{"id":21987,"date":"2011-06-28T15:30:33","date_gmt":"2011-06-28T19:30:33","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=21987"},"modified":"2011-06-28T15:30:33","modified_gmt":"2011-06-28T19:30:33","slug":"bubble-theory-and-the-madding-crowd","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/06\/28\/bubble-theory-and-the-madding-crowd\/","title":{"rendered":"Bubble Theory and the Madding Crowd"},"content":{"rendered":"

By EarlyToRise<\/strong><\/p>\n

In the investing world, we talk about bubbles. A bubble happens when stocks in a particular sector are over-hyped, and greed starts driving the market.<\/p>\n

In a stock market bubble, investors stop thinking about what<\/em> they\u2019re buying and start looking around them to see who else<\/em> is buying it.<\/p>\n

Joe Investor sees a sizable group of other investors piling into a stock or sector, driving the price higher. He figures they\u2019ve thought things through, so he\u2019ll go along for the ride.<\/p>\n

Jill takes Joe\u2019s lead, figuring he knows what he\u2019s doing. Jerry follows Jill. Julie follows Jerry. The blind are leading the blind.<\/p>\n

Well guess what?<\/strong><\/p>\n

There are marketing bubbles too\u2026<\/strong><\/p>\n

Some marketing tactic or strategy is hyped beyond all reasonable expectation\u2026 newbies who don\u2019t know any better jump in\u2026 and a bubble is born. As the hype grows, it creates a kind of vortex that sucks in more and more people. The number of dupes and the number of promoters both skyrocket.<\/p>\n

Some investment analysts are calling the recent LinkedIn IPO a warning sign that a new tech bubble might be upon us. The stock debuted at $45 and immediately started gyrating between $80 and $120, hundreds of times 2010 earnings. In plain English, there was no justification for these prices.<\/p>\n

Groupon and Facebook are planning IPOs as well, and they will most certainly garner the same kind of senseless, nosebleed valuations. The bubble will balloon and burst. And overnight, billions of dollars will change hands, just as they did during the dot-bomb bust of the late nineties. Foolish investors holding these stocks will get the shirts ripped from their backs.<\/p>\n

With marketing bubbles, the damage is subtler\u2026 <\/strong><\/p>\n

Each day, a new crush of wild-eyed marketing neophytes rush in, lured by the promise of easy money, like ants to a Twinkie. Hungry for knowledge, they buy up info-products right and left. And do they learn?<\/p>\n

Bubble stuff. All about Facebook and Twitter and mobile marketing and Groupon and other so called \u201cgame changers.\u201d Now I\u2019m not saying there is no value in these things. It\u2019s just that they are hyped into the ozone\u2026 out of all proportion\u2026 beyond anything even remotely real.<\/p>\n

And that hype drowns out the importance of learning the basic, bread and butter stuff, without which these neophytes are going to get their heads handed to them.<\/p>\n

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In the world of investing, the basics are things like earnings growth, return on equity, and profit margins. The boring, common sense stuff that allows you to rationally compare one stock to another. In the marketing world, it\u2019s return on resources invested (RORI). Is marketing this way worth my investment? Is it the best use of my resources?<\/p>\n

The fact that there are umpteen million users with a Facebook account makes for great hype. Heck, if it were a country it would be the third-biggest. But what does that mean in terms of the RORI for your particular business?<\/p>\n

Most people who market with social media haven\u2019t a clue. Their behavior is driven purely by peer pressure.<\/p>\n

They\u2019re going gaga for likes and friends and fans and followers and the rest of it. But they have no idea how many new subscribers or customers or dollars all that exertion is netting them.<\/p>\n

Worse, many of them are paying zero attention to the fundamentals of online marketing \u2013 like copy and conversion. They don\u2019t even know these things exist. Bubbleheads.<\/p>\n

I read somewhere that for many people Facebook IS<\/em> the Internet\u2026 <\/strong><\/p>\n

Pretty strong hype, isn\u2019t it?<\/p>\n

I suppose there are people quaking in their cyber-boots at the thought of venturing into the savage outer reaches of the Web\u2026 that bastion of evil lurking beyond the safe, mediated womb-world of Facebook. But do you really want those <\/em>people as YOUR customers? Maybe you do. Depends on what you\u2019re selling.<\/p>\n

For the kind of fierce individualists who make good customers for me, Facebook-addicted prospects are about as attractive as a bag of chicken giblets.<\/p>\n

And then there\u2019s the whole Groupon thing\u2026<\/strong><\/p>\n

We\u2019re seeing Groupon copycats popping up everywhere, like Whac-a-Mole. They\u2019re hyping the slashing and burning of prices to blue blazes. There are even Groupon wannabes for information products. I\u2019m willing to bet that if it hasn\u2019t happened already, you\u2019re about to get pitched by one of them.<\/p>\n

\u201cLet us expose your company to the multitudes,\u201d they say. \u201cYou\u2019ll gain hundreds, perhaps thousands, of brand-new customers. All you have to do is let us sell your $1,000 info-product digitally for $17 bucks and pay us a commission.\u201d Come again?<\/p>\n

What should you do when they come knocking? If you\u2019ve got a stale old info-product that few are buying and you can still sell it with a conscience, think of it as lead generation.<\/p>\n

But to sell a genuine $1,000 product that offers real commensurate value for $17\u2026 get serious. Do you really want to pimp your brand and the perceived value of your products in exchange for a bunch of bottom feeding bargain hunters who will probably never even open your files on their computer?<\/p>\n

Let your decision on all things bubbly be based on good old-fashioned RORI, not peer pressure.<\/p>\n

[Ed. Note<\/strong>: Daniel Levis is a top marketing consultant, direct-response copywriter, and publisher of the highly acclaimed marketing periodical Persuasion Mastery Club<\/em>. Get a full month of Persuasion Mastery Club<\/em> (a $78 value) FREE! No credit card required. Just sign up here. <\/a><\/strong><\/span><\/p>\n

Listen in while Daniel grills one of the masterminds behind what is arguably the biggest info-product success story in the history of direct marketing – The Doctor’s Book of Home Remedies<\/em> for Rodale Press. Michael Fishman spills his most cherished secrets on everything from envisioning an info-product idea… to developing it through systematic research… to validating it with small-scale tests… and, ultimately, to rolling it out for juicy profits!<\/p>\n

Click here<\/a><\/strong><\/span> for free access to the mp3 and transcript of this priceless interview and a bonus edition of Daniel’s Persuasion Mastery Club<\/em> premium e-letter.]<\/p>\n

About the Author<\/strong><\/p>\n

This article appears courtesy of Early To Rise<\/a>,<\/span> a free newsletter dedicated to creating wealth<\/a> and success<\/a> through inspiration and practical, proven advice. For a complimentary subscription, visit http:\/\/www.earlytorise.com.<\/p>\n","protected":false},"excerpt":{"rendered":"

Some marketing tactic or strategy is hyped beyond all reasonable expectation\u2026 newbies who don\u2019t know any better jump in\u2026 and a bubble is born. As the hype grows, it creates a kind of vortex that sucks in more and more people. The number of dupes and the number of promoters both skyrocket.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-21987","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/21987","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=21987"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/21987\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=21987"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=21987"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=21987"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}