This Week in Strategy: When you said life would get back to normal after June....Julyed!
Hi Strat Pack,
Another week in the books. I remember a time when summer was supposed to be a slow period for us advertising folks. Oh to be young again.....
Speaking of young again, I want to talk about something that is both a passion of mine and hopefully interesting to you as well: The Moon, Which Seems Pretty Old, Is Actually Much Younger Than We Thought. According to new research, the moon is 85 million years younger than scientists once thought. Computer simulations revealed that the moon formed roughly 4.425 billion years ago. Scientists had previously estimated the moon formed some 4.51 billion years ago when a Mars-sized object smashed into Earth. At the time, the guts of our newly formed planet were beginning to take shape. The impact also kickstarted the formation of Earth's core. Heavier elements like nickel and iron sank toward the planet's center, while a layer of silicate rock formed the mantle layer around it. "This is the first time that the age of the moon can be directly linked to an event that occurred at the very end of the Earth's formation, namely the formation of the core," planetary scientist Thorsten Kleine, of the University of Münster in Germany, said in the statement. And I think that is very cool.
Among other things that are 4.425 billion years old, I came across this really cool Atlas Obscrua article about The Duo Who Documented the Birth of NYC’s Subway For brothers Pierre and Granville Pullis, photographing the sprawling system was intrepid, precise work—not unlike the construction itself. The images are technically proficient, but also artistic and tenderly humane. Many of the photographs were bound into books—some in the museum’s collection still have holes punched through one end—as reference documents, or as evidence that could be called forth in the event of a lawsuit (it was, after all, an era when construction was staggeringly dangerous and injuries were commonplace). They were also impeccably timed snapshots of urban life and work. Pierre and Granville captured signs and businesses and moments of striking symmetry, such as people frozen in mid-stride as they wandered between buildings. “What makes these full of personality [in a way] that other photographs of this type usually [aren’t] is that you can tell both of [the photographers] waited for just the right moment to click the shutter.” Really cool, highly recommend you click through
Alright stop messing around trying to figure out how the NYC Subway is going to build that extension to the moon (ha! never!) Let's jump right in.
The one thing to read this week
1) In a virtual marketplace, only the strongest brands will survive [MarketingWeek]
A long read but one that is very much worth it IMO. Going online not only cuts costs, but also lowers competitive barriers and removes physical distance from the purchase decision, playing to the strengths of the biggest, strongest brands.
[Mark Ritson's] wife has a private yoga instructor. A tall, very calm dude called Gary who turns up once a week in spandex and puts her through the positions, while I work downstairs trying – mightily – to avoid invasive thoughts about them going at it like beavers in the master bedroom.
In truth, that first paragraph tells you more about me than Gary. He is far too evolved and 21st-century to have sex with any of his clients. Despite the spandex, he is the real deal. Gary spends his week driving around my local region working personally with dozens of clients in one- and two-hour personal sessions. He has become a welcome addition to our weekly rituals. Proper yoga helped my wife through childbirth and has become an essential part of her general approach to life. She gets some peace and clarity. I get a happy other half. Everybody wins.
So, imagine the chaos in my household last week when Gary announced he was going to be ‘Virtual Gary’ from now on. He kept his practice going during the Covid-19 lockdown by replacing physical sessions with Zoom consultations. It took a week or two for Mrs R to get the laptop working properly and adjust to stretching through a computer screen. But, after a few bumps, it has worked just fine and she has had almost three months of online yoga.
Fortunately, my little corner of the world – thanks to God and a rural community that has been socially isolated since 1850 – has enjoyed a completely Covid-free existence for two months now. Almost all the restrictions have been lifted and Gary can start his weekly visits again. But Gary has developed a taste for the online life. He emailed all his clients last week to announce that he will continue with the Zoom sessions and no longer offer physical visits. His hourly pricing will stay the same.
You can see his point. The side of his van might say “Soothing Yoga” but most of his time is spent driving around some very unsoothing rural roads avoiding tractors. For every downward dog there must be a dozen three-point turns and no-one pays him for travel time. Now that his clients have adjusted to both the virtual sessions and the idea of paying the same price for them, Gary’s potential revenues and gross margins might grow exponentially.
