sticky holiday situations.
Hulu: First spirits advertiser to run the Ad Selector model, where consumers will be able to choose the Southern Comfort message they want to watch.
CBS, Fox and FX: Full player takeovers around top-rated prime-time shows such as “How I Met Your Mother,” “Late Show With David Letterman,” “Rules of Engagement,” “CSI,” “24″ and “Arrested Development,” among others.
Add comment July 30, 2009
Report: Consumers Substituting Online TV for Cable
Nearly a fifth of Internet users watch video online almost every day. Women are catching up to men in terms of online video usage. And a growing number of recession-conscious Americans claim they are using the Web as a cable TV substitute.
Those are some of the more noteworthy research nuggets found in the latest report issued on Wednesday (July 29) by the Pew Research Center’s Internet & American Life Project, which focused specifically on online video. According to the report, 19 percent of Internet users surveyed claim they visit video sites in a typical day, up from 8 percent just three years ago.
And while Web video continues to skew young and male, in the past year the gender gap has closed, found Pew. This year’s report found that 59 percent of women visit video sites versus 65 percent of men. However, just a year ago only 46 percent of women made the same claim compared to 57 percent of men. Overall, online video viewing is becoming a core Web activity for most: close to two-thirds (62 percent) of adults have watched videos on sites like YouTube, considerably more than the 46 percent of adults who say they active on social-networking sites and far more than the 11 percent adults who regularly use Twitter, found Pew.
Not surprisingly, given the surging popularity of professional content on sites like Hulu, Pew’s report found that many Web video users are graduating past the short, funny viral clips which helped establish the medium just a few years ago. More than one-third of Internet users (35 percent) claim to have streamed a TV show or movie online, versus just 16 percent in 2007, according to the report. Pew’s research found that watching long-form professional still tends to be a behavior favored by younger users (61 percent of internet users ages 18-29 claim to have done so), though older demographics are catching up.
And in these tough economic times, for some viewing shows for free online is becoming an attractive alternative to paying for cable. According to a recent Pew report, 22 percent of American adults say they have cut back or cancelled cable in the past year (while only 9 percent have cut back on paying for Internet services). And within that cable-cutting segment, almost a third—32 percent—say they’ve taken the step of connecting their computers to their TV to consume Web video, a step that until recently has proven to be intimidating to most Americans.
Overall, a total of 8 percent of Internet users claim to have connected their TVs to the Internet, according to Pew’s report—the majority of which were men.
Add comment July 30, 2009
34 Ways to Use YouTube for Business
Meryl Evans
YouTube’s not just for posting silly videos of sleepwalking dogs and other embarrassing moments — it can also be used as a highly effective business tool. You can use it to show off your expertise, share knowledge, market your products and connect with customers, colleagues and prospects.
Here are 34 ways to use YouTube (and other video hosting services) for business.
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Expertise and Thought Leadership
- Upload recordings of presentations you’ve given, to demonstrate authority and public speaking skills.
- Share slides from presentations that weren’t recorded.
- Create short videos of valuable tips of interest to your clients and prospects to show off your expertise.
- Conduct an interview with an expert.
- Turn your podcasts into videos, to expand your reach.
- Engage with the YouTube community by leaving comments and uploading video responses to videos on topics related to your business or industry.
- Enhance your videos using YouTube’s special features, such as annotations, audioswap, insight, language options and quick capture. Also see what’s cooking in the YouTube Biz Blog and TestTube for more upcoming features.
- Record an important meeting to share with employees, shareholders and others, as appropriate.
Marketing and Advertising
- Set up a channel to reflect your brand and engage with others. Here’s an example from The White House.
- Choose a user name that reflects your brand for your channel URL.
- Add your channel URL to marketing collateral and social network profiles.
- Post customer video testimonials to add to your credibility.
- Put together a creative video explaining your product or service.
- Show your product in action using movie trailer-style: fast, creative and catchy.
- Show the results of someone using your services.
- Promote your events using recordings of previous events.
- Introduce your staff to add authenticity.
- Take viewers on a tour of your offices and city to help them feel connected with you.
- Ask others to use your product in their videos (like product placement in movies) and cross-promote each other.
