Marketing’s Boll Weevil?

April 29, 2010 By 1 Comment

Those interested in US history will remember the devastating impact the Boll Weevil had on the cotton-based Southern-Economy in the early 20th century. In the thirty years from the Weevil’s appearance in the US to the height of its spread, 600,000 square miles of territory were infested, wreaking havoc on the monoculture in the Agrarian South and prompting one of the largest shifts of population in the history of this country.

The city of Enterprise, Alabama, however, erected a Monument to this pest in 1919 since it, in their perception, heralded an era of Economic Prosperity. The Boll Weevil infestation is thought to be the precipitating force behind the South’s creation of a more complex, diverse economy.

Shocks to the system, while painful to endure, can engender positive change.

So what is Marketing’s Boll Weevil? The Internet? Measurement? Recession?

What are your thoughts?

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Marketing’s Acupressure Problem

April 28, 2010 By 5 Comments

Peanut-Buttered Marketing has little hope for success. Marketing that stems from the “meridian” philosophy of early Chinese medicine is the only real way to go. In Acupuncture and Acupressure, certain nodal points in the body are located as “meridians” that when stimulated have far-reaching effects throughout the body. Marketers need to know the acupressure points in their ecosystem if they hope to ever show the results they claim they can. Spreading marketing evenly, while understandable, is by and large a failing proposition.

Consider the following problem: Let’s say you are CMO of a company that wants to get Developers to write applications for your new Mobile operating system. You want to incite action and participation from Developers by getting them to change their perceptions of your company and your competitors. Where would you spend the bulk of your marketing efforts? Well, clearly, you’d spend resources in Silicon Valley, the well-known “headwaters” of perception in the world of technology and home to Apple Corporation, maker of the iPhone and incumbent perception-leader in its space. It would be foolish to spend equal amounts in the Valley and in, say, Los Angeles though the latter is a bigger market.

Consider, further, the following: Statistics show that 90% of goods are purchased offline i.e. in brick and mortar stores. Studies have shown, further, that the bulk of purchase decisions are made “in store.” Yet less than 10% of marketing dollars are spent on in-store marketing. No wonder, then, that retailers are struggling for ways to improve their businesses and have not been considered particularly innovative in this matter. Marketing spread-evenly and not in the acupressure zone, while possibly beneficial, is neither sensible nor optimal.

These examples are hyperbolic but illustrative of a tendency in business to take the easy way out and to elevate appearances over outcomes. Acupressure marketing requires aggressive bet-making and risk-taking that is anathema to the grinding corporate culture so prevalent today because a focused investment, if ultimately incorrect, is glaringly so. The peanut butter approach on the surface appears more judicious and comprehensive. But while it is safer, it is also less efficacious.

These Acupressure points come in a variety of forms. They can be geographical, demographic, audience-based, or medium-based. They can be based on style or creative expression. They can be related to process or product. Howsoever you choose them, the key is to make the choice to identify them and to act in accordance with the plan you generate.

In all areas of endeavor, epoch-making changes result by incurring risk in the hopes of innovation or even revolution.

Marketing needs to be more risky and marketing bets have to be bigger and bolder.

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VSS publishes historical database on media industry growth

April 28, 2010 By 1 Comment

Private equity firm Veronis Suhler Stevenson on Tuesday released “Communications Industry Historical Database 1975-2009,” a retrospective study of the media and communications industry. The study shows that total U.S. communications spending increased at a compound annual growth rate of 8.1% during that period.
The report tracks the changes in 21 major segments of the media and communications sector. Subscription television is the largest segment, totaling $155 billion in 2009. The database can be ordered at www.vss.com/historical09

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India 3.0

April 26, 2010 By 1 Comment


India 3.0 is here.

India 1.0 was all about cost and the 24 hour workday. India 2.0 was about large project efficiencies. India 3.0 is about global talent management.

In speaking with Srivats Srinivasan, CEO of Nayamode, a marketing services company based in Redmond, WA, I crystallized my thoughts about the changing order of what I call “Advantage Priorities.” [Full disclosure: I am an Advisor to the company.]

The term Advantage Priorities refers to the method of enumeration of the relative advantages that different facets of your Business Model confer to your company. India 1.0 was about the advantage of cost savings and of a perpetually productive workforce. India 2.0 was about the advantages that large, skilled, non-payroll virtual teams can add to efficiencies. India 3.0 is about the ability companies have to leverage a robust and dynamic global talent pool to provide the right talent for the right project, while simultaneously upgrading projects and skill-sets.

