16 August, 2010 · 2:05 pm

Ten Things Your Agency Doesn’t Want You to Know: #4

You have the wrong people in your agency meetings.

It is a truth of life that people often make the mistake of assuming that just because they consume a lot of something, they are expert at how to make it. People who drink a lot of fine wine will talk about terroir and tasting notes even if their palettes couldn’t distinguish between Merlot and pine tar. The same can be said about movies, driving and advertising. People have been surrounded by advertising all their lives, so they naturally and erroneously assume they know a lot about it. The result is that there’s an implicit and harmful assumption that everyone’s opinion is valid. The CFO weighs in, the summer intern gets a vote, and various other unqualified personnel are encouraged to participate in the evaluation of the work “as part of their development.” It’s hard to believe that a company would let a first-year finance associate tweak the firm’s capital structure, or the HR director play with the supply chain, yet often have no qualms doing the equivalent thing to their marketing. If you want your marketing programs to be better, than have your most qualified marketers work on them. You should demand the same level of expertise and experience in your marketing decisions as you do in your other business decisions.

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10 August, 2010 · 5:38 pm

Business Culture: Family vs. Team

I often encounter business leaders who try to capture the positive aspects of their company culture by referring to their “family” environment.  These are often managers who want to distinguish themselves from a cutthroat or unethical work environment.  Nonetheless, whenever I hear an executive  refer to the company family, I can’t help but wince. Inevitably, they are undermining their own credibility, integrity, and success.

While I appreciate the sentiment, companies cannot operate like families. At their best, they are teams. Managers often confuse the analogies of family and team, because many of their positive values overlap.  They both require sacrifice for the good of the group, and being able to rely on that same sacrifice from others.  They both thrive in a spirit of tolerance, where we acknowledge each other’s different styles and strengths. Both strong families and strong teams share common core values, such as trust, honesty, and loyalty.

But they diverge in a meaningful way. Family is an unconditional commitment. A  family should remain a family no matter what they do.  A family does not have an explicit mission, other than its own survival. A team is a conditional commitment. It exists because of a mutual commitment of its members to support an explicit mission, be it completing a project, defeating a competitor, or providing a service.  This creates different expectations and different obligations on its members.

A family leader is expected to support his family in every way possible. If a child is engaging in behavior that is destructive or embarrassing to the family, the parents’ first obligation is to support that child, and do everything they can to overcome whatever is at the root of their child’s  problem. If an employee is engaging in behavior that is destructive or embarrassing to the firm, a manager’s obligation is to minimize the negative  effect on the mission. If that can be accomplished by helping the employee, all the better. But if it can only be addressed by replacing the employee, that’s an acceptable alternative.

If a family member’s temperament is a poor fit with the rest of the family, the unconditional commitment of the family should overlook those differences, and accept them as they are. If an employee’s work style is at odds with the rest of the company, and manager needs to either work with that employee or find a replacement that will make a better fit.  A manager who accepts people as they are to the detriment of the firm is incompetent.

There was a sad story about a family that adopted a child, and then sent the child back after they found out he was going to be challenging to take care of. The universal reaction was that it was unethical to reject a child from the family simply because he was too hard to take care of. In a business situation, the ethics are practically reversed. If an employee was taking up disproportionate resources to support and manage, other employees would consider it unfair. One of the most common worker complaints is management that tolerates dead wood employees who don’t pull their weight at work.

Sports are the most obvious examples of team. If a wide receiver on a football team can’t catch a football, a coach would not keep him on the team. But you would never think of replacing a sibling for lack of performance.  A football team doesn’t pay its starting quarterback the same salary as its backup kicker. A team rightfully gives more attention to the people who are most critical to its success. A family’s love and attention should not be doled out on the basis of some performance measures. With a family, the family unit itself is paramount. With a team, the mission of the team is paramount.

Managers who promote their teams as families do themselves and their employees a disservice.  As in the recent downturn, it can cause additional bitterness when it requires letting people go. It makes a lie out of everything the manager claimed to stand for. Families don’t disown other family members in bad times. The same disillusionment happens if someone is passed over for a promotion or gets a smaller bonus.

Employees lose trust in their leaders if they see them violating the principles they espouse. The differences between family and team are subtle but profound, and managers who confuse them risk being seen as hypocritical or dishonest when those values are put to the test.