Except Mrs R is not so sure. As much as she likes Gary, the idea of paying the same amount of money for Virtual Gary does not quite stack up. It’s not that she is against online yoga; her Zoom sessions have convinced her of the potential. It’s that Gary is not the only one opening his mind to virtual possibilities.
We live in the middle of nowhere and finding anyone with yoga capabilities within reach was always, ahem, a stretch. In the old, pre-Covid world of yoga my wife was limited to Gary or an elderly woman who creaked a lot and smelled of cheese. But with the opening of this new virtual yoga window, she now has a dizzying array of practitioners keen to work with her from all corners of the globe.
She has assembled what appears to be a technicolor army of gurus and yogini ready to get to work with her. They might look like the global fan club for the Village People, but they know how to operate. All of them are on Zoom. All of them have simple payment plans. And all of them are looking for clients.
My wife’s options have grown just as exponentially as Gary’s. He cannot see this at the moment. His clients all pay an annual fee for their weekly sessions so – for now – they are all locked in for a few more months. The only calculation going on in Gary’s head is one based on a naive incremental assumption that he gets to keep his current customer base while expanding it with his new-found capacity. Triple the client potential at double the profitability and – the best bit – he never needs to leave the house again! Nirvana.
Virtual Gary might be set for a big pay day. He can serve more clients, in more places, more of the time. This is the big upside of going totally virtual, embracing the death of distance and turning the marketing mix knob marked ‘P’ for place all the way up to 11. But, crucially, he is missing the downside that also comes with the death of distance: the lowering of barriers to entry and a drastic and permanent increase in competition.
Lowered barriers
For me, Michael E Porter’s famed ‘Five Forces’ model had always been a clunky, overly-macro framework that was hard to successfully apply to actual businesses. Until, that is, Virtual Gary came along. There he was, bobbing along in the middle of that safe little circle of local yoga instructors with Smelly Pam as the only existing competition.
But, with the sudden move to virtual yoga, he has lowered all the barriers to entry with a single high lunge and activated all four of Porter’s external forces. His market is threatened with a panoply of new entrants and substitute products, which will lead to significant buying power for local yoga customers like my wife and introduce enormous bargaining power from bigger, less expensive, more famous alternative suppliers.
And Gary sees none of this because he is wearing the blinkers of new-found virtual expansion. He sees only the green grass of the new fields opening up to him and ignores all the other massive pedigree bulls roaming those meadows and looking his way. Potential upsides in business usually blind most managers to the much bigger threats that come with them. Gary is almost certainly about to get smashed by the very thing he thought was about to make him rich.
This is, of course, not just the story of regional Tasmanian yoga. It’s a narrative currently occupying a host of businesses grappling with the Covid catalyst and the virtual implications bestowed by lockdown. Companies see better profit margins and an almost unlimited customer base but miss the drastic reduction in barriers to entry, and the gigantic range and frightening potential of the competitors now stepping across those formerly restrictive thresholds towards their once-protected customers.
Scott Galloway’s continued criticism of the American university system is a prime example. Galloway is shooting at numerous targets with his ongoing predictions of doom and decay for the overpriced, disgracefully debt-ridden operations of American academia. And it’s an argument made all the more powerful in that it comes from a professor working within the American university system.
But at the heart of his critique is the identification of the same strategic error that Virtual Gary is currently guilty of. Galloway predicts that hundreds of universities will be forced to close in the coming years as what presented itself as an online opportunity turns into a “flight to quality” and results in “a concentration of power among a small number of brands”.
Right now, every second- and third-tier university on the planet is migrating their students to crappy online learning while pocketing the spectacular margins that come with it. They are doing this because Covid-19 is forcing them to, or because they were already on the journey thanks to a strategic naiveté that is matched only by their unrealistic ambitions for continued growth.
What these universities are missing is that once this online model becomes established and distance is removed from student decision-making, there will be no demand for second- or third-tier universities. There won’t even be a remit for them to exist anymore.
Why study at any of these schools online when a small cabal of global universities offers better quality education, from more famous professors, belonging to more prestigious universities, populated by more notable alumni, with more advanced tech? And better college sweat shirts.