It’s not that cost advantage and large project efficiencies are no longer present. It’s just that they are less relevant than the new Advantage Priority One.

The key to sustaining India 3.0 no longer lies in delivery ability and economics. It lies, instead, in Marketing, in the ways in which global companies talk about their global talent and how this talent is brought to bear in the service of customers. If one talks about cost-advantage as a key differentiator, then the obvious questions of talent, quality, and endurance will emerge. If one talks about virtual team extension as a key differentiator, then the obvious questions of culture, consistency, and sustainability will emerge.

Global companies that have a presence in India need to, instead, talk about talent optimization, about how they can get the best of India as well as the best of other countries in which they do business. The talent diversity and intensity that an Indian presence has to offer is the true advantage to India 3.0.

When the discussion changes to value from cost and when the world recognizes that incredible innovativeness, intelligence, and execution capabilities exist in India (and elsewhere, outside the rich world) then we will have really understood the power of India 3.0.

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The Enduring CPM and its Discontents

April 22, 2010 By 5 Comments

The Internet is a breeding ground for unlimited punditry, and the pundits are almost always wrong – as in the area of Internet advertising in which self-proclaimed seers declare the demise of the CPM, the fundamental unit of measurement in Internet Advertising.

The world has changed, they say, and advertisers/marketers want action and engagement, not just impressions. In this “theory,” the CPM is dead, but the CPC, CPL, and CPA are alive and kicking.

For anyone, however, who has lived a day in the life, all of these fancy contrivances are essentially equivalent. Any CPX is just CPM with a different risk calculus and a veneer of legitimacy.

Yes, Marketers want action and engagement but ultimately the method of calculation that determines the cost of the CPA or Cost-Per-Engagement (CPE) is based on the enduring CPM.
Since this alphabet soup of acronyms is confusing, here is a brief primer on advertising math:
CPM= Cost per Mille or Cost per Thousand Impressions
CPC=Cost per Click
CPA= Cost per Action
CPL=Cost per Lead
CPE= Cost per Engagement

The Display Ad is the simplest form of Internet Advertising. Here, Publishers charge the Advertiser a certain amount of money per thousand impressions, i.e. they charge the Advertisers a certain CPM. It’s in the Publishers’ interest to have a high CPM so they generate more revenue. Theoretically, it’s in the Advertisers’ interest to have a low CPM but in reality if they want to advertise to the “right” audience who is “qualified,” the CPM will be accordingly higher and rightly so since every impression has more chance of being concluded in a “sale” or some other desired action.

The controversy around CPM is not about a disagreement on the mathematics but about the perceived desirability (or lack thereof) of an impression versus a “real action” that shows the consumer is engaged. Enter the CPXs (as above) that each measure a tangible outcome. In the case of CPC is the clicks being measured in the cast of CPA it’s a predefined action (like downloading a white paper, creating a profile, etc) being measured.

This controversy has correctly lead publishers to attempt to create more engaged audiences, ones that will take further action when being exposed to an impression. Thus, they can quote Advertisers not just a CPM but a CPX of some sort, since they are confident that their audiences will either click (as in CPC) or take some action (as in CPA.)

But the fact remains that they still have to quote a number, which they have to calculate. And in every case I have seen, they calculate the CPX based on the estimated percentage of people who will go from Impression to Click to Action or Impression to Action. Thus, ultimately, all CPX is really based on CPM.

CPX = F(CPM) so to declare the CPM dead is disingenuous.

Now, back to the notion that Publishers have interest in keeping the CPM high:
What needs to be understood, by far the most important thing, is that publishers are doing themselves a huge disservice as regards the “C” in the CPX construct. The strategy of most publishers hurts both their advertisers and themselves. The problem is one of simple statistics, the most often misunderstood discipline in our innumerate society.

Simply put, publishers (in most cases, there are exceptions) continue to want to “grow” their uniques and their databases. For a publisher with a small audience footprint, this is fine. The moment, however, one passes a certain threshold, the audiences and unique individuals the publisher bandies about and “sells” to the advertiser start to approximate– in all relevant ways– the entire population (either of a particularly defined audience or of the population in general.) When this happens, the value of a particular publisher’s audience ceases to be relevant as a differentiator.