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14 July, 2010 · 10:43 am

Ten Things Your Agency Prefers You Don’t Know: #10

Only two things really matter when picking an agency.

If you are a major marketer, the type of agencies you’ll consider all have the same basic approach and capabilities.  Their processes, for better or worse, are all about the same as well.  Many claim to have proprietary tools or processes, but that’s just not the case. They may have different names and different labels for what they do, but the breadth and delivery of services is essentially the same at any holding company agency or major independent. Pricing is also not different. More accurately, if there is a pricing difference, agencies are quick to match their competitors in order to win or retain a client.

If the basic capabilities are the same at most every agency, what distinguishes them? In my experience there are two factors that really matter. The first factor is the quality of the people working directly on your business.  A great team at a mediocre agency will tend to do great work, and the opposite is true as well.

The second factor is the standards an agency sets for itself – standards for creativity, professionalism, and integrity. The agencies with higher standards make it harder for bad work to get out the door, and are quicker to realize when their work is falling short of what it should be.

If I had to choose a new agency as efficiently as possible, I would do three things.  First, I would look at all their work. Not just their highlights or major clients, but everything they’ve done in the past 6-12 months so I could judge their overall standard of work. For example, on a big retail account there is often a lot of little stuff that has to get churned out quickly and cheaply, like tent cards or shelf talkers.  Do they just jam their print ads into another format, or do they actually take a little time to design it for the environment it’s in.

Second, I would talk to each of their clients to see if they had more than the usual compliments and gripes so I could assess their standards of professionalism and integrity.  No client-agency relationship is without its spats and hiccups, but I’d listen to see if problems get addressed, or if  the same spats and hiccups keep recurring

Third, I would meet directly with the people who would be working on my business. I’d not only assess whether I like and trust their work, but also to sense if they are people who will champion my business back at their place. Big agencies have lots of people competing priorities and opinions, so I want someone who is going to advocate for me when I’m not there. Oh, and you can have them do some work too since most agencies are giving it away for free anyway.

The typical pitch process gets around to accomplishing these things indirectly, but generally takes a lot more money and time.

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28 June, 2010 · 11:26 am

Getting It: Charmin vs. Cottonelle

One of the biggest mistakes that marketers make when attempting to use social media is focusing on the channel first. Many of them have been trained that success comes from tapping into what’s hot whether that be celebrities, television shows,  or urban slang.  So they go into social media by trying to figure out  the hot place to be.  First they went rushing into Second Life, then MySpace, then Facebook, and now iPhone apps.

That mentality misses the point of social media: it is not to intercept people on their way to what interests them,  it is to engage people so you are what interests them.  The first task is not to assess the popularity of something unrelated to who you are, it’s about finding something rooted in who you are as a brand that other people find interesting. And that’s where the real challenge lies.  Before you pick any social media channel, you need to figure out what makes you interesting to somebody. Sure, it’s easy to figure out why people would want to talk to you if you’re Nike, BMW, or Maxim. Who doesn’t want to talk about sports, cars or sex?

It’s a little harder when you’re a less naturally conversational product.  Even if it’s something people use a lot of, it doesn’t mean they want to have a conversation about it.  If you make socks, table salt or toilet paper, is there anything that could make a normal person seek you out?

It turns out there is, if you are smart about it. For proof, consider what Procter & Gamble has done with their Charmin toilet paper. By owning public restrooms, they found a reason for people to talk about them and with them.  In 2002, the brand team started Potty Palooza, a portable set-up of high-end public toilets that traveled around the country to concerts, festivals, and other events.  It became an attraction in its own right, and the subject of considerable buzz. They built on that momentum with the installation of luxurious public restrooms in key venues like Times Square. Most recently  they extended their idea into the sponsorship of a mobile app, SitorSquat, that maps out public washrooms around the world.  These efforts have helped strengthen Charmin’s place as the most popular toilet paper brand, and even to have its premium line cited as a leading economic indicator. They found a way to make  people want to talk about a toilet paper brand. They started by finding something inherently interesting about the brand, and then played it out in various channels where it fit.

