Marketing BS Briefing: Missing Title Edition
Occupation romance headwinds, brand vs DR follow-up, IKEA horror, Severance as a marketing tool, editing audio with text, very short stories, and more...
Elon managed to hijack most of the news last week, but there was still lots to share. I may reduce frequency of these essays/briefings for the next little while as I am trying something new. Long before I did “business” I did “comedy”. I am going to take a stab at creating a full 40-minute stand-up set that ties into all the “business stuff” I have learned in the last twenty years and find some places to perform it. As an appetizer, I wrote a couple of jokes and posted them to Twitter yesterday. I would love it if you took a look, and if you enjoy them at all, like them and share them. Here they are. Let me know what you think.
Also: From time to time I have shared subscriber writings in these briefings, but I have never specifically asked anyone to send them to me. Consider this a formal ask. If you have written something you think is good, send it to me and I will include the links in a section when I do a briefing.
Onto the news analysis!
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Follow-up
Romantic cost of non-traditional employment: In my Don’t Trust Your Gut review I argued that part of the value female daters placed on specific jobs was due to the income levels they signal (that may be a better proxy for income or future potential income than self-declared statements). This study from 2020 looked at men’s odds of getting married based on what the percentage of men (vs women) in that occupation. It found that men in highly female (>75%) occupations were 3% less likely to get married in any given year and 21% more likely to not be married by age 40. This is extra surprising given that many people meet their spouses at work, and working in a highly female occupation would presumably provide more opportunities for meeting those potential spouses (and less intra-office competition for their affection). h/t Rob Henderson.
Total Ad Spend: Follow up on the 2nd Fader/Nevraumont podcast about the seeming broad shift from DR to brand spend (we need a better name for this podcast. Suggestions welcome!). This HBR article from April this year predicted that trend of traditional advertising losing share to direct response would reverse. It seems that time is proving them correct. At least for now. One way to think of all this is that total ad spend in the US has been roughly 2% of GDP since 1940. If that carries forward to the future, if GDP is flat or increasing, then any drop in DR spend has to translate into higher brand spend. Also related: AdExchanger writes about how CPG firms believe the next growth phase is “social commerce” and “incrementally” — basically the opposite of where the spend increase is happening right now.
Brand vs Direct Response: Annie Wilson (lecturer at Wharton, and former senior behavior scientist for Vanguard) had some very good comments on the DR vs brand episode. Thanks Annie! Only slightly edited for clarity:
[This] aligns with what I am hearing from one of my MBA students who works for Reckitt and manages a few different CPG product lines… I don't think direct response advertising is having the same ROI as it once did, or as it was believed to have (in part due to the issue of cookie deprecation and new privacy rules, changes in transparency and measurement, and changes to algorithms that are in response to and independent of cookie changes), and I think the issue of inflation is definitely important for understanding the shift in spend. I have heard from more than one person in retail and CPG that private labels are going to get their day in the sun pretty soon if brands keep raising prices. Consumers are fed up with the price increases (leading them to shift to private label) and brands are exhausting the typical strategies for reducing sensitivity (e.g., running promotions at the same time as a price raise or decreasing product volume rather than changing price). As expected, a lot of brands are compensating for lower sales volume with even higher prices, but this just isn't sustainable and not a good long-term strategy if they can't get those consumers back or get volume back in the future, so it makes sense they would want to raise the perceived brand value to help discourage switching to private labels and to imbue greater value on their brands for the future…
This is also just me speculating, but it seems possible that supply issues in some categories might be influencing spend too. Namely, if my product is stocking out due to forecasting errors or supply chain issues, then maybe it's better that I don't try to drive up demand but I work on my branding so that if you substitute now or can't find my product now, I don't lose your loyalty or share of wallet later… For example, I know a few cold & flu brands have totally exhausted supply way too early in the season due to a confluence of factors, so I wonder if, for instance, I always buy Mucinex, but I can't find it in store, if it would be smarter for the brand to get my mindshare for when Mucinex is back on the shelves or to prevent me from shifting my loyalty to Robitussin rather than trying to increase direct sales now....
Two additional thoughts:
I think another factor is that a lot of industries are seeing lower barriers to entry for new competitors (e.g., beauty industry as a notable example). This has had effects in a number of industries on both driving up the cost of DR media (and thereby reducing its efficiency) and making branding and positioning even more important means of differentiation, particularly as categories become saturated and you see what Youngme Moon describes as "heterogeneous homogeneity" emerge.
I think you also see the move toward brand spend playing out very specifically in the experiential marketing space where both big and small players are looking to bring brand images, values, and purpose to life (both digitally and physically) for customers as they realize they need to double down on image and experience as differentiators.
If I was a gambler, I would bet a lot of the brands that are overly-focused on "buying" customers right now via DR won't survive against those who are looking to "earn" customers through higher brand spend.
Pricing: Follow-up on last week’s podcast on paying for Blue Checkmarks, Mark Ritson at MarketingWeek uses the angle to share his thoughts on “how not to do pricing”.
Marketing
Illusionary Truth Effect: The idea that we believe misinformation more if it is repeated many times. Article focuses on politics, but the same principles hold for marketing where the angle is that lots of impressions saying your brand is awesome may make people believe that it is awesome (at least more than if they were not exposed to those impressions)
Bad product placements: “Store is Closed” is a horror-themed survival games set in an infinite furniture store that is a little bit like IKEA. While it never mentions the IKEA brand, the similarities are close enough that the Swedish retailer is arguing trademark infringement and trying to have the game changed or shutdown. Many companies pay for product placement, and even non-flattering placement can still drive purchase intent. I wonder how much of this concern is about marketing to employees rather than potential customers?