A telling conversation I had with network exec recently brought the point to bear. He claimed that his network had 100M+ uniques. He claimed simultaneously that “his” audience was far more qualified than that of his competitors. How a swath of 100M people (and that too mostly in the US) can be any different than the population in general in terms of buying patterns, propensity to act on an offer, or any other measure of “value” defies math. It’s not possible. Well, okay, it’s… possible. If for instance all of the 100M are men (how would they really know?) then one can argue that the value-making patterns of this group might be slightly different than that of the general population. But, the population’s size diminishes the differential value of their [male] audience vis-à-vis the male audience of a competitor. If Facebook claims its 400M+ membership is more qualified or more densely valuable than the population at large, you should smell a fish.

Statistics don’t lie. Only people do.

So while the CPM is not dead, most publishers are slowly killing the C. In attempting to relentlessly expand their audiences, they hurt their own businesses and simultaneously provide watered-down coverage for their advertisers.

Thus, the monochromatic desire to grow on the elementary dimension of “audience size” or “uniques” is perilous-it leads to a process of equalization which makes all publishers’ (or networks’) audiences essentially equivalent.

What really matters is the degree to which a publisher can captivate its audience and therefore capture an increasingly larger portion of the audiences’ “economic flow.” This is the hard part and, frankly, the part most interesting to a good marketer or advertiser. It’s about depth not breadth, about quality not size.

The greatly exaggerated reports of the CPM’s demise can be dismissed; the diagnosis of the C’s degeneration, however, should not be. The cancer, if left unchecked, can spread quickly.

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Northwest MRA – Spring Training Event

April 18, 2010 By Leave a Comment

Late notice – but if you are in Market Research (and you are in the Northwest/California) – you might want to join the Northwest MRA in their Spring Educational Event at Napa Valley.

http://www.northwestmra.org/napa/
Cost : $125

Chris Robson from Parametric Marketing will be speaking in the event – he has a penchant for provocative thinking – and I suspect will be something along the lines of what Kathryn Korostoff talked about in her piece in the MRA Blog – Why DIY Research is Good for Everyone. I had the good fortune of meeting Chris Robson and Scott Liang from Parametric Marketing and I know they have some very provocative things to say about the Market Research business.

Side note : Why do professional market researchers call it “DIY Research” – I’d rather prefer “Self-Service Research”

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Pater Semper Incertus Est: Marketing’s Failed Paternity Test

April 5, 2010 By Leave a Comment

Marketing outcomes never know who their fathers are.  Despite efforts to quantify, to track, to measure, to assign parent-child relationships, to “go to the source,” and to “create real metrics” marketers are confounded by a basic fact:  in a complex world, the relationship between a marketing input and a marketing outcome is uncertain at best.  This does not mean we should abandon some attempts at measurement; what it means is we should give up the religious certitude with which we approach our profession and, more importantly, should immediately abandon the promise-making we indulge in (to our CEOs) as regards “scientific” marketing.  It does not mean that we can’t be analytical when it comes to marketing; what it does mean is that attempting to adduce causality is a fool’s errand, more for mountebanks than real marketers.

We have to struggle to win our profession back!

Marketing’s Kulturkampf

In Albert Camus’ The Rebel, he writes “through a curious transposition peculiar to our times, it is innocence that is called upon to justify itself.”  While Camus was referring to the ravages of colonialism, the statement, if taken out of its original context, can be seem to refer to the role of the Chief Marketing Officer in today’s corporate world.

Over the 10 years, the role of the CMO has changed radically- in fact it many cases the role has first emerged and since been reinvented time and again DURING this short period.  In the canonical interpretation which now seems naïve, CMOs (or heads of Marketing/Brand/etc- title culture changes ever decade or so)presided over the creation of the fantastic:   large brand campaigns meant to sway large swaths of people, dynamic parleys with Advertising Agencies discussing the ways in which new products  could be launched or old ones reinvented; in fact the CEO was often himself the de facto Chief Marketing Officer- thus was the perceived importance of Marketing in an earlier era.