They did not pick a channel and then shoehorn something into it. For an example of that, you can look at Cottonelle’s Facebook page. Here’s the mission of their page in their own words:

“The Cottonelle® Brand Facebook page is intended to provide a place for fans to discuss Cottonelle® products and promotions.”

There’s  no reason to go there unless you have some pre-existing connection to the brand. I can’t say what motivated this effort, but it seems like someone simply decided Cottenelle needed to be on Facebook.  They do a nice enough job trying to keep some kind of conversation going, but you can feel the strain like small talk between people who arrived too early for an office party.  It’s hard to have a meaningful conversation without something interesting to talk about.

(credit to Bill Hague of Magid Research for related insights)

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14 June, 2010 · 9:55 am

Getting It: Chevrolet and Volkswagen

The contrast in behavior between two car companies over the past several  months could hardly be more illuminating.  As reported by DetroitNews.com, the marketing heads of GM directed their internal staff to stop referring to cars using the Chevy nickname and instead use the more proper Chevrolet label.   It smacks of  a guy I knew named “Ox” who tried to convert everyone to calling him Alex after he graduated college and got his first job in banking.  He thought it was more fitting to help him climb the corporate ladder.  It distanced him from his old friends and made him less interesting to his new ones. After all, who would you rather have watching over your money, Alex or the Ox?  GM’s attempt to backtrack a couple days later was only slightly less baffling.  They explained that because they sell more cars internationally now than domestically, they thought it better for consumers outside the U.S. to learn their proper name first before learning the nickname.  That defies the way nicknames really work with both people and products,  if Paul David Hewson (Bono)  and Coca-Cola (Coke) are any indication.

Compare that approach to Volkswagen.  They’ve embraced the Punch Dub game that kids started around spotting a Volkswagen.  When I saw their ads shortly after my kids starting punching each other in the arm every time they saw a VW drive by, it was both endearing and smart.  It made those familiar with the game feel like insiders, and those unfamiliar with it curious. Every marketer strives to integrate their brands into the popular culture, and they handled the opportunity deftly.

The contrast comes down to a simple definition of a brand. While marketers work hard to foster brands, a true brand is ultimately owned by the consumers. It is people’s perceptions and feelings that define a brand. VW took what people were doing around the brand and embraced it, GM pushed it away. Maybe GM took their part in popular culture for granted because Chevy has been around so long.  It might have been easier for VW to see the relatively new phenomenon as a gift in a way that GM could not. Still, the fundamental mistake was in a mindset that misunderstood the fundamental nature of brands.

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19 May, 2010 · 3:57 pm

How Markets Create the Need for Tea Parties

As the anti-incumbent story rumbles  across the mediascape, there is a familiar theme — call it the “I’m mad as hell and I’m not going to take it anymore” movement. Congress is at its lowest approval ratings of all time, political distrust is at an all-time high, and new activist fervor is sweeping the land. Politics as we know it is about to change.

Don’t believe the hype.  Whether it’s the Know Nothings of the 1840’s, the Term Limit supporters of the 1990’s,  or today’s Tea Party, they are all a response to the fundamental structure of the American political market.

I worked on political campaigns, and it is important to learn that there is a fundamental difference between the political marketplace and the consumer marketplace.  Both are ruthlessly competitive, so it is not a difference in ethics or morality. It has to do with what I call “category effects.”  Consumer markets have them, and political markets don’t.  Here’s why.

In simple game theory terms, there are four general outcomes between two competitors in the consumer marketplace:

  • Both gain
  • Both lose
  • Competitor 1 gains, Competitor 2 loses
  • Competitor 1 loses, Competitor 2 gains

For an example where both gain, look at Adidas and Nike. Both doing well financially, both well-regarded major brands, and benefiting to a large extent from the fact that they have a major competitor helping them drive the market and mythology of athletes and athletic gear.

For an example where both lose, look at United and American Airlines. Even before the recession, the two largest US carriers were losing share to Southwest-like competitors on the discount end and Virgin on the high-end. Neither gained from the struggles of the other, and both added to each other’s  problems by pricing and service policies that soured people on the airline travel experience.

In both situations, individual players face consequences for how the whole category performs.  If companies compete in such a way that the category grows, they may both win.  If they compete in a way that the category suffers, they may both lose. It is in their self-interest to have people think well of the category.