- Post links to your videos on various social networks.
- Look into YouTube Promoted Videos to reach your target through contextually-relevant search results.
- Use Google AdWords on Google Content Network, which includes sites like YouTube. These use text-based ads and don’t require a video from your business. Research the Placement Tool to identify the best placements for your ads.
- Earn money from your videos by entering into a partnership with YouTube.
- Run a contest.
- Add Call-to-Action overlays to your videos to drive traffic to your web site.
- Study your channel’s performance with the integrated Google Analytics and YouTube Insight to make the most of your videos.
- Display company information in every video including name, URL, phone number and email address.
- Create “how to” videos to help your customers use your product or service.
- Post solutions to common product or service problems.
- Answer customer-specific questions using videos. Imagine how surprised a customer will be when you point them to a video with the answer!
- Embed videos on your web site on appropriate pages, including customer support and product tours.
- Post a blog entry discussing a problem and include a video for visual support.
- Go the extra mile by adding closed-captions or subtitles to your videos. Remember that not everyone can watch or hear videos in the same way.
- Show a work-in-progress project to a customer for review and approval, without the need for a face-to-face meeting or in-person demo.
Customer Service
How do you use YouTube for business?
Add comment July 28, 2009
15 Must Read Social Media eBooks
Posted by Kristen Nicole on July 28th, 2009 11:49 AM
Whether you’re keeping up with family members or growing your business’ brand, social media has become the center of activity for many aspects of our lives. And it’s getting hard to keep up. We’ve created a short list of helpful e books that can get you started on your path towards social media success, or help you kick things up a notch if you’re already an active member of the online social media world.
The Basics
If you’re just getting your feet wet or you’d like to learn more about the relative history of social media, check out some of the following ebooks, which cover the basics. Sometimes boiling things down to their simplest forms could give you the greatest perspective, and that never hurts when it comes to a complex phenomenon like social media.
1. What Is Social Media
This book answers one simple question: what is social media? From iCrossing, “What Is Social Media” runs down all the basics, from how social media is being used to providing definitions the ever-changing jargon that personifies social media.
Both broad an analytical in its approach to social media, “Content Nation” goes over the importance of social media, and how it has effectively changed our culture and the way in which we communicate with each other. If you can’t beat ‘em, join ‘em!
3. ProBlogger: Secrets for Blogging Your Way to a Six-Figure Income
Yes, blogs are part of social media. With various ways in which to integrate blogs and social media, the end result is a cohesive, fluid and mobile conversation about a plethora of topics. The beauty of social media is that it enables every voice to be heard. Blogs are a great starting point to get your shout on.
4. Managing Online Forums: Everything You Need to Know to Create and Run Successful Community Discussion Boards
Forums and discussion boards are still thriving areas in which people converse about every aspect of their hearts’ desires. If you’re looking to leverage these sometimes forgotten areas of social media, then start with this book. Learning the ins and outs of forums can really help you leverage social media in the end, whether you’re profession is as a community manager or you’re eventually looking to build your personal or business brand.
5. I’m on LinkedIn–Now What??? (Second Edition): A Guide to Getting the Most Out of LinkedIn
LinkedIn is one of the core social networks when it comes to professional networking. But a lot of people don’t know just how well they can actually network once they’re on LinkedIn. This book will help you take advantage of LinkedIn’s networking capabilities, which is increasingly important when it comes to today’s job market.
6. The Twitter Survival Guide
A primer for the most talked about social network today, this guide gives you the basics from how Twitter got so popular to what that means for you as a social networker. Setting up your profile for optimal use, proper etiquette for tweeting and examples of successful users are all part of this ebook.
Enterprise and Business
If there’s one group that has been striving to “figure out” social media, enterprise and business takes the cake. With the popularity of social media and the large virtual congregations of users within online properties, the monetization of social media has been a blessing and a curse when it comes to business and enterprise use. For those CEOs out there, here are some ebooks that might be helpful for navigating these social media waters.
7. Social Media Liabilities In The Enterprise
Yes, there are ways in which you need to caution yourself and your business when jumping into the social media pool. Make sure all your bases are covered and check out this book, which offers a very specific yet needed view of how to go about preparing your business for social media, from a conceptual and practical perspective.