During the last decade, there have been many palpable shifts in the ethos of the marketplace that have created attendant shifts in the role(s) of marketers and notably the role of the CMO.  While these shifts are many, a few are particularly germane:

  • The meteoric rise of the Internet and the “theoretical” measurability of everything
  • The rise of an “individual brand” culture as distinct from the post-war notion of the “averaged” consumer
  • The dramatic increase in “mindshare” that technology-enabled solutions and “web-centric” companies command in the marketplace (and in stock market valuations)
  • The rise of the “short-view:” a self-imposed myopia and adherence to truncated time horizons in which “long-term” might mean one-year not one decade
  • The rise of a largely self-congratulatory set of “pundits” who claim that the above 4 things represent a fundamental break with the past

Each of these militate strongly against the normative role of the earlier era described above and have created the following outcomes for CMOs

  • Measurability is King- not only because of difficult economic times but because the theoretical idea has reared itself and the idea that the digital world offers the ability “quickly rev” makes imminent measurement all too important.
  • The onus is on marketers to use a burgeoning plenitude of channels to “market through” to be able to “manage niches” as evidenced by the individual brand culture that has taken over.  Therefore the “grand narrative” that worked before no longer wins plaudits in marketing circles.  This requires an almost religious indoctrination in the twitter culture.
  • Given the rise of technology, CMO’s need to understand platforms for measurement- not only to understand effectiveness but, and here is the main cultural rub, to justify the existence of marketing versus sales, engineering, operations, or delivery.
  • CMOs are most threatened with the hobbling criticism of being “old world” or from the “Mad Men” age.  Thus they censor themselves and play along with the digerati at times to excess.
  • The short-term view that corporate America has taken makes for the importance of “rocket scientists” who measure everything and can quote detailed statistics (sometimes exotic) on everything.  What makes this, while interesting, somewhat suspect is that data while good has to be acted on and first of all, not all data is actionable and second, the actions needed are often outside the bailiwick of marketing.

The job of the CMO has changed radically.  When jobs become justifications, they lose their grandeur.  When difficult times emerge, myopic organizations prosecute the innocent.  When the CEO asks us to provide something we simply cannot provide, we are presented with Hobson’s Choice- Overplay our hands or lose our jobs.  Neither creates great outcomes.

The struggle is a fundamental one.  The very essence of Marketing is at stake.  Will we let our Art be sacrificed at the altar of a false-science?

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The Wolf Option: Whither the Agency?

April 5, 2010 By Leave a Comment

Every company needs to have an Agency that plays The Wolf to its Vincent and Jules, recalling Harvey Keitel’s character in Tarantino’s film Pulp Fiction who can “be there in 10” when the shortest known route takes 30 minutes.  The contours of this relationship are perforce complex and deep and the relationship itself is good for all three parties- the company, the agency, and most importantly, the company’s customers.  Alas, I am unaware of many such relationships and, rarer still, of many agencies seeking that status and committing to a business model that would support it.

In Philosophy the idea of “Agency “connotes the ability an agent has to act in the world.  In Business, at least in the past, entities or people were conferred with the mantle of “Agency” if they were authorized to act on behalf of or in lieu of their customers.

In today’s world of Advertising and Marketing, neither of these concepts rings particularly familiar because agencies are seldom given the freedom to act and certainly very rarely act in lieu of their customers.

The problem is not simply one of trust.  It’s about the collective inability of companies and agencies to develop the right sort of relationships and organizational frameworks to develop “deep partnerships. “  It’s also about the cost-plus business model that almost all agencies follow, whether they admit it or not.  And about the disregard that most companies have for their agencies, whatever they might profess in Press Releases.

The Agency business is a difficult one.  Much of the business is based on two factors, driven by Economics:

  1. The Employee Pyramid:  Well off executive at the pinnacle and a broad-based on poorly paid young people who are in it for the alleged sex appeal.  Hard work and long hours all the while “enjoying” exempt status does not a large W-2 make.
  2. Production:  the creation of artifacts and not the creation of strategic metaphors is where the money is.  Ideas are great (and are at times paid for) but execution pays the bills.  That said, all agencies purport to be “strategic partners.”

This witch’s brew is made worse by cost-obsessed customers who force bad behavior from their agencies through lack of commitment, lack of cross-training, and a myopic view of the importance of cost.  Is this really the recipe for business dynamism? I think not.

So what do we do?  Throw up our hands in despair, cursing the futility of it all?  Well, that is one option- the one that is being followed by an industry that looks only unto to itself for answers.  The head-in-the-sand option is actually not a terrible one if an Agency has invested in and maintains operational rigor.  Squeaking out 12% on a decent revenue base is not all that bad.  Further, since teems of young people are graduating to few jobs, you have your pick of talent who you can work hard and pay little.  You can invest little in training (since these teems will be moving on soon enough).  You can give people little cubicles and make up for it by offering sodas and an occasional beer party.  Stick in an Xbox and a Wii in the game-room and these youngsters might actually stay at work 12 hours.  Pure capitalism at play:   neither easy nor hard.

