26 February, 2010 · 1:07 pm

Earning Interest

There is a simple way to sum up all the trends around social media, viral marketing, mobile apps and other developments in marketing — we are shifting from a world in which attention is bought to one in which attention must be earned.

I recall attending an AOL conference back in the day when AOL was bigger than the Web. One panelist whose name sadly escapes me, shared some amazingly prescient wisdom over a technical discussion of how to deal with the limits of dial-up internet access. He said “I think our biggest bandwidth problem is going to be people’s attention span.” That sums up the marketer’s challenge better than anything else I can think of.

The number one question all marketers should ask themselves before launching any program is “why would this be of interest to anyone in my target?” Interest can take many forms, so not everything has to work in the same way.  A great Superbowl ad and a great customer service experience can both engage people. Our basic human motivations provide multiple ways to attract our attention. Here are five broad categories that we look at to help design marketing programs that earn interest:

  • Passion – We all have passions that bring pleasure to our lives. It may be for fashion, the Green Bay Packers,  or Broadway musicals. Whether carnal or intellectual, we seek out avenues that allow us to feed and  indulge our passions.
  • Curiosity – We are naturally attracted to mysteries and riddles. There are few things in this world more seductive than an unopened package. Once something piques our curiosity, it’s like an itch we have to scratch.
  • Entertainment – As YouTube empirically proves every day, we seem to have a bottomless desire to be entertained. Whether it’s through humor, drama or pure spectacle, there are few better ways to endear yourself to someone than to entertain them.
  • Interaction – It is deep within our species to want to connect with others of our kind. Shared experiences give us more satisfaction than solitary endeavors. Bars and online forums both owe their existence to our inherent desire to interact with others.
  • Utility – We all feel like our lives should be easier. So we embrace tools that fulfill the promise of saving time, money, or effort. 

Successful marketers are those who can earn the interest of their target. Marketing plans sometimes still refer to “paid media” (advertising) and “earned media” (PR). It’s all earned media now.

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2 February, 2010 · 1:15 pm

Ten Things Your Agency Prefers You Don’t Know: #6

The agency network model is designed for investors, not clients.

Almost every agency pitch involves some bragging points about capabilities in which a list of sister companies demonstrates the agency’s ability to provide expertise in every marketing function known to civilization.  Inevitably, it is positioned as a way for clients to tap into whatever services they need while maintaining an integrated brand approach.

The Omnicom/WPP/Interpublic/Publicis model of accumulating multiple marketing agencies across different fields has little to do with integrated marketing and everything to do with market share. As different marketing fields developed over time, agencies saw revenue going out the door. First it was promotions, then it was direct marketing, then interactive, then social media,  and so on.  Publicly-held holding companies rightly decided that if you can’t  beat them, buy them.  Revenues must grow to grow stockholder value, so why not capture the revenue that is going elsewhere? Holding companies can capture a greater share of their clients’ total marketing spend if they have a broad range of companies to funnel work to.

But when a client works with a “sister company” within an agency network, there is no inherent financial or strategic efficiency.  For example, when a traditional agency brings in an interactive agency in their network, there is no staffing efficiency. The interactive agency doesn’t put less people on the account because they are working with another agency in the network.  Revenues are not shared between network companies, so there is no incentive for any agency to suggest that a client would get a better return by shifting money outside  of what that specific agency does.

As for strategic integration, try asking a few agencies within the same network to share their brand positioning models. Not only are the models rarely the same, even the vocabulary is different.  What one calls a Brand Position, another calls a Brand Proposition, and another calls a Brand Promise.  It’s unlikely a client will get a higher level of strategic integration among companies that don’t even share a common brand language. There is an advantage in working with companies that are used to working together. But you don’t have to be part of the same corporation to work together, and being in the same corporation doesn’t mean you have worked together. Any agency veteran will tell you they often meet their “integrated agency partners” for the first time a day or two before a pitch.

There are two potential advantages for a client working with a holding company network of agencies. There may be some comfort for a client in having what some call “one point of contact” and others call “one throat to choke.”  There also may be some financial benefit for very large marketers with big budgets in several channels.  In this case, a holding company may be willing to cut their overall margins across several agencies in order to capture more total revenue. But that is a by-product of clout, not of efficiency.

Until holding companies really work to integrate their companies financially and strategically, marketers would be well-served to find the fit that is best for them regardless of any shared corporate structure.

