“The thing is, you can keep any idea afloat as long as you keep pumping money into it. The challenge for these guys is not finding enough consumers to buy into the idea but enough fools to invest” Michael Milken - aka the “junk bond king”

One lesson I’ve learned from years of working in finance is that when investors start telling you they know better than their consumers, it’s time to rethink.

Back in 2002 I wrote a report called “MMS: The Big Picture” which in short, said, MMS was bunk - don’t believe the hype, youth don’t want it.

Needless to say I met with a lot of resistance but I’d like to think that I nailed my colours to the mast when most of the industry was pointing to the early adopter data as a vindication of the “next big thing”.

MMS will find success in certain application areas - such as picture messaging, but overall W2F believes that MMS will only substitute “a maximum of 10 per cent of the SMS market”. (that was 2002)

What did we base our findings back then on when so much of the industry received wisdom spoke of “texting on steroids”, a “richer medium” etc? Sometimes activity or investment does not equate to consumer demand, we drew our insights from talking to consumers in their natural environment, out of the research labs, as we do now.

So the interim moral is that if you’re going to say something contentious, be prepared to lose friends. But as Churchill once said “the truth is incontravertible”.

So what of Blyk’s recent E40 million? Does this vindicate the business model?

In my opinion, no. In fact, I’ll give them 3 years before they’re looking for the exit doors (trade sale would suffice).

Blyk’s model is fundamentally flawed on 4 accounts:

1) Blyk relies on a metric (cost per/click throughs) that is heading only in one direction meaning what works today becomes more difficult tomorrow. 25% click throughs will not last - what then for the media planners? You cannot extrapolate high click through rates associated with early adopters to the larger market of followers - this is the same thinking that convinced us MMS would be a hit from the early consumer data.

2) Blyk’s success until now relies on 4 factors a) novelty b) give it away for free c) it attracts high churning freeloaders d) they have few direct competitors

3) Blyk is a mobile pure play and increasingly advertising needs to incorporate cross-media planning - eg TV that instigates a conversation on Twitter, mobile and onto Youtube as youth do not exist (unfortunately for us in the mobile industry) conveniently in one channel alone.

4) Importantly, SMS is the least trusted form of communication for young consumers (source mobileYouth report). SMS will work today and provide your marketing elbow with more caffeinated power for the short term, but there is a drop waiting for your brand along the line.

When we go out onto the street and talk to youth about what they want, a few youth buy into the idea of freebies but they demonstrate little loyalty to brands they had to do little to earn the services of. Orange Rockcorps is getting it right - don’t give it away for free, make them earn it!

Yes free works but as a lure to cross-sell other services (eg giving away a book to promote the author, album to upsell a boxset, singles for concert tickets and so on).

What does Blyk need to do to return on the investment?

1) Create If Blyk were to take away the FREE, the consumers would flee - there is little or no loyalty there when the marketing dollars stop. The challenge is not throwing the money at the problem but using the creative capacity of the Blyk team to create a legacy. Red Bull Music, Orange Rockcorps, Boost Mobile are all creating legacies for young consumers - with the London Olympics around the corner - here is Blyk’s chance.

This is how Blyk should be engaging youth - not through freebies but by leaving a legacy

2) Make your consumers earn it Blyk is merely giving the stuff away for free. As Getty once said “Any idiot can sell a dollar for 80 cents” and Blyk have plenty of dollars to sell short with their new found funds. Some of the youth we have interviewed talked about Blyk reps on campus giving away the sim cards for free. This is the METRO newspaper business model of the mobile world - it works but lacks any brand goodwill. Ok for the metro, but not necessarily for one that relies on trust.

The challenge is as with any relationship - easy come easy go. MTV’s recent EMA concert in Liverpool was offered only to a lottery list of young consumers, creating both the scarcity and peer patronage.

I’d like to see a Blyk type business model work and maybe they’re changing internally but as they stand they will leak money fast as their subscriber acquistion and account management costs increase with falling CTR and novelty associated with the consumers they are targeting.

The reception at MTV Viacom headquarters off Oxford Street in London tells an interesting story.

The Berlin Wall

As you enter you’re greated by a seminal piece of photography - 2 East German guards standing in uniform atop the Berlin Wall. It’s 1989 and the younger guard is holding, as a symbol of arrival, an umbrella emblazoned with the MTV logo.

Join the conversation on Twitter Graham Brown

Perhaps if you were to look back at the 80s and ask the youth of the day to identify the icons that defined the decade the Berlin Wall and MTV would feature in their top 10.

Marketing is no longer something you do to youth, but something you do with them (mobileYouth report 2008)

Step out the ivory tower a minute, forget direct marketing or social media and take a look at the world of the young consumer and, importantly, what works. Take a look at what youth are actually saying about your brand and marketing.

For starters, campaigns are effective but only in the short term. Ask yourself, when your marketing dollars stop what happens to your customer engagement? If that also drops, then you have an expensive and highly intensive marketing strategy that will return results only as long as you keep priming the pump.

Engaging youth is no longer about short term spiking (ie campaigns), but a focus on long term creation.

Join the conversation on Twitter Graham Brown

Think long term, think organic, think partnership; here are the 3 most overlooked marketing strategies for successfully engaging young consumers because they don’t necessarily dwell on technology, media planners or the next great thing but do the common things uncommonly well - make youth feel significant, make them feel they belong - welcome to partnership marketing.

1) Customer Service

Yes, believe it or not but “good customer service” consistently features near or at the top when youth are asked what they want from their operator (source mobileYouth report 2005-2008). Furthermore, it’s the difference between youth churning from one network operator to the next as customer service forms the foundations of that other great tenet of youth marketing: trust.

Consider O2’s move to replace product managers with customer service managers, a change that improved its long term customer retention rate and reduce churn. No coincidence.

Customer service means giving young consumers access to the machine, not through an “e-ticket” system which merely serves to enrage them but human contact.

Virgin Mobile is now pushing customer service as a key selling point for young consumers