Second is the “being better than the others” option.  Add a set of relationships, technical and creative skills, and semi-intelligent management/organizational principles to Option one and you get here.  Mind you, this option does not imply great value-addition or particular dynamism.  What it implies is operational smarts with a bit of élan sprinkled on top.

The third mode is the “Channel” option.    In this model, you sell your Agency as always being “ahead of the pack” from the perspective not of business value but of with channel strategy i.e. you “build for YouTube” or “build iPhone Apps” etc.  If your people are creative and work fast, you can make decent money with this option since there will always be companies that want to participate in the fad du jour.  You still have to apply the rigor of Option 1 but you stand to make 20% in this approach.  The main problem:  when you don’t predict the next big channel and find yourself obsolete in a year or invest too strongly in one channel that does not “port” to another.

These three options are all viable, howsoever uninspired.  The fourth mode, “the Wolf Option” will define the future of great agencies.  This option is about deep partnership between agencies and their customers and a reciprocity based on long-term value addition to the ultimate customer.  It subsumes and supersedes the other options.   In this model, agencies and their customers agree to a long-term symbiosis in which they exchange money, tutelage, and strategic plans.  In some cases, there is a planned exchange of personnel.  This arrangement cannot be subject to the vicissitudes of fiscal year-by-year planning.

This option is not a cheap one.  It doesn’t exist in the cosmology of bottom-line-obsessed managers.  In the Wolf Option, agencies hire incredible people with a long-view and long-term commitment to a customer’s future.  To land these folks, agencies have to pay well and offer a great deal of knowledge transfer.  These high-end professionals then form the “inner ring” of tacit knowledge and thereby act as potential stewards of a customer’s future in the mode of deep partnership.  The customer, reciprocally, is willing to pay the agency for greatness and, further, is committed to treating the agency as a true partner not as a vendor—for the long-term.

In model, strategy, planning and production are all of a piece.  Silos don’t exist.   Campaign-by-campaign planning is replaced by long-term business planning.  Attrition and loss of tribal knowledge is reduced to a minimum.  Once the Sword of Damocles no longer hangs over the head of the agency, real creativity will emerge.  And marketing will no longer oscillate from the bad to the mediocre.

The Wolf Option is about Agencies transcending their off-late pilloried existence and Marketing regaining its stature.  This option, most importantly, creates great Marketing and happy customers.

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ResearchAccess Launch

April 3, 2010 By Leave a Comment

Market Research has four core components, each of which is, at once, valuable and fraught with dangers; they are:

  • Frameworks
  • Data
  • Analysis
  • Action

Many incorrectly consider these as independent or at least loosely associated.  In fact, each depends fundamentally on the soundness of the other.  As such, as with any complex area or system, each has component has to align carefully in order to produce something of value; thus, most Market Research is not particularly valuable unless one considers providing fodder for marketing homilies as the goal of the research.

We need a new paradigm.

A core issue here is one of timing.  By the time frameworks are developed, data collected, and analysis provided, the very essence of the problem might have changed.  By the time we conclude that mobile phone sales are driven by the enterprise, the consumer might have taken over as the core influencer.  By the time that we conclude that men aged 18 to 34 are our core audience, we find, in fact, that the differences between an eighteen year old and a thirty year old are more pronounced than ever.  Once we conclude that a competitor is a threat, we might already have ceded enough market share to usher in our demise.

We need a new temporal paradigm.

A second core issue is one of property.  To the extent that frameworks and data are considered “trade-secrets”  that provide “comparative advantage” to research firms, the cross-pollination necessary for all great intellectual endeavors is absent.  Further, since these frameworks themselves are often anointed as valuable simply by dint of the firm’s brand, the error of recursion occurs.  Last, since indeed some data sets are themselves proprietary, no one firm is accessing all “available” data; hence, the analysis and actions stemming from these imperfections are themselves imperfect.

We need a new ownership paradigm.

What we need is freely available, real-time frameworks and data.  These will beget freely available analysis and action plans.

Research Access is dedicated to this goal.

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