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6 January, 2010 · 4:24 pm

Ten Things Your Agency Prefers You Don’t Know: #5

money_question_markAgencies don’t know how much they are making on your business.

Because of the backward retainer system endemic to the industry, it is hard to say what the real margin is on any one business. The agency may be making a healthy margin on the day-to-day delivery team, but there are a lot of costs that are built into the general overhead of the agency. These costs include people and money spent up front in the new business process, the time of agency executive management in supporting the business relationship, and the ad hoc responses to sudden market developments or changes in direction. These costs tend to get mixed into the general administrative costs of the agency, and assigned to agency overhead. That makes overhead a murky number full of costs that may or may not be fairly allocated across clients. A client with a high margin who likes to manage by crisis may actually be less profitable than a low margin client with a more steady operational approach. So while generally agencies know how they are doing as a whole, they have only a fuzzy idea of how they are doing on any one particular client. As a result, marketers assume agencies are making too much, and agencies assume they are making too little.

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6 January, 2010 · 10:10 am

Ten Things Your Agency Prefers You Don’t Know: #7

Agencies don’t have a lot of bench strength.
That’s mostly because they can’t afford to. Clients have gotten their procurement departments more involved in agency compensation over the past decade. This procurement movement helped in several respects and hurt in others. It helped reduce some inefficiencies and pushed agencies to be more forthcoming in their fee proposals. It has failed to create a lot more value for the client. It has failed because both agencies and marketers focused on reducing the costs of the inputs rather than increasing the value of the output. In order to reduce costs, agencies have had to reduce the total compensation for their staff. The dynamic has been similar to the effect of salary caps in professional sports. Now there are only so many stars an agency can afford to keep on the roster. So you get what few stars you can afford, and fill in the rest of the team with role players, or unproven rookies who you hope will rise to the occasion. This has pushed agencies to manage their clients like the old vaudeville spinning plate routine. They try to get all the plates spinning, and only give their attention to the ones that are really starting to wobble. The A-team is dispatched to get the plate spinning again, and then as soon as that’s done, they rush to the next wobbler. So for any marketer wondering whether they have a first-rate team dedicated to their business, the answer is probably no. They can’t afford to.

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2 December, 2009 · 10:36 am

Ten Things Your Agency Prefers You Don’t Know: #1

An agency can’t give you a brand that you don’t already have.

There may have been a time when a brand was mostly defined by its marketing communications. If so, that time is long past. Advances in media savvy, information transparency, and brand choice have forced brands to live in the real world.

Underlying the social media push is the larger issue of transparency.  Trends in culture and technology have made it impossible for companies to have an artificial brand image that exists separately from everything else they do. A brand today is more defined by the quality and design of its products, how it’s sold, how well it interacts with its customers, and the type of people who manage it. Marketing messages are just one aspect of that larger brand behavior. How a brand acts has more long-term impact than what it says. And a brand cannot act consistently in a way that is inconsistent with the actual culture of the organization.

The true brand is defined by all the real stuff behind it. When people talk about great brands, the usual suspects include companies like Nike, Apple, or Southwest Airlines. There have been some great advertising campaigns associated with each of them. But the best of them only crystallized what was already inherent in their brands. Do you think that Phil Knight, Steve Jobs or Herb Kelleher needed their agency to define what they were about?

The best agencies are like skilled jewelers who design a setting to show off a stone to its best effect. They can’t create the stone, but they can bring out the best features. A company that comes to an agency and expects them to create who they are lacks a basic understanding of where a brand comes from.  Great communications can bring that true brand to life in ways that clarify or enhance it, but unless you are willing to turn over the management of your company to the agency, they can’t create something that isn’t there already.

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11 November, 2009 · 1:54 pm

Social Media is Hard Work

woman working outOne of the signs that you’re with people who don’t entirely understand the effective use of social media is when the conversation turns into a lengthy discussion about what tools to use. Should we ditch our blog and go entirely to Twitter? What’s the best video site? What’s a better monitoring tool Radian6 or Spiral16?

Making the tools the primary topic of discussion reflects the habits of the broadcast media world.   A 1993 media plan started by weighing the advantages of TV vs. print vs. radio vs. out-of-home.  After that was decided, the messages and programs were then crafted for the channels.  

