Are we in big bubble trouble? + Energizer Bunny communications: the powerful 95-5 rule + The Pigeons of QVB

My main memory of the late 1990s dot com bubble was sitting in a Darlinghurst restaurant with my flatmate James Gifford and feverishly planning various internet start-ups … including an online retailer carparts.com.au.

Neither of us would have known the difference between a carburetor and a distributor – nor did either of us even own a car – but during the bubble, nothing like experience, knowledge, or even reality, particularly mattered.

(We never launched anything! Though it appears someone did eventually realise our … errrr … vision.)

People are now saying we’re in an AI-fuelled stock market bubble.

Bubbles are extremely important because when they pop! they create economic carnage.

They also create challenges for marketers and communicators: do you harness people’s emotions, ride the bubble, and try and maximise bubble benefits for yourself? Or do you counsel caution?

Both carry risks: with the former, looking stupid and suffering reputational damage when the bubble bursts; and with the latter, effectively sitting on the sidelines and missing out, possibly for years.

But are we there yet?

Are we really now in a bubble?

Legendary investor Sir John Templeton famously said that bull markets are born on pessimism, grow on scepticism, mature on optimism and die on euphoria.

The key ingredient of a real stock market bubble is that euphoria (happiness and confidence) turns into mania – a complete and utter detachment from reality … by almost everyone.

There are a few signs of frothiness emerging:

· Major markets are definitely overvalued.

· Bubbles are usually fueled by a powerful new narrative, and AI definitely fits the mould.

· After several years, this bull market could be getting long in the tooth.

· The public is starting to move into the market quite heavily. A friend told me recently that their mate had concocted a ‘market-beating formula’ that his mate was happy to share. So my friend was going to accept the offer and use the formula to breezily take up trading.

But other factors suggest we are not yet in a full-blown bubble:

· Yes, markets are overvalued, but there are counterarguments, including that big gains have been concentrated in the Magnificent 7, which are highly profitable, unlike profitless dot com companies; and that bond yields are much lower than during the dot com bubble.

· When everyone’s talking about whether we’re in a bubble, we usually aren’t in one. During a bubble, most people are too busy living the bubble – launching start-ups, trading stocks, etc – to have any perspective on what is going on. (It’s when the bubble bores stop boring us about bubbles that I’ll start to get worried.)

· Bull markets climb a wall of worry; fears that this market is a bubble could just be the latest worry.

· While I’m seeing growing confidence, I’m not yet seeing the manic insanity of a genuine bubble like we saw in the dot com boom.

The one exception is perhaps gold. We saw signs of mania-like ‘gold fever’ recently, with lines of people desperate to buy physical gold queuing outside retail gold shops in Sydney’s Martin Place. (Update: the gold market cracked a bit this week.)

But when people talk about being a bubble, in my mind I drift back to the dot com era and think: now that was a bubble.

I’ll let you know when I start planning my hot new AI start-up, and that will be a good sign to sell, sell, sell!

(If this is a regular bull market, it could end any time soon or enter a short-term correction; if this is a true bubble, it could keep going for years.)

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The 95-5 rule: Why you need constant ‘Energizer Bunny’ communications to prime future buyers and voters

I came across a nice reminder that we should always be marketing and communicating.

It was in a lovely video on advertising best practice from the always insightful marketing expert Mark Ritson.

Ritson reiterates the 95:5 rule of B2B marketing created by John Dawes from the Ehrenberg-Bass Institute.

Basically, at any one time, 95 per cent of your potential clients are not even in the market – they are not looking to buy.

(They are already invested in an existing fund, have a consultancy firm they use now, have a law firm retained, etc … or they just don’t have a need right now.)

Just a fraction, 5%, are actively looking.

This, of course, has big implications for marketing spend and focus.

Most companies, and B2B companies particularly, are obsessed with short-term sales and activation, particularly in digital (marketing myopia).

However, roughly half of your marketing budget should be allocated to staying top of mind – brand building – so that when the bulk of the market, the 95%, are ready to buy, you immediately come to mind.

(Brand building includes advertising, PR, content, events and speaking: anything that boosts your awareness and ‘fame’ in your market.)

Too many marketers and communicators are focused on the short-term and one-offs.

The 95-5 rule teaches us to focus just as much on the long-term and the ongoing.

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This principle also applies to political parties and policy advocates: only a handful of people are caring about or thinking about you and your agenda at any one time.

Like B2B, politics and policy communication shouldn’t only be focused on motivating people around a one-off event (elections, etc).

It should be just as focused on the never-ending battle of ideas and attention (series of events, sustained campaigns, ongoing debates, etc) that, if executed consistently, will pay dividends over a longer period.

The Liberal Party, for example, has been election focused; but, along with most of its allies, it’s been almost absent from the broader ongoing national debate over Australia’s future, though this is starting to change.

Greg Sheridan made this point recently when he said that effective opposition leaders like Tony Abbott and Kevin Rudd were communications ‘energiser bunnies’ always communicating, communicating, communicating.

They wanted to “talk on any radio station that would have them, contribute op-ed articles, devour policy research, hone new lines of attack, attend or create any community event, dream up gimmicks for the media and so on.”

That is, they were heavily focused on the 95 percent brand building part of their game.

Sheridan asks: “Who in today’s opposition, beyond Tim Wilson, fits that description?”

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Pigeons and the power of perception

On my recent holiday, I read ‘New York Sketches’, a compilation of essays and poems by the great stylist, E.B White (creator of Charlotte’s Web and Stuart Little).

One of my favourites was ‘The Rock Dove’, a hilarious Q&A where White answers questions about the pigeons of Manhattan.

One of the questions was: “I wonder where pigeons have their nests?”

Along with illustrations of each, White cited four common types of nest – the baroque, the modern, the Gothic and the military.

(The Gothic nest, for example, sits in the ornate trefoil of St Patrick’s Cathedral’s Lady Chapel.)

White, however, says that most people miss the goings on and nestings of pigeons because “New Yorkers do not ordinarily lift their gaze”.

As it happens, my office in George Street sits across from a particularly ornate building, the Romanesque Revival Queen Victoria Building.

When I got back from my holiday, as I ate my lunch standing outside the QVB, I did ‘lift my gaze’ to see if any pigeons were nesting in the nooks and crannies of the QVB.

I didn’t spy any, though I could see the building would be a prime nesting spot, and in the distance to my left, I did see a pigeon flutter into the very top of the clock tower of the Sydney Town Hall. Perhaps to nest?

What White had done was help me see the world, or my part of it, in an entirely new way.

And that’s what great communicators do; they harness perhaps our most powerful sense – sight – and manage to shift our gaze so we can literally see something they think is particularly important or interesting.