8. Sales 2.0 – Leveraging Web 2.0 to Sell
Another joy of the online world is sales, direct or indirect. Social media can help you in this department, but it will take some know-how. Get the basics and then some with this book, which speaks to social media marketing and a few other aspects of online marketing. It’s a helpful look at how the various aspects of the online world create sales opportunities from which you can profit.
9. Social Media Marketing: An Hour a Day
A lot of the people I speak with about social media often complain about how time consuming it is. This time obstacle is a huge barrier to entry for a lot of businesses looking to leverage social media, so whittling it down to an hour can sound very appealing. Learn a few tricks of the trade to help you better manage your time.
That’s right. A cocktail party. What could be more fun? Just as a cocktail party is just a dressy and intoxicating way in which to power up your networking opportunities, so too is the realm of social media. Learn how the various aspects of social media, from blogging to social networks, can be helpful when it comes to your online marketing initiatives.
11. Mom 3.0: Marketing WITH Today’s Mothers by Leveraging New Media & Technology
Mothers have long since been at the center of financial decisions when it comes to many purchases made for the family, which is why mothers have been highly targeted through marketing campaigns since the dawn of modern advertising. Things haven’t changed too much, but the channels for such marketing have been modified a tad. Learn how to target moms online, as they have been a quickly growing group of very active online users for over two years now.
12. Twitter Revolution: How Social Media and Mobile Marketing is Changing the Way We Do Business & Market Online
It’s true, Twitter has changed the face of online marketing. But as a mobile tool, Twitter has changed the face of mobile marketing as well. One of the benefits of Twitter is its ability to provide a method of mobile communication without mutual or one-sided contact information exchange, which preserves privacy and is appealing because of its opt-in attitude towards said mobile communication. Get the scoop on how Twitter is being used to push a mobile advertising revolution, so you can be ready for your next move.
The Rules of Engagement
As an evolution of sorts from the basics of enterprise and business use of social media, engagement is the buzz word of the year. Engagement is the way in which brands have found to be the most effective when it comes to online marketing. This means you’re not only leveraging the fact that people are networking about and around your brand online, but you’re interacting with them in a direct manner for important brand maintenance. Stay on top of trends by checking out some of the ebooks that have been written specifically for user engagement purposes.
13. Customer Service, The Art of Listening and Engagement Through Social Media
One way in which to directly engage users is for customer service purposes. Through platforms such as Twitter and Facbook, the necessity of “friending” a customer is no longer necessary, opening up the lines of communication and enabling brands to communicate in a less intrusive manner. It is truly an art.
Nothing’s more straightforward than a set of rules to follow. This guide for community engagement will take you step by step through the ways in which you can not only build relationships with customers, but maintain those relationships as well. It’s this maintenance that will enhance your brand-building when it’s all said and done.
15. Twitter Power: How to Dominate Your Market One Tweet at a Time
Twitter has become an avidly used platform for direct communication with brands and consumers, so it’s only fitting that there is a book on dominating your market in particular via Twitter. It’s rather easy to engage consumers on Twitter’s openly conversational platform, making for a great tool for monitoring their brand while engaging their customers all the while.
Add comment July 28, 2009
Why People Use Twitter
Updating status = self-promotion?
What drives people to tweet?
According to the “Consumer Internet Barometer” from TNS and The Conference Board, 41.6% percent of Internet users who used Twitter did so to keep in touch with their friends.
In addition, 29.1% used it to update their status, 25.8% to find news and stay updated, 21.7% for work purposes and 9.4% for research.
Men and women both used Twitter primarily to keep in touch with friends. Secondarily, men were interested in finding news and women in updating their status.
Users under age 35 were more interested in broadcasting their status than their senior counterparts. Older users were more likely to use the service for work-related purposes.
The average Twitter user interacted primarily with friends and family.
Next-most-popular were celebrities, bloggers, TV shows, co-workers, brands and journalists.
More women interacted with friends, family and celebrities than men, but men were more likely to follow bloggers.
Older users trailed younger ones in interaction with every Twitter user type except journalists and brands.