Galloway points to a potential marriage between the big brands of MIT and Google, and suggests the two could generate billions from online, certified courses. He is (eventually going to be) right. And his veracity should trouble every university not in the top 10. I don’t mean the national league tables. I mean if you are not Harvard or Cambridge or Stanford – you are super fucked.
Competition makes marketers essential
Remember Boo.com? How about Webvan? Beautyjungle? eToys? Me neither. They were among the thousands of perky etailers set up to enjoy the unlimited potential of online trade 20 years ago. And all of them were royally screwed by a handful of bigger, better, mega-brands starting with Amazon and eBay. These brands got to the top of the mountain first, sucked up most of the market next, and destroyed these smaller brands in the process.
Sure, you want global access to markets and the lower operating costs of online business, but are you ready for the subsequent attack of the 800lb gorillas that come with them? That’s an especially important consideration for formerly offline, regional businesses like Gary’s Yoga or provincial universities, because they could not compete if their lives depended on it. They have grown within and are therefore used to a captive market. They think they want to escape that captivity and grow. But they fail to see the big apex predators out there in the jungle waiting for fresh meat once the gate is opened.
All the businesses that have gone from physical interaction to virtual engagement are in this same boat. Tax advisors, lawyers, conference organisers – the list goes on and on. They all have dollar signs in their eyes as the costs to serve go down and the potential market grows by a factor of a bazillion. But those dollar signs obscure the dark side of virtual business and the sudden arrival of global competition where once only a few local players battled it out.
As marketers, none of this should surprise you. In fact, you should welcome it. One of my earliest insights about marketing was that companies, and indeed whole industries, do not automatically care about customers or marketing. All you initially need to succeed in business is a product and some sales. It is only with competition that companies start to worry about the customers behind those sales and start their marketing journeys. Competition creates market orientation, which, in turn, kick-starts the marketing process.
That being the case, the lowering of the classic barriers to entry in the industries now embarking on a virtual path will mean two things. First, a blood bath in the near term as companies are killed, acquired and diminished. Second, a refocus on consumers, marketing and brand. Not because marketers are super important or the secret of every success. But because we’ve just been elevated about three levels up the corporate totem pole, as competition has just made us essential.
I guess what I am really saying is that Virtual Gary is going to need a marketing expert. The good news is that he can reach me on Zoom. The bad news is that my prices haven’t changed either. Nirvana.
2) The State of Strategy [Noteworthy - The Journal Blog]
Over the past couple of months during the lockdown, [author Edward Cotton] devoted some to what I was pompously calling a Reverse Mentoring Program. It got me to chat with junior and mid-level strategists all over the world, to work out what they were up to and what was on their minds.
Here are my 5 takeaways.
1. Strategy Has No Unifying Concept
There is no single idea that unites strategists under a. single umbrella, the only thing that does it is the title. What they each do varies depending on where they work and the role they play. Some are more focused on helping clients, others more on creatives and others are in the service of assisting fellow strategists. Beyond this, there is also the complexity generated by the fragmentation of the discipline- UX/UI, Creative Strategists, Connections Strategists, etc.…
2. The Underground Economy of Freelance Strategists
Many young strategists, those who recently graduated or had limited work experience and got laid off, are working as freelancers. Their lack of experience puts them at the bottom of the food chain. A place where they are earning something close to minimum wage doing grunt work for agency side strategists. This is a trend that is only likely to be worsened by the current situation.
3. A Thirst for Inspiration
Many of the strategists I spoke with have a thirst to be inspired and learn. They are on a quest to uncover books, papers, articles that can encourage them to become better at what they do. Strategists with good leaders have an advantage here because they help point and direct them to resources and pay for and arrange subscriptions, but most importantly, they facilitate departmental discussion around topics of interest.In the critical need for inspiration on the job, I would also suggest that strategists appear to seriously challenged in their ability to conduct their own original qualitative research. This is because agencies and clients don’t have money or time to do this work. This seems like a massive weakness moving forward. The core foundation of early Account Planning was built on this skill, and it appears in danger of being lost. I only found one strategist, who was strongly encouraged and allowed to focus on this area of the discipline.