By contrast, political competition has only two outcomes:

  • Competitor 1 gains, Competitor 2 loses
  • Competitor 1 loses, Competitor 2 gains

In a campaign, it does not matter if you have two great candidates or two terrible candidates, one person gets elected.  There is no outcome where both gain or both lose.  There are 100 Senators in the US Congress, and short of a change to the Constitution or an overthrow of the US government, that number is not going to change based on people’s approval ratings.   In other words, there are no category effects for politicians. If doesn’t matter if people love or hate the category, 50 people still win the same prize either way. There is no self-interest for politicians to make people feel better about the category.

That is why negative advertising is frowned upon in the consumer marketplace, and embraced in the political marketplace.  In politics, if people hate the category I’m in, I can still win as long as they dislike my opponent more than me.  It doesn’t matter if the population is so put off that only 3 people even bother to vote. If two of them vote for me, I win.   In the supermarket, if people hate the my category, it does not help if they hate me less.  I still lose. If two people buy my product  and only one buys my competitor’s, we both go out of business.

As long as there are no category effects in politics, there is no incentive within the system for the candidates to improve the institution.  Efforts like the Tea Party represent an external effort from outside the system,  attempting to impose category effects on a market that inherently lacks them.  If patterns are true to form, one of the political parties will absorb their key tenets into their platforms, and the system will continue to chug along as it always has.

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13 April, 2010 · 11:03 am

The Brand – Marketing Paradox

Over the past few years, there has been two converse trends that speak to an interesting shift in the marketing landscape. On the one hand, the benefits of a strong brand have become more discussed and desired than ever before. CEOs, politicians, athletes, and entertainers are obsessed with developing and shaping their respective brand.  Numerous self-help columns promise to help people develop their individual brands. Never before has branding been perceived as such a critical success factor by so many people in so many fields.

So these should be heady days for established branding experts. Marketers from brand managers to agency directors should be enjoying unprecedented status and influence. Yet the opposite situation seems to be the case. White papers for CMOs circulate around the struggle to get a seat at the decision-making table.  Agencies are increasingly treated as commodities, set out for bid in much the same way as office supply contracts.  Major consumer marketing companies have bypassed the professionals to embrace “user-generated content” and crowdsourcing to fuel their marketing campaigns.

One explanation for these contrasting trends is that branding has become too important to be left to the marketers. Supporters of this view argue that the limited toolset and mindset of traditional marketers has made them ill-equipped to deal with the challenges of the modern marketplace.  There is some isolated truth in this, but anyone who has dealt with a large sample of CMOs can attest that as whole they are as engaged, intelligent, and creative as anyone you could hope to meet.

The more credible explanation is that branding has become bigger than marketing.  The digital era has brought an unprecendented amount of information and transparency to products and the companies who make them. As a result, people are forming brand impressions from a far greater number of inputs than ever before.  A frustrating customer service experience becomes a viral video hit, a golf outing with clients sparks national outrage,  financing from an overseas bank results in a store boycott. So brand impressions are being formed less by the things marketers control and more by the corporate culture and its day-to-day operations. 

Branding used to cover a company like frosting on a cake. It was something you added at the end to make it look good. Now the branding is baked in. For branding experts to contribute, they have to make a positive impact on what goes into the cake, not on what comes out of the oven.

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9 April, 2010 · 11:33 am

The Wrong Analogy

With Mr. Woods back in the action, it reminds me how often I’ve heard marketers draw an analogy between what they do and the game of golf. They talk about having a clear target in mind. There’s a bag of tools that you use based on your read of the environment. There is the pressure to succeed in front of a crowd. And there by their side, is the trusted caddy – a metaphor for the agency offering counsel and practical assistance. While many of those elements seem accurate, it lacks the real character of today’s marketing environment.

If we were going to pick a sports analogy, it would be more like basketball. In basketball, you still have to have a target and line up your shot carefully, but there are no practice swings, and you have to take that shot NOW. There are five guys trying to stop you, and what you want in this situation isn’t the quiet counsel of a caddy, but someone who is going to get you the ball, set a pick or whatever else it takes to score. And that crowd? They are not impartial admirers of the game applauding fine play. They are a loud, biased, opinionated group who’s force can energize you to greater heights or intimidate you into mistakes.

