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businesseducationtechnology
The High Price of Premium Access
About this Episode
Guess what… 10 times the price
In the 1950s and 1960s, consumerism reached its peak worldwide. The wealthier societies in Europe after World War II, as well as those in the USA, where new pop culture was emerging that would set global trends in fashion and daily life, significantly changed the form of communication. With the rise of television and daily newspapers, product marketing took on a new level. Many excellent experts emerged with the goal of reaching as large a group of customers as possible and convincing them that they should buy. Not just that they should buy, but that it would be shameful not to have it.One of the most famous advertising magicians of the time was David Ogilvy. A controversial figure, often criticized. However, no one can deny that he changed our world forever. He was the one who said, "The consumer isn't a moron, she's your wife." Numerous strategies developed by him and his team still form the basic approach to campaigns today. It is a canon. In this forest of innovations developed in New York, London, or Tokyo, there is one principle that is extremely useful and effective for business leaders. This principle is leaving the customer (or employee) with a certain, but highly controlled, space for interpretation. Ogilvy said that advertising must make the customer think.According to this principle, a brand should not provide the solution to the customer on a silver platter. Instead, it should prepare the message very carefully so that its interpretation by the customers is clear, and often obvious. In advertising, this technique is realized through a strong slogan and an image or picture associated with the product. "Just Do It" and the Nike logo are understandable worldwide. Of course, you could write, "Buy Nike shoes because they're the best for running, basketball, etc.," but that would insult the intelligence of the audience. "Red Bull Gives You Wings," "I'm Lovin' It" for McDonald's, or many others, are direct but not entirely so.Many companies have mastered this method, motivating their customers effectively. We are used to it. But before our eyes, an evolution of the message is happening, particularly in the realm of modern technology. What does the new message look like? The world, with our consent, is splitting into two main groups. The first group is the more prestigious, wealthy, and demanding one, served by specialists and dedicated experts (a group with time and money), while the second group is focused on cost, and the service can be performed by a machine. An example is today’s banking, helpline services, or even medical advice. You handle your matter because it’s typical. Marketing has worked this out with a simple message: "Don't waste time in line, do it yourself for free."We can observe this trend with knowledge-based products. Companies that launched their products in the typical Silicon Valley way (build mass, then sculpt it) give their services for free or in a freemium business model. They face a huge challenge in starting to make a profit. It’s even said that once you’ve given something for free, you’ll never make users pay. And this is where the genius of Ogilvy and Rosser Reeves, known for the "Unique Selling Proposition" (USP) concept, comes in. The idea is that after a period of use and getting familiar with the product, its full price must be ridiculously high. Not just expensive. Extremely expensive. Less than 24 hours ago, OpenAI applied this method exactly. The paid subscription won’t cost $20. It will cost $200. And you know what? People will pay because they will realize they are joining the first group, and the second group, the ones who don’t pay, won’t have access to the full experience. That’s how it’s done.
In the 1950s and 1960s, consumerism reached its peak worldwide. The wealthier societies in Europe after World War II, as well as those in the USA, where new pop culture was emerging that would set global trends in fashion and daily life, significantly changed the form of communication. With the rise of television and daily newspapers, product marketing took on a new level. Many excellent experts emerged with the goal of reaching as large a group of customers as possible and convincing them that they should buy. Not just that they should buy, but that it would be shameful not to have it.One of the most famous advertising magicians of the time was David Ogilvy. A controversial figure, often criticized. However, no one can deny that he changed our world forever. He was the one who said, "The consumer isn't a moron, she's your wife." Numerous strategies developed by him and his team still form the basic approach to campaigns today. It is a canon. In this forest of innovations developed in New York, London, or Tokyo, there is one principle that is extremely useful and effective for business leaders. This principle is leaving the customer (or employee) with a certain, but highly controlled, space for interpretation. Ogilvy said that advertising must make the customer think.According to this principle, a brand should not provide the solution to the customer on a silver platter. Instead, it should prepare the message very carefully so that its interpretation by the customers is clear, and often obvious. In advertising, this technique is realized through a strong slogan and an image or picture associated with the product. "Just Do It" and the Nike logo are understandable worldwide. Of course, you could write, "Buy Nike shoes because they're the best for running, basketball, etc.," but that would insult the intelligence of the audience. "Red Bull Gives You Wings," "I'm Lovin' It" for McDonald's, or many others, are direct but not entirely so.Many companies have mastered this method, motivating their customers effectively. We are used to it. But before our eyes, an evolution of the message is happening, particularly in the realm of modern technology. What does the new message look like? The world, with our consent, is splitting into two main groups. The first group is the more prestigious, wealthy, and demanding one, served by specialists and dedicated experts (a group with time and money), while the second group is focused on cost, and the service can be performed by a machine. An example is today’s banking, helpline services, or even medical advice. You handle your matter because it’s typical. Marketing has worked this out with a simple message: "Don't waste time in line, do it yourself for free."We can observe this trend with knowledge-based products. Companies that launched their products in the typical Silicon Valley way (build mass, then sculpt it) give their services for free or in a freemium business model. They face a huge challenge in starting to make a profit. It’s even said that once you’ve given something for free, you’ll never make users pay. And this is where the genius of Ogilvy and Rosser Reeves, known for the "Unique Selling Proposition" (USP) concept, comes in. The idea is that after a period of use and getting familiar with the product, its full price must be ridiculously high. Not just expensive. Extremely expensive. Less than 24 hours ago, OpenAI applied this method exactly. The paid subscription won’t cost $20. It will cost $200. And you know what? People will pay because they will realize they are joining the first group, and the second group, the ones who don’t pay, won’t have access to the full experience. That’s how it’s done.
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