Social media is more about fitting the tool to the task than the task to the tool. To fulfill its promise, social media requires companies to engage with customers and prospects on a non-trivial level. It requires reaching out to people for their support and ideas. It requires responding to them when they respond to you.  It requires keeping up on conversations that are happening in multiple places.  It is not that the tools are unimportant, it’s just that the success of social media efforts depends less on the tools and more on the effort behind them.  It’s a bit like working out.  Assessing whether spinning, swimming, or Tae Bo is the better method for getting in shape is less important than doing any one of them vigorously and consistently.

In the broadcast world, if you forced me to choose between having the best message placement (e.g. the best programs, the best locations, etc.) or the best messengers, I would probably pick the placement. In the social media world, if you forced me to choose between the best tools and best messengers, I would definitely pick the messengers.

The most important step in planning a social media program is understanding who you want to engage and why they would benefit from engaging with you. When it comes time to pick the tools, there are numerous sources to guide you (with the practical, experienced guidance of Jason Falls’ team at Social Media Explorer being high among them). But your ultimate success will depend more on the commitment you put into it than the specific tool you use.

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23 October, 2009 · 12:50 pm

Ten Things Your Agency Prefers You Don’t Know: #2

Square Peg in a Round Hole_0565The agency structure dictates the ideas you get.

Every agency makes the claim that they are media-neutral, fully integrated, 360, or some other catchphrase implying ideas that are bigger than any one channel. The intent is certainly there, but the very structure of the agency prevents it from happening.  Agencies have accumulated a full-time staff of people who need to be allocated if that agency is to survive as a business.  This is true for almost any type of agency, be it traditional, digital, or social. If you have a dozen copywriters on staff, you better be generating ideas that require a lot of copywriting. Similarly, it you have 3 Flash programmers on staff, you better be doing some Flash development.  So imagine a situation in which a traditional agency is on retainer with a client.  What is the likelihood that the agency will come back and recommend moving most of the budget into shopper marketing? Sure, the agency has shopper marketing in their holding company network, but moving the budget to them means the agency loses the bulk of their retainer. Will the agency reward the Account Director for slashing their retainer and putting agency staff in jeopardy? Of course not.  That’s why you’ll get the ideas that match the resources of the agency.

Related to this structural issue is the myth that agency creatives are focused on ideas that transcend channels. It reminds me of the “IT expert” that only shows up in movies. This fictional guy is equally adept at every computer application ever written, knows both hardware and software, has a PhD level understanding of encryption algorithms, and immediate access to every database on the planet.  Meanwhile, in real life, if you need help with a Mac version of Office, the PC guy in tech support can’t help you. Similarly, a creative brought up to think in terms of websites is not likely to start thinking about a marketing problem in terms of retail events. Another one highly skilled in the art of scripted :30 stories isn’t going to be comfortable crafting a social media program.

It is not a question of smarts, talent, or even intent. Architect Louis Sullivan expressed the adage that “form follows function.” In the case of agencies, function follows form.

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1 October, 2009 · 5:02 pm

The New Brand Building Materials

toolsInterbrand’s annual survey of the top brands in the world always creates some interesting discussion around how best to define brands and their value.  By a proprietary (i.e., fuzzy) methodology, they attempt to put a financial value on the brand. Many of the most valuable brands near the top of the list are the ones you’ve come to expect: Coca-Cola, Microsoft, McDonald’s, Disney, etc.

But there is a different cut on the rankings that reveals a profound statement on the current state of brand building. There are only four brands ranked in the top half of the list in 2009 that were not on the list at all five years ago.  Based on this rise from nowhere to top 50 in the world, you might characterize these as the companies that did the most brand building  in the last five years. These four brands are:

  • Google (#7)
  • H&M (#21)
  • UPS (#31)
  • Zara (#50)

 As you look at these all-star performers, I’d ask marketers to consider one question: what do you remember about their advertising campaigns over the last five years?

You may remember more than a few things for UPS, and it is fair to say they have been active and heavy advertisers in the past few years.  But it is quite a different story for the others. Google sells ads instead of buying them. For Spain-based retailer Zara, it is a bit of a trick question because they pride themselves on their “zero advertising” business plan. They built their business on “fast fashion” by which they can design, manufacture, and ship to a new product to shelf in less than three weeks. H&M is also a fast fashion brand, that does some promotional product advertising, but attracts most of its ardent followers from a never-ending cascade of new fashions that promises a whole new store every month.

We hear lots of stories of smaller brands that have used innovative marketing approaches to build a successful niche or score a quick hit. These companies tell an even more powerful story of becoming among the most valuable brands in the world while using few of the techniques we’ve come to associate with megabrands.

