Dear Tig,

We are introducing a (really neat) new type of Internet tool for our customers, and we want to tout its usefulness to both current and potential new customers. But we can't figure out how to do that without also giving our competitors access. So, should we password-protect it or just have it out there for our competition to copy (and they will)?

Thank you,

Covert Apps

Dear Covert,

Some types of ideas you can safeguard with intellectual property protection. Certain types of inventions, processes and designs can be patented. But a very large swath of Internet services don't seem to fall into any of these categories (which didn't seem to stop some early Internet companies from attempting to patent any old obvious thing done on the Web). To get the most out of a good idea (as opposed to a protectable idea), you can pursue one of a couple strategies.

Sudden market saturation is effective when you can grab large market share by making everyone aware of your cool new application before the competition has time to get its act together. This is risky not just because savvy competition can quickly steal your wind, but also because markets often take some time to adapt to new applications, especially in technology fields. To properly execute this strategy, you need a saturating marketing campaign, preferably of shorter duration and higher frequency. To the degree you can make your brand “own” this functionality, the better. You might also be able to control this perceived ownership with the naming of the application. If you choose something too close to your own brand name, then people will tend to seek a non-branded generic name for the type of application. I recommend a happy medium that suggests your brand, but that can also function as the category name.

Sneaky market saturation relies on the presumption that your competition doesn't watch you too terribly carefully. You could conceivably put the application out in a password-protected area, manually giving out the access to customers and new prospects. Inevitably, this will leak out, but it may delay the threat for weeks or months.

Of the two, sudden market saturation is more reliable in accruing benefits to the inventing company. With the other, when details leak out, you're just out of luck. With the sudden method, you at least have a great head start on the branding of a competitive service. But beware the worst of both worlds: under-funding the marketing campaign for the sudden method will likely succeed only in handing your work over to your competition.

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Dear Tig,

My boss and I have been arguing about whether we should pay more for media that comes from a well-branded source rather than the equivalent media (demographic quality, etc…) from a relatively unknown vendor. I've been arguing that we should buy lots of media from the lesser known of the two, as we can buy about three to five times as much. Do you have thoughts on it?

Thanks,

Cheapie

Dear Cheapie,

The best advice I can give you on this takes me back to my late third grade teacher, Mrs. Novak. When I was trying to explain why it was that I helped Brent tie Cara's ponytail to her chair, she replied, “If Brent jumped off a cliff, would you jump off too?”

There are a couple arguments as to why branded media should command more money, even given equivalent audiences, but they don't tend to justify enormous price differences.

The first argument suggests that the audience is a higher quality group of people in ways that demographics fail to measure. This may be true in some cases, but of course, it depends on what sort of audience you seek. People tend to trust large, well-known media sites to be more accurate with the characterization of their audience. This is worth some percentage points.

The other argument suggests that the audience tends to lend greater credence to advertisements it sees on the more branded site. There is some evidence that there is such an effect, although of course it inevitably comes from research done by large media vendors. Again, perhaps this is worth a few percentage points.

Media is priced much more like clothing than it is priced like a true commodity. That is to say, pricing isn't entirely rational. Scarcity drives up perceived value, like a Japanese toy manufacturer deliberately squelching supply to try to win fad status. This does suggest that many high-priced media sources are irrationally expensive.

And sometimes there exist real benefits that defy media analyses. CEOs like to have their ads on CNN. It makes them feel good and important. This might not help the business in the way a media buyer might want, but it may have other desired effects, and it certainly can go a long ways in getting annual media budget allocations approved. Sometimes it matters more that the media supervisor would rather tell his mother that he buys ads in USA Today rather than Pomona Today.

In the end, it comes down to whether or not you want to jump off that value cliff just because everyone else seems to think it's a good idea. It's quite likely that, in the absence of a rational explanation, the more expensive media might not deserve such a higher price.