4. Cultural Challenges
Most strategists working agency side face considerable internal challenges. These stem from their agencies having a very narrow perspective on what strategy does, from clients who are not prepared to take risks and challenges from other departments who impede access. It also appears that there is still something of a digital divide. Strategists are developing a rich and deep understanding of consumer’s digital behaviors, but agencies find it hard to create work that responds to the desire and need for real dialog and interactivity.
5. Strategy Might Be Only One of the Things They Do
In smaller markets, where strategy is not highly utilized, many strategists are forced to do other things, like copywriting or develop their own start-ups. They need to be genuinely entrepreneurial and flexible to position themselves for any opportunity.
Overall, the RMP was a fascinating and highly rewarding experience.
All of the strategists I spoke with were positive- despite the challenges. They seemed to be pragmatic and realistic about the situation and charged with energy and enthusiasm to pursue their craft to the best of their ability.
This is a discipline that needs help and support. It needs it from agency leadership, from local Strategy and Account Planning membership groups, from ad industry associations and networks and from agency and client professionals with strategy experience to mentor and help.
3) Cross Cultural Consumer Characterization [Baiba Matisone - LinkedIn]
While working on brand building, Baiba recently discovered that this 4C model as a very useful tool in psychographic profiling.
In short for those who don't know what psychographic profiling is: a psychographic profile is generated to define group attitudes, values, interests, and chosen lifestyle. These considerations will also differ from one culture to another, usually, globally appropriate segmentation technique is based on Abraham Maslow's hierarchy of needs(1943).
Maslow's research into human motivation was the inspiration behind the advertising agency Y&R "Cross-Cultural Consumer Characterisation" model (the 4Cs). This model characterizes people into recognizable stereotypes that reflect 7 human motivations:
security
control
status
individuality
freedom
survival
escape
From these core values, a set of relatively stable lifestyle profiles have been created.
4) Quick Hits: A few articles that are concise, important, interesting, impactful, and I'm not going to write long descriptions for them
What does the ‘Is It Cake?’ meme trend mean on Twitter and TikTok? [New York Post] I'm sure you're familiar with the meme where everything turns out to be cake. If not: over the weekend, an important, groundbreaking scientific discovery was made: Everything is made of cake. Social-media users came to this conclusion after several now-viral videos circulated showing hyper-realistic looking pastries in the shapes of toilet paper, onions and Crocs shoes being sliced open, only to shockingly reveal that their insides are flour, sugar and frosting. Click through to the article to learn more
What It's Like to Escape the Mindset of a Conspiracy Theorist [Vice] This isn't about advertising but I think it's still a really interesting and important look at how communications can impact people's mindset. In terms of persuasion, I think it's a very interesting read. Three core principles characterize most conspiracy theories. Firstly, the belief that nothing happens by accident or coincidence. Secondly, that nothing is as it seems: The "appearance of innocence" is to be suspected. Finally, the belief that everything is connected through a hidden pattern.
Interesting argument for why active & transitive sentence construction are more powerful [Richard Shotton - Twitter] From the Science of Storytelling: We start modeling words as soon as we start reading them. We don't wait until we get to the end of the sentence. This means the order in which writers place their words matter.
5) Department of Great Work
The whole working-from-home thing — Apple [YouTube] Man this hit really close to home for me. The Underdogs are back, in a follow up film to their 2019 debut. Apple describes them as "navigating their new normal with lots of unknowns but one reliable constant: Apple helps unleash their creativity and productivity even when they’re working from home." Though the Underdogs aren't in advertising ostensibly, boy do I feel like they captured my working conditions to a T. At 7 minutes, it's a it long but worth it. Done in-house (I believe!)