Who can Twitter users blame for their addiction? One-half of tweeters said a friend or family member introduced them to the site and 33% were hooked by a co-worker.
To follow eMarketer on Twitter, click here.
Add comment July 28, 2009
MySpace Hopes to Become a Window for Youth Culture
July 28, 2009
While many have written off MySpace as an ailing behemoth of social networks past, the site is hoping to reanimate their users by defining the site as a new platform for venting creativity. Echoing their early days as a community of young bands, MySpace wants to reposition itself as a place for young creatives, rather than a disorganized collection of companies, bands and individuals all spamming one another.
Creating a tighter demographic will certainly put a direction on the site, but it remains to be seen if it can compete with the readily updated features on Facebook. Anastasia from Ypulse predicts MySpace can make a comeback if it can achieve these goals,
- apply what he learned from Facebook and improve the user experience on MySpace (and control the spam)
- streamline and simplify while offering templates flexible enough for creative types to still make the space their own, and easily find likeminded “friends” and “fans” based on their creative interests/entertainment tastes
- continue to offer exclusive content nobody else has first (New Moon trailer, youth focused webisodes)
- leverage their planned “data-focused features” as a part of MySpace music, “publish[ing] trends, track[ing] influencers and creat[ing] lists of top-played and playlisted content of not only major bands and artists but also of all the independent work on millions of MySpace artist pages”
[via Ypulse]
Add comment July 28, 2009
MasterCard Launches ‘Priceless’ iPhone App
But Is Deal-Sharing Tool too Disconnected From Card’s Sentimental Campaign?
by Beth Snyder Bulik
Published: July 27, 2009
YORK, Pa. (AdAge.com) — There’s an app for everything — and now there’s even one for everything else.
MasterCard, which has built its marketing around the theme, “There are some things money can’t buy. For everything else, there’s MasterCard,” is extending that strategy with an iPhone app that allows users to upload their own “priceless” favorites into a socially networked nationwide grid. But in a seeming disconnect from the sentimental moments a MasterCard allows one to enjoy, as depicted in its 12-year-old ad campaign, the app seems to encourage consumers to share deals, bargains or simply favorite places they’ve “found,” such as nail salons or florists. MasterCard also has deals with ShopLocal and Not for Tourists, which will also aggregate offer-related picks from merchants.
The ‘brag factor’
“The human nature of people, call it the brag factor, is that they like to talk about things they’ve discovered,” said Chris Jogis, senior VP-U.S. marketing for MasterCard Worldwide. While MasterCard would not disclose how many downloads the app has gotten since it launched earlier this month, a spokeswoman characterized it as “a very positive reception.” Reviews from TechCrunch and several iPhone app review sites were generally upbeat.
A TV-only ad campaign launched last week in support of the app, featuring three creative executions in heavy rotation on network and cable. It will continue to run through the rest of the year. MasterCard’s agency is McCann Erickson Worldwide, New York, part of Interpublic Group of Cos.
While the iPhone app is just one part of MasterCard’s digital strategy, digital in general is a much bigger focus for the credit-card transaction giant. As the company sees it, there is an opportunity to connect more directly with consumers as well as provide value and utility for them while building a stronger brand connection, Mr. Jogis said.
He doesn’t see an advertising disconnect with the campaign, which focuses on the freedom a MasterCard affords the holder to share experiences, vs. an app that allows consumers to share bargains. “Certainly most of the things we look to do are connected to convenient ways for consumers to buy things,” he said, adding: “But even when it’s about a deal or a great price, it’s also about the find and the adventure and the experience.”
Obvious advertising?
While Tom Anderson, managing partner of Anderson Analytics consultancy, said “user-generated reviews tied to GPS are great” and they do tie “perfectly to the MasterCard brand and specifically their much successful ‘Priceless’ slogan,” he expressed concern about some of the obvious third-party deals communicated on the app in his local area.
“Ads I saw, such as ‘$10.99 2X Ultra Tide or Gain,’ I would hardly consider ‘priceless,’” Mr. Anderson said. “You only have one chance with an app like this. If users come to it and it smells like an ad, then it is an ad, and with no value added it will die quickly. … No one wants to carry around a piece of advertising in their pocket.”