So as some ponder the question about what kind of advertising they should be doing — broadcast, online, mobile? — they might also ponder the question if they should do any advertising at all.  To be realistic, advertising is and always will be a powerful tool. But it is no clearly no longer the default tool for becoming a major consumer brand.

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18 September, 2009 · 1:58 pm

The Purchase Funnel Fallacy

FunnelThe Purchase Funnel is more than a metaphor. Many companies actually use it as a tool to shape their sales and marketing programs. It is simple, intuitive, and wrong.  At least it is wrong for most products in developed economies of the Western world.

It is like physics , in that Newtonian physics is accurate for objects much larger than atoms and much slower than light. But it falls apart for describing subatomic particles moving at great speed. Similarly, the Purchase Funnel is accurate for markets with a limited set of products and information sources. But it falls apart  in a world of overwhelming product choice and a constant bombardment of brand messaging.

Think about the last time you decided to try something new. Did you survey all the product choices of which you were aware? Did you narrow that list to a subset of products you would consider? Did you sample the products within that set, and then determine which one to adopt? You may have done something close to that for a new house or a car, but most people would not describe that process for how they purchased a new shampoo, soft drink, or candy bar.

If your own behavior doesn’t convince you, take a look at Y&R’s Brand Asset Valuator. Y&R has been a marketing laggard for the last decade, but their brand tool is the most comprehensive brand database in the world in terms of both the number of brands it tracks, how many countries it tracks them in,  and how long it has been tracking them (full disclosure: I used to work for Y&R). While they are hesitant to say it, it provides empirical proof that the sales funnel is flawed. Time and time again, it tracks the rise and fall of brands.  It shows a consistent pattern.  They track four main characteristics of a brand:

  1. Knowledge – How well you feel you know the brand
  2. Relevance – How relevant you think the brand is to you
  3. Esteem – How well you think of the brand
  4. Differentiation – How unique you think the brand is

If the Purchase Funnel were an accurate model, you would expect to see a brand’s profile to develop in the order they are listed above. First, you’d get to know something about the brand, then you would determine its relevance to you, and so on. But it turns out that is not the case. In almost every case, the first element that people register about the brand is Differentiation. That may seem counter-intuitive at first, but not after you consider our environment. We are overwhelmed by brand choices and messages. We don’t seek them out, we avoid them. We have to filter things out in order to stay sane.  So what gets through our filters? Something that is different, unique. That’s what we notice first. Only after we notice something different do we evaluate whether it is for us or not.

Forrester recently took on the Purchase Funnel as well, but they ascribed its demise to the internet (good discussion of this and McKinsey’s alternative model from Robin Grant at We Are Social) . That is true to the extent that social media helps us manage our filtering process even more efficiently. But the underlying cause is something deeper. In our world, interest comes before awareness.

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4 September, 2009 · 12:31 pm

Impressing vs. Connecting

Cat & DogAs the world flocks to social media, it is important to remember that not every tool is right for every situation. On a tactical basis, Twitter is an excellent example of this. Just as nearly every marketer who wanted to look plugged-in 18 months ago was starting a blog, the same crew is now crushing on Twitter. Lost in this rush to appear like a modern marketer is even a cursory examination of what the tool is designed to do. As its heart, Twitter is an announcement vehicle disquised as a conversational vehicle.  It is ideal for passing along news, gossip, and funny quips. It is a mediocre vehicle for dialogue. Yet, I have heard many a marketer justify their Twitter efforts as a way to have a deeper conversation with their customers.

This begs the larger issue of using social media strategically, as part of a plan with real objectives other than to use the latest thing. To make the point, I’ll go so far as to say there are some companies for whom social media in general is a bad idea. Social media implies an effort to open up your brand to your consumer. It is about providing more ways to connect with people. But there are some brands for which connecting more intimately with their consumer would work against their basic strength.  That is because the success of some brands depends more on impressing people than on connecting with them.

High-end luxury and fashion brands in particular succeed to a large degree on their aloofness. The democracy of social media promises a degree of access that undercuts the sense of elitism that is central to these brands. Many brands succeed by instilling a sense that they are our friends or our supporters. But some succeed by instilling a sense that they are our superiors. To use an analogy from the pet world, not every brand should aspire to be a golden retriever — fun, bouncy, always happy to see you.  Some brands succeed better as the Russian Shorthair cat, keeping an elegant distance that makes each encounter a hard-earned pleasure.

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