March 26, 2008

Oprah, Pottery Barn, And The Curse Of Multiple Channels

Two different meetings yesterday, two different topics, same basic issue.

Oprah: In a meeting yesterday, a woman mentioned that there's "too much Oprah" these days. She used to watch Oprah's daily show, and used to subscribe to her magazine. Then new channels were offered --- Oprah's XM channel, Oprah's "Big Give" on ABC, and Oprah's weekly book discussion of Eckhart Tolle's "A New Earth". This individual mentioned that she is "migrating" toward the spiritual content on XM and the weekly webcast, finding the old content less relevant, too "Hollywoodish".

Pottery Barn: In a separate meeting, a young lady mentioned that she recently purchased from Pottery Barn's website, only to receive a catalog a few weeks later. She asked me this question ... "Why do they do this? I sure don't want the catalog, that's why I ordered online."

Both issues highlight the curse of multiple channels.

Oprah starts a channel on XM, and between subscribers and DirecTV listeners, she maybe has a million listeners. That sounds good! Oprah creates an online television channel to discuss spiritual issues, and another two million folks leap to the new channel. Good! ABC broadcasts a new show from Oprah, and another fifteen million viewers give it a try. Good!

Underneath the rampant success of multiple channels is the issue of "channel shift". Individual customers, best customers, for a period of time consume all channels. Eventually, the customer identifies the channels most relevant to her, and drops her patronage of channels she identifies as "less relevant".

That's the challenge retailers like Pottery Barn face. Back in the stone ages of e-commerce (aka 2001), e-commerce customers were catalog customers. The best thing you could do was mail a catalog to the e-commerce customer! We knew this, because we measured the effectiveness of this strategy, and it worked! This strategy was still reasonable in 2005. And then, all of a sudden, the world changed. Customers believe they now have control. The catalog, a welcome addition in 2005, is viewed by some as an intrusion.

The retailer (or media mogul) gets this information "after the fact". In other words, it is really hard (ahead of time) to identify the point where Oprah's fan base is frustrated with so many channels.

In retail, we have tools that help us understand when audiences are embracing multiple channels, or are sick and tired of incessant marketing of multiple channels. Most of the time, our customers are secretly telling us when they no longer find various channels to be relevant. We just need to measure it better.

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