Bundling: Peleton is launching talk shows. Is Peleton an exercise company or an entertainment company? Perhaps there is less of a difference than we previously believed. If Netflix’s stock wasn’t so deflated, maybe they should make an acquisition. I would rather watch Netflix when I am cycling than get yelled at by a fitness instructor, and apparently I am unusual in this regard. But maybe I was just early.
Paying for Reviews: Qatar World Cup is paying some fans flights, tickets and accommodation in exchange for guaranteed positive social media reviews of the event. Non-genuine reviews are always a problem. Many experts were skeptical when Amazon decided to allow negative reviews of products. Now that is standard on third party platforms. It is a big business today to find ways to goose review scores on platforms like Amazon, Tripadvisor and Yelp. But when there is no platform to enforce standards it is easy (and relatively inexpensive) to commit review fraud.
Canner Lions Goes Woke: The Cannes Lions advertising awards have always been more about flash, than effectiveness. These are awards for creative teams, not brand management teams. They are now taking another step away from effectiveness and adding criteria around growth, sustainability and diversity to their award criteria.
Marketing to employees
Severance: Why do companies provide any severance beyond what is legally and contractually required? One reason is the signal it sends to future employees. This can come about both from word-of-mouth from individually affected employees, or from broader press coverage for the larger companies making larger cuts. Something to keep in mind as we are seeing many tech companies in layoff mode right now — specifically how one should read this Patrick Collisons’ email to stripe employees during their recent layoff.
Goodwill: The company will no longer accept donations of Kanye (“Ye”) products. Clearly Goodwill’s customers would be happy to purchase these “tainted” products, so this is clearly an attempt to appease Goodwill employees (who care more about the negative association with the singer than they do about their “mission”)
Pulling ads off Twitter: General Mills, Mondelez, Pfizer and Audi are leading the charge, but more and more companies are pulling their spend off Twitter. Twitter is mostly brand advertising, so the impact is hard to measure and the upside of pulling off is that it is appealing to company employees. Note: These companies still have no problem working with China, who is arguably less humanitarian than Elon.
Strategy
Officeshare: The WSJ writes about the new trend of companies co-locating and sharing office space. I think the challenges is that more and more companies that are going hybrid, want their in-office days to be on Wednesdays (or Tuesdays and Thursdays). If you are going hybrid there is a real advantage of intra-company coordination, but if every company wants the same days in the office, it makes sharing space impossible.
Disney Merch: The company is offering exclusive merchandise to Disney+ subscribers. I don’t think this will be a significant business. Its fine to offer limited quantity stuff to your biggest fans (See paying for status), but generally once you have spent on the fixed cost of a product you want to sell it to as many people as possible. Putting it behind a paywall is going to hurt sales. Maybe you make up for that with memberships (it works for Costco), but is anyone going to sign-up (or not cancel) Disney+ because they want to buy a lightsaber (but are not interested in watching the new Star Wars series)?
AI
Descript: Descript is Andrew Mason’s (co-founder of Groupon) new media editing company. It uses AI to automatically transcribe audio, and then allows you to edit the audio with a text editor. It’s as magical as it sounds. You can also train it on a voice, and then ad add text to audio as easily as you cut — and it seamlessly ads the words so they fit into the surrounding context. I am using it now for all my audio editing and it is pretty great - both in functionality/capability and in it being just fun to use. They are currently in beta with new video editing tools which look equally cool (easy drag-and-drop audio and visuals on AI-created storyboards).
Cheating: More and more students have figured out that they can use AI to write their term papers, and there is no real way for them to be caught. This future is here now and we either need to decide that being able to create a paper with the help of AI is what the goal of an assignment is, or we need a different way of doing the evaluation. Writing skills still matter, but AI will mean those skills get applied differently, just as calculators did not eliminate the need to be good at math. Moonbeam is one tool that makes it easy to create essays on any topic for any “target audience” built on top of GPT-3. They won’t be the only one.
Generative Advertising: This substack argues that ad creative will be taken over by AI and allow ads to be automatically changed and adjusted to match user needs and the surrounding (organic) content. I am skeptical. You need high ‘n’ to both build AI that will do this and to understand if it is working. Personalization is by definition low ‘n’. I think some (many?) companies will buy into this and buy from vendors selling it, but I don’t think it is the way of the future.
Explore a world: Fabians has created a Google Doc that uses Stable Diffusion and GPT-3 to allow the “exploration of a world”. There are more and more of these Google Docs templates floating around. I expect more to come. You don’t need to learn to build these, but you are going to want to learn how to use the ones that other people build (just a matter of inputting API keys). This is another fun one by the same creator that creates visual storyboards for television episodes.
Careers
Legibility: Tyler Cowen shares a paper by John Conlon that shows students “stereotype majors” and tend to assume that degrees will lead to careers in the most distinctive and “legible” job (legible is my word not his). Basically students think that people who get degrees in journalism, psychology and education degrees will end up as journalists, counselors and teachers at a far higher rate than actually occurs. The result is that there is boosted demand for degrees that have low probability of obtaining the most stereotyped job (with low paying alternatives). The power of legibility. Maybe we need to start calling physics “hedge fund science” in order to boost enrollment…
Fun
Very Short Stories: Inspired by the Hemingway legend of the 6-word story (“For sale: Baby shoes. Never worn.”), Wired asked 33 authors to pen 6-word stories. Old piece from 2006.
Keep it simple,
Edward
This was a great read! I love the idea of AI transcribing audio. So cool. Thank you for sharing