How to Make a Face Shield Using the Top of a Krispy Kreme Doughnuts Box [Laughing Squid] Is this 'work' in the traditional advertising sense? Don't ask questions I don't want to answer. Could this fusion of life saving PPE and delicious delicious doughnuts help drive shield (and dare I say mask) adoption in states like Florida, Arizona, and Texas? Maybe! Could be fun! But seriously please wear a mask
Pornhub’s Big Package Gives 100 Small Businesses Billions Of Free Ad Impressions [Forbes] Yes this link is safe for work! Since small businesses can't rely on the Federal government for anything besides a cold shoulder, Pornhub is here to help, at least a little bit. Today it's launching its Big Package For Small Business campaign (SFW link), intended to assist small business recovery with free advertising space. While Pornhub couldn't resist slipping a pun in the name of this initiative, the opportunity for a selection of small businesses to receive one billion ad impressions worth of free advertising cannot be understated. This is expensive, extremely visible ad space so if you are a small business, better get that website and online store cleaned up.
Burger King Sings About Making a Whopper From Cows That Fart Less [Muse by Clio] Earlier this week BK introducd the Reduced Methane Emissions Beef Whopper in select shops nationwide. It's made from the meat of cows that emit less methane from their bovine orifices thanks to a diet rich in lemongrass, which BK has developed with scientists in an effort to curb greenhouse gases. BK, creative shop We Believers and director Michel Gondry got "the biggest little star in country music," 11-year-old Mason Ramsey—who's like a pint-size Tim Blake Nelson—to explain the initiative in a silly music video. Music-video veteran Mandy Moore choreographed the dance moooves. (Like there's a universe where I wouldn't include that pun...)
Essential Workers are now fighting two pandemics at once [MailChimp Presents] Amid COVID-19, small businesses around the US have had to find ways to adapt while interacting with the public. Watch how a restaurant, bike messenger, laundromat, food bank and more are coping with cutbacks while staying safe. Check out this powerful short film series in partnership with Vice+ and Arts & Sciences
BMW turns show homes into showrooms to find wealthy buyers [Contagious] So smart. So simple. Last year, when BMW Canada discovered that 33% of people seeking to buy a luxury car are also looking to buy a luxury home, the auto brand combined the two customer journeys in an activation called Stage Your Driveway. In partnership with Toronto-based real estate company Heaps Estrin and agency FCB Toronto, BMW digitally superimposed three of its ‘most elite’ models (the X7, the i8 Roadster and the M5) onto real estate listings in upscale Toronto neighbourhoods, so that they appeared to be parked in the driveways. When prospective buyers visited the listings in person, real BMWs were parked out front, ‘turning driveways into showrooms’. The campaign brought BMW’s cost per lead down by 56% and generated 37,000 new high-value prospects
6) Platform Updates
Twitter says 130 people were targeted in hack that hijacked accounts of Elon Musk, Joe Biden [CNBC] “We believe approximately 130 accounts were targeted by the attackers in some way as part of the incident,” Twitter said Thursday.
The hack, which took place on Wednesday, compromised the accounts of several prominent figures in business and politics. The accounts were seen posting tweets trying to convince people to send them bitcoin, with the promise of sending back double the funds in return.To stop this fraud, all verified accounts were briefly unable to tweet Thursday morning. The Federal Bureau of Investigation is now looking into the attack, according to a report.Nielsen, Facing TV Backlash, Reverses Delay of Out of Home Audience Measures [Variety] Despite a pandemic that has forced many Americans to shelter at home, Nielsen will, after all, follow through on its plans to chase TV viewers in bars, hotels and offices. It's only been like 142 years since Nielsen started measuring TV viewership so it makes sense that they finally start measuring viewership at bars and restaurants and stuff.
Facebook reportedly considering ban on political ads before election [The Verge] Facebook is reportedly considering a ban on political ads before the US elections this year. The idea is being discussed internally but is not yet a firm policy. The step would drastically escalate Facebook’s current plans for preventing misinformation or meddling in the 2020 elections. There’s not much detail about the policy, but it appears the blackout would be brief — a matter of days before election day in November. Facebook has previously allowed users to “turn off” political ads and added disclosure requirements, and it’s attempting to provide reliable information with a voting hub. But it’s stopped short of banning the ads themselves, in contrast with its rival Twitter, which announced a political ad ban last year.
As always, the full archive is available here. Was this email forwarded to you? Want to start getting this on a weekly basis? All I need is your email, everything else is optional. Thanks for sticking around as always. See you next week!