Add comment July 28, 2009
Reaching Out to the World With Twitter
SAN FRANCISCO — Three weeks after Curtis Kimball opened his crème brûlée cart in San Francisco, he noticed a stranger among the friends in line for his desserts. How had the man discovered the cart? He had read about it on Twitter.
Peter DaSilva for The New York Times
Curtis Kimball, owner of a crème brûlée cart in San Francisco, uses Twitter to drive his customers to his changing location.For Mr. Kimball, who conceded that he “hadn’t really understood the purpose of Twitter,” the beauty of digital word-of-mouth marketing was immediately clear. He signed up for an account and has more than 5,400 followers who wait for him to post the current location of his itinerant cart and list the flavors of the day, like lavender and orange creamsicle.
“I would love to say that I just had a really good idea and strategy, but Twitter has been pretty essential to my success,” he said. He has quit his day job as a carpenter to keep up with the demand.
Much has been made of how big companies like Dell, Starbucks and Comcast use Twitter to promote their products and answer customers’ questions. But today, small businesses outnumber the big ones on the free microblogging service, and in many ways, Twitter is an even more useful tool for them.
For many mom-and-pop shops with no ad budget, Twitter has become their sole means of marketing. It is far easier to set up and update a Twitter account than to maintain a Web page. And because small-business owners tend to work at the cash register, not in a cubicle in the marketing department, Twitter’s intimacy suits them well.
“We think of these social media tools as being in the realm of the sophisticated, multiplatform marketers like Coca-Cola and McDonald’s, but a lot of these supersmall businesses are gravitating toward them because they are accessible, free and very simple,” said Greg Sterling, an analyst who studies the Internet’s influence on shopping and local businesses.
Small businesses typically get more than half of their customers through word of mouth, he said, and Twitter is the digital manifestation of that. Twitter users broadcast messages of up to 140 characters in length, and the culture of the service encourages people to spread news to friends in their own network.
Umi, a sushi restaurant in San Francisco, sometimes gets five new customers a night who learned about it on Twitter, said Shamus Booth, a co-owner.
He twitters about the fresh fish of the night — “The O-Toro (bluefin tuna belly) tonight is some of the most rich and buttery tuna I’ve had,” he recently wrote — and offers free seaweed salads to people who mention Twitter.
Twitter is not just for businesses that want to lure customers with mouth-watering descriptions of food. For Cynthia Sutton-Stolle, the co-owner of Silver Barn Antiques in tiny Columbus, Tex., Twitter has been a way to find both suppliers and customers nationwide.
Since she joined Twitter in February, she has connected with people making lamps and candles that she subsequently ordered for her shop and has sold a few thousand dollars of merchandise to people outside Columbus, including to a woman in New Jersey shopping for graduation gifts.
“We don’t even have our Web site done, and we weren’t even trying to start an e-commerce business,” Ms. Sutton-Stolle said. “Twitter has been a real valuable tool because it’s made us national instead of a little-bitty store in a little-bitty town.”
Scott Seaman of Blowing Rock, N.C., also uses Twitter to expand his customer base beyond his town of about 1,500 residents. Mr. Seaman is a partner at Christopher’s Wine and Cheese shop and owns a bed and breakfast in town. He sets up searches on TweetDeck, a Web application that helps people manage their Twitter messages, to start conversations with people talking about his town or the mountain nearby. One person he met on Twitter booked a room at his inn, and a woman in Dallas ordered sake from his shop.
The extra traffic has come despite his rarely pitching his own businesses on Twitter. “To me, that’s a turn-off,” he said. Instead of marketing to customers, small-business owners should use the same persona they have offline, he advised. “Be the small shopkeeper down the street that everyone knows by name.”
Chris Mann, the owner of Woodhouse Day Spa in Cincinnati, twitters about discounts for massages and manicures every Tuesday. Twitter beats e-mail promotions because he can send tweets from his phone in a meeting and “every single business sends out an e-mail,” he said.