One implication of the basketball analogy is that, with your team out on the floor and the clock running, you can’t be afraid to shoot. So many of the structures and processes of today’s marketing relationships are set up like it is a golf game – in that the objective is to minimize the number of missed shots. Our view is that is not how many shots you take that matter, but how many shots you make. In other words, it is better to go 3 for 5 than it is to go 2 for 2. Here is an interesting statistic from the last completed basketball season that bears that out. Of the four teams that made it to the NBA semi-finals last season, none of them was the in the top three in shooting percentage for the league.

This isn’t an argument for being inefficient. In fact, it’s just the opposite. If you spend all your resources lining up one or two shots, you’ll probably lose. The more efficient you are, the more shots you can afford to take, and the better chance you have of scoring.

 
 

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30 March, 2010 · 10:19 am

Ten Things Your Agency Prefers You Don’t Know: #9

There is no reason for an agency of record.

With the possible exception of a media agency, the agency of record status is of no benefit to marketers. A little historical context is useful to understand the situation. Back when ad agencies did everything for their clients, including buying their media space, the agency of record designation had a legal and business purpose. It meant that a newspaper, magazine, or TV station knew that an agency was authorized to make purchases on behalf of its client. It was in keeping with the technical definition of agent in commercial law: someone authorized to negotiate and enter contracts with a third-party on behalf of the principal. An agent provided clients the convenience of not having to deal directly with hundreds of media contracts associated with a large marketing campaign. For large marketers making frequent purchases of many types of media, this role still makes sense for their chosen media agency.

But after media agencies spun off into standalone entities, the other types of agencies worked to hold on to this title. There were now creative agencies of record, promotional agencies of record, or interactive agencies of record. These designation exist to this day, but solely for the benefit of the agencies. They are the basis for long-term contracts and associated retainers that make holding companies more attractive to their investors.  In short, they provide the assurance of a more reliable revenue stream, and create a barrier to entry to competing agencies. It is a sort of corporate engagement ring jammed onto the finger of a client to ward away other suitors.

But there’s no reason for marketers to wear that ring.  These agencies don’t play the business role of agent. As with production for example, pre-production estimate approvals and other mechanisms effectively make marketers a first-party to any contracts or external agreements. In fact, an agency of record can be a detriment to marketers because it hampers their ability to seek out ideas from whoever they like.  Forrester just predicted the demise of the interactive agency of record, but why stop there? It’s true that marketers may prefer the convenience of working on an ongoing basis with a single organization that understands their business and their way of working.  There may also be some efficiencies in having multiple projects run through a single provider.  Some marketers may find their agencies so valuable that they want to ensure they have a long-term relationship. But that should be a matter of choice and not a contractual obligation. Most marketers have to earn their customers loyalty every day.  So should their agencies.

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6 March, 2010 · 9:22 am

The Naming Game

RoseAt some point in every new product introduction, you have to come up with a name. Based on my experiences naming both products and companies, the naming process can be one of the biggest tail-chasing exercises a company can do. There is an unreasonable expectation that a 2-4 syllable combination can communicate on its face a list of a dozen qualities that various stakeholders think it is critical to convey. Brand identity firms create million-dollar projects out of this fallacy.

 The fallacy is quick to see if you spend a moment considering the brand names that are most familair to you.  Consider what the biggest brand names today would communicate if you knew nothing else about the company:

  • Amazon: Online store or adventure travel company
  • Microsoft: Software company or synthetic fabric manufacturer
  • Nike: Shoe company or defense contractor (and you’re supposed to pronounce the “e”?)

The truth is that a name is what you make it stand for.  The power of the biggest brand names, including those listed above, came from the work that went into them.  Names do not make the brand, brands make the name. The most you can hope for is that:

  1. You can own the name as a legal trademark as you expand and grow
  2. You will not be confused with another well-known brand, especially a competitor
  3. You don’t start by having to overcome an linguistic negative like being hard to pronounce or meaning something obscene in the languages of regions where you intend to do business
  4. You can tell some story about the name for those who are curious in order to help build some of your brand lore

The only other rule is that nobody really likes a name that they didn’t come
up with. So be prepared for second-guessing no matter what name you choose.

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