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May 01
2007

Beware of the SPIKE

Posted by pennell in Online DonationsDonor ManagementCRM

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My background is Broadcast TV. We'll call that part of my life "the good old days". Back in the good old days, we lived and died by ratings. More or less, ratings told us who had the most viewers at any given time of day.

Ratings were derived by people like your Uncle Lue writing a log of what they watched for about a week and then handing it over to a company called Nielson. Why would Uncle Lue do this? Easy. They gave him a dollar!

Anyway, it's during this week when people fill out their journals that the networks battle it out for ratings glory. Networks try everything. For the most part, nothing really changes that much. But every once and a while, a network gets a SPIKE.

What is a SPIKE?

It's when the worst rated news suddenly becomes the best rated news. And how would that happen? Like this:

Week One: Pathetic Rating

Week Two: Pathetic Rating

Week Four: Huge Rating due to Exclusive Interview with Michael Jackson.

Week Five: Pathetic Rating

You see, ratings work on the AVERAGE. And when you figure in the sudden windfall of viewers coming from the SPIKE week - - the workst news in town suddenly looks like a powerhouse.

THE PROBLEM: They won't be having another Exclusive Interview with Michael Jackson any time soon. In other words, that huge average rating isn't real.

TV isn't the only thing that has SPIKES. In fact, we're dealing with it in the Non-Profit sector to this very day. Beware of the organization that shows up with unreal success stories of Online Donation Success. You may be looking at a very good example of a SPIKE.

Over the past couple years we have endured incredible disasters. 9/11. The Tsunami that destroyed parts of Indonesia. Multiple hurricanes to South Florida, and the Hurricane Katrina catastraphe. Non-profit organizations responded in heroic measure, and their constituents made it possible. There was a huge wave of donor activity, and a number of large software companies were right in the middle of it all. To be fair, their systems powered unpredicented online donations. But, also in the pursuit of fairness, their systems were not the REASON for these unprecidented donations.

Now we have a number of software vendors overstepping their bounds. They are taking credit for the stimulation of the donations, but here is the reality. They are selling the SPIKE. Now you must do what we always did in media. Look at the numbers week by week - - and compare them historically.

The problem is, if you do this, the cost justification some of these vendors are selling you doesn't pan out. In fact, if online donations are skyrocketing as many of these vendors report, how do we make sense of the recent Business Week report?

Meanwhile, the outlook for online giving remains subject to debate. When a charity raises funds, "most of the money will come from a small number of very large donors," says Mark Kramer, managing director of Boston consulting firm Foundation Strategy Group. "It's not a question of making it easy for them to give online -- it's a question of the personal relationship and contacts." Kintera has "taken a more ambitious vision, but it's not clear that the business model is there to support it," Kramer adds.

My position is not to discourage you from pursuing donations online. I just ask you to be realistic. I ask you to beware of the SPIKE. For further "strong opinions", I'm just a phone call away.

- - Dan


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