Even if a shop’s customers are not on Twitter, the service can be useful for entrepreneurs, said Becky McCray, who runs a liquor store and cattle ranch in Oklahoma and publishes a blog called Small Biz Survival.
In towns like hers, with only 5,000 people, small-business owners can feel isolated, she said. But on Twitter, she has learned business tax tips from an accountant, marketing tips from a consultant in Tennessee and start-up tips from the founder of several tech companies.
Anamitra Banerji, who manages commercial products at Twitter, said that when he joined the company from Yahoo in March, “I thought this was a place where large businesses were. What I’m finding more and more, to my surprise every single day, is business of all kinds.”
Twitter, which does not yet make money, is now concentrating on teaching businesses how they can join and use it, Mr. Banerji said, and the company plans to publish case studies. He is also developing products that Twitter can sell to businesses of all sizes this year, including features to verify businesses’ accounts and analyze traffic to their Twitter profiles.
According to Mr. Banerji, small-business owners like Twitter because they can talk directly to customers in a way that they were able to do only in person before. “We’re finding the emotional distance between businesses and their customers is shortening quite a bit,” he said.
Add comment July 22, 2009
Letter from Tony Hsieh CEO of Zappos.com to Employees
The following email was sent to our employees today:
Date: Wed, 22 Jul 2009
From: Tony Hsieh (CEO – Zappos.com)
To: All Zappos Employees
Subject: Zappos and Amazon
Please set aside 20 minutes to carefully read this entire email. (My apologies for the occasional use of formal-sounding language, as parts of it are written in a particular way for legal reasons.)
Today is a big day in Zappos history.
This morning, our board approved and we signed what’s known as a “definitive agreement”, in which all of the existing shareholders and investors of Zappos (there are over 100) will be exchanging their Zappos stock for Amazon stock. Once the exchange is done, Amazon will become the only shareholder of Zappos stock.
Over the next few days, you will probably read headlines that say “Amazon acquires Zappos” or “Zappos sells to Amazon”. While those headlines are technically correct, they don’t really properly convey the spirit of the transaction. (I personally would prefer the headline “Zappos and Amazon sitting in a tree…”)
We plan to continue to run Zappos the way we have always run Zappos — continuing to do what we believe is best for our brand, our culture, and our business. From a practical point of view, it will be as if we are switching out our current shareholders and board of directors for a new one, even though the technical legal structure may be different.
We think that now is the right time to join forces with Amazon because there is a huge opportunity to leverage each other’s strengths and move even faster towards our long term vision. For Zappos, our vision remains the same: delivering happiness to customers, employees, and vendors. We just want to get there faster.
We are excited about doing this for 3 main reasons:
1) We think that there is a huge opportunity for us to really accelerate the growth of the Zappos brand and culture, and we believe that Amazon is the best partner to help us get there faster.
2) Amazon supports us in continuing to grow our vision as an independent entity, under the Zappos brand and with our unique culture.
3) We want to align ourselves with a shareholder and partner that thinks really long term (like we do at Zappos), as well as do what’s in the best interest of our existing shareholders and investors.
I will go through each of the above points in more detail below, but first, let me get to the top 3 burning questions that I’m guessing many of you will have.
TOP 3 BURNING QUESTIONS
Q: Will I still have a job?
As mentioned above, we plan to continue to run Zappos as an independent entity. In legal terminology, Zappos will be a “wholly-owned subsidiary” of Amazon. Your job is just as secure as it was a month ago.
Q: Will the Zappos culture change?
Our culture at Zappos is unique and always evolving and changing, because one of our core values is to Embrace and Drive Change. What happens to our culture is up to us, which has always been true. Just like before, we are in control of our destiny and how our culture evolves.
A big part of the reason why Amazon is interested in us is because they recognize the value of our culture, our people, and our brand. Their desire is for us to continue to grow and develop our culture (and perhaps even a little bit of our culture may rub off on them).
They are not looking to have their folks come in and run Zappos unless we ask them to. That being said, they have a lot of experience and expertise in a lot of areas, so we’re very excited about the opportunities to tap into their knowledge, expertise, and resources, especially on the technology side. This is about making the Zappos brand, culture, and business even stronger than it is today.
