During Amazon’s fourth quarter 2013 earnings conference call, on Jan. 30, 2014, CFO Tom Szkutak said something surprising: “With the increased cost of fuel and transportation as well as the increased usage among Prime members we’re considering increasing the price of Prime between $20 to $40 in the U.S”. The retailer revealed the actual price increase three days ago, effective March 20.
That tip-off is excellent example about the ways companies float trial balloons and how the news media distributes them. Merriam-Webster dictionary defines trial balloon as “a project or scheme tentatively announced in order to test public opinion”. The Wikipedia definition, which “needs additional citations” fits with my own: “A trial balloon is information sent out to the media in order to observe the reaction of an audience”.
The media played its role, acting on Amazon’s behalf as public relations conduit. Companies can’t pay for marketing as effective as the balloons floated by rumor-crazed, pageview-obsessed bloggers and journalists. Rumors rapidly spread across the Internet about $119 being the number. Wall Street analysts welcomed the amount, while letting Amazon gauge customer response to either.
The Media’s helping hand eased along the price increase. Many Amazon Prime customers familiar with the rumors will be relieved Amazon only will raise costs by $20. The comparison they will make is $119 to $99, not $79 to $99.
“Expectations can influence nearly every aspect of our life”, Dan Ariely writes in his grand-breaking book Predictably Irrational.
Responsible reporting isn’t public relations. This comes back to my favorite question: “Who benefits?” The answer isn’t always easily applied, when news reporting. Your audience might want to know about impending price increases.
In this example, however, there is a big difference quoting the CFO saying $20 to $40 and paraphrasing $99 to $119, or more profoundly, repeating rumors focusing on the higher number. The subtleties carry high emotional quotient.
Photo Credit: Alex Steenberg