Q: Are Tony, Alfred, or Fred leaving?
No, we have no plans to leave. We believe that we are at the very beginning of what’s possible for Zappos and are very excited about the future and what we can accomplish for Zappos with Amazon as our new partner. Part of the reason for doing this is so that we can get a lot more done more quickly.
There is an additional Q&A section at the end of this email, but I wanted to make sure we got the top 3 burning questions out of the way first. Now that we’ve covered those questions, I wanted to share in more detail our thinking behind the scenes that led us to this decision.
First, I want to apologize for the suddenness of this announcement. As you know, one of our core values is to Build Open and Honest Relationships With Communication, and if I could have it my way, I would have shared much earlier that we were in discussions with Amazon so that all employees could be involved in the decision process that we went through along the way. Unfortunately, because Amazon is a public company, there are securities laws that prevented us from talking about this to most of our employees until today.
We’ve been on friendly terms with Amazon for many years, as they have always been interested in Zappos and have always had a great respect for our brand.
Several months ago, they reached out to us and said they wanted to join forces with us so that we could accelerate the growth of our business, our brand, and our culture. When they said they wanted us to continue to build the Zappos brand (as opposed to folding us into Amazon), we decided it was worth exploring what a partnership would look like.
We learned that they truly wanted us to continue to build the Zappos brand and continue to build the Zappos culture in our own unique way. I think “unique” was their way of saying “fun and a little weird.” 
Over the past several months, as we got to know each other better, both sides became more and more excited about the possibilities for leveraging each other’s strengths. We realized that we are both very customer-focused companies — we just focus on different ways of making our customers happy.
Amazon focuses on low prices, vast selection and convenience to make their customers happy, while Zappos does it through developing relationships, creating personal emotional connections, and delivering high touch (“WOW”) customer service.
We realized that Amazon’s resources, technology, and operational experience had the potential to greatly accelerate our growth so that we could grow the Zappos brand and culture even faster. On the flip side, through the process Amazon realized that it really was the case that our culture is the platform that enables us to deliver the Zappos experience to our customers. Jeff Bezos (CEO of Amazon) made it clear that he had a great deal of respect for our culture and that Amazon would look to protect it.
We asked our board members what they thought of the opportunity. Michael Moritz, who represents Sequoia Capital (one of our investors and board members), wrote the following: “You now have the opportunity to accelerate Zappos’ progress and to make the name and the brand and everything associated with it an enduring, permanent part of peoples’ lives… You
are now free to let your imagination roam – and to contemplate initiatives and undertakings that today, in our more constrained setting, we could not take on.”
One of the great things about Amazon is that they are very long term thinkers, just like we are at Zappos. Alignment in very long term thinking is hard to find in a partner or investor, and we felt very lucky and excited to learn that both Amazon and Zappos shared this same philosophy.
All this being said, this was not an easy decision. Over the past several months, we had to weigh all the pros and cons along with all the potential benefits and risks. At the end of the day, we realized that, once it was determined that this was in the best interests of our shareholders, it basically all boiled down to asking ourselves 2 questions:
1) Do we believe that this will accelerate the growth of the Zappos brand and help us fulfill our mission of delivering happiness faster?
2) Do we believe that we will continue to be in control of our own destiny so that we can continue to grow our unique culture?
After spending a lot of time with Amazon and getting to know them and understanding their intentions better, we reached the conclusion that the answers to these 2 questions are YES and YES.
The Zappos brand will continue to be separate from the Amazon brand. Although we’ll have access to many of Amazon’s resources, we need to continue to build our brand and our culture just as we always have. Our mission remains the same: delivering happiness to all of our stakeholders, including our employees, our customers, and our vendors. (As a side note, we plan to continue to maintain the relationships that we have with our vendors ourselves, and Amazon will continue to maintain the relationships that they have with their vendors.)
We will be holding an all hands meeting soon to go over all of this in more detail. Please email me any questions that you may have so that we can cover as many as possible during the all hands meeting and/or a follow-up email.
We signed what’s known as the “definitive agreement” today, but we still need to go through the process of getting government approval, so we are anticipating that this transaction actually won’t officially close for at least a few months. We are legally required by the SEC to be in what’s known as a “quiet period”, so if you get any questions related to the transaction from anyone including customers, vendors, or the media, please let them know that we are in a quiet period mandated by law and have them email tree@zappos.com, which is a special email account that Alfred and I will be monitoring.
Alfred and I would like to say thanks to the small group of folks on our finance and legal teams and from our advisors at Morgan Stanley, Fenwick & West, and PricewaterhouseCoopers who have been working really hard, around the clock, and behind the scenes over the last several months to help make all this possible.
Before getting to the Q&A section, I’d also like to thank everyone for taking the time to read this long email and for helping us get to where we are today.
It’s definitely an emotional day for me. The feelings I’m experiencing are similar to what I felt in college on graduation day: excitement about the future mixed with fond memories of the past. The last 10 years were an incredible ride, and I’m excited about what we will accomplish together over the next 10 years as we continue to grow Zappos!
-Tony Hsieh
CEO – Zappos.com
Add comment July 22, 2009
Digital activism on YouTube
(This is the second of a series of posts from YouTube’s news and politics blog, Citizentube. -Ed.)
Activism today isn’t limited to picket lines and marches on the Mall — people have taken their movements to the web, and YouTube has become an important platform for exposure. Every day, people use YouTube to fight for causes, whether they’re hunger-striking celebrities like Mia Farrow, or 9-year-olds trying to save the neighborhood kickball lot from destruction. On Citizentube, our YouTube blog that chronicles the way people use video to change the world, we’ve seen digital activists use YouTube in three basic ways: to shine a light on issues that need more exposure, to drive action around causes they care about, and to create connections between people and organizations that share their desire to make a difference.
Some of the most compelling videos we see are those that spotlight important issues that aren’t being covered in the mainstream media. Witness, a nonprofit organization whose mission is to document human rights abuses around the world through video, offers an excellent example — this video from their YouTube channel chronicles the clashes between the Burmese military and rural ethnic minorities. Invisiblepeople.tv, a relative newcomer to YouTube, is taking a similar approach by tackling a more domestic issue: homelessness. This summer, the group is traveling across America to document the real, unedited stories of people living on the streets, in tent communes and in cars — and posting all of the footage to their YouTube channel. And of course we’ve seen protesters in Iran, China and elsewhere use YouTube to amplify their causes far beyond national borders.
Other individuals and nonprofits are using YouTube as a direct advocacy tool, experimenting with ways to drive action from their videos to a particular cause. And we’re building new products to make it even easier for them to do this effectively. For example, in March, we launched a tool called “Call to Action,” which allows nonprofit organizations to drive traffic from an in-video overlay to an off-site page where they can collect donations, signatures or email addresses. Shortly after launch, to commemorate World Water Day, we featured a video from charity:water on the YouTube homepage that used a call-to-action overlay to encourage YouTube users to donate money to build wells and provide clean, safe drinking water for those who don’t have it. Through YouTube, charity:water was able to raise over $10,000 in one day — enough to build two brand-new wells in the Central African Republic and give over 150 people clean drinking water for 20 years.
Yet some of the most innovative uses of YouTube for digital activism are those that leverage the communities that exist on YouTube around particular causes. YouTube is inherently a social experience and many of our users are hungry to partner and collaborate with others who share their passions. Last December, popular YouTube users the Vlogbrothers launched the “Project for Awesome,” a campaign which asked fellow budding change-makers to make videos about their favorite charities. Over 1,200 people joined the effort to promote their cause of choice. And just a few weeks ago, in partnership with President Obama’s launch of serve.gov, we created “Video Volunteers“, a new platform on YouTube which connects nonprofits that lack video resources with proven video-makers who want to use their skills to do good. There are already hundreds of posts from nonprofits seeking help on the Video Volunteers YouTube channel, so if you’re interested in creating a video for an organization, head over to the channel now and find a cause you care about.
Activism is constantly evolving on YouTube, so we’ll keep posting fresh accounts of how citizens and nonprofits are changing the world, one video at a time, on Citizentube.
Posted by Ramya Raghavan, YouTube Nonprofits & Activism
Add comment July 22, 2009
