Marketing BS Weekly Briefing: Mulan and Disney Employees, Pay Localization, Tour de France Incentives, Witness Protection Program
What Third Way CMOs need to know this week
I am considering adding an additional section to these briefing with updates from readers. If you have anything interesting with the group, let me know and I may include it in next week’s briefing.
Followup
Aggregation Effects: Outtake from yesterday’s essay. PWC estimated the GDP loss in the UK from reduced aggregation effects due to people working from home. They estimate -4% decline in GDP.
Pay Localization: VMWare follows Twitter and Facebook in “localizing” salaries of employees who choose to go remote outside of Silicon Valley. Employees think of this as “cost of living” adjustments (supply side) while companies think of it as local market wage competition (demand side) - which don’t always align. Longer term results: Subsidy of for single, childless people to move to higher cost of living cities (since their real estate expenses are lower as % of salary); Opportunity for new entrant companies to over-pay for remote workers who’s salaries have been “localized” (talent arbitrage)
High Performance Culture: Two good quotes from Zack Kanter related to Reed Hasting’s Netflix cultural rules:
CEO: i want a high performance culture, like Netflix - ok well first you’re going to need to fire half your current staff, and then double the salaries for the ones you keep CEO: haha ok ok well i can’t do that, what’s the rest of it? - what do you mean, the rest of it?“No Rules Rules” and “The Life Changing Magic of Tidying Up”: two books that give a simple roadmap to a dramatically improved quality of life, and 99.9% of readers decide after the first chapter that step 1 is too painful but they keep reading because it’s fun to dream. https://t.co/fLXipnDHrT
Zack Kanter @zackkanter
News
TikTok: Bytedance rejected Microsoft and has come to some sort of arrangement with Oracle that is decidedly NOT a divestiture. With the algorithm still under the (effective) control of the China Communist Party, it’s not clear how this “solution” helps at all. Chinese media is first to confirm that TikTok is definitely not being sold (which drives home the point). It all seems more like what American companies are often required to do to get access to markets like China and India... But it may placate Trump, which may have been the whole purpose of the exercise. What a mess. Worst of all possible worlds. Welcome to 2020.
Roam: Roam is to writing what Excel is to math. Very simple, but also ridiculously powerful. I purchased a five-year membership and have never regretted it. They just completed their first raise - a “Seed round” valuing the company at $200MM
Facebook: Announced the Launch of Facebook Campus, taking the company back to their origins. You will need a .edu email address to access the product and it will have no ads. Critics claim it is a play for data. That’s BS. Any data from this is overrated. It’s really a way to keep students engaged, preempt a new competitors in the space, and eventually integrate with ads - Facebook just needs to build the audience first.
Outbrain/Taboola: The merger of the two “native advertising” companies has been called off. Outbrain claims the details are all confidential. Taboola says (my paraphrase), “we tried to acquire Outbrain, but when we looked under the hood we needed to cut the price we were willing to pay, but Outbrain would not budge”. These ads are ugly. >50% of people do not know they are ads. They sit under real content trying to trick the worst part of your psyche into into clicking on headlines like “What [famous actress] doesn’t want you to know,” or “What [celebrity] looks like now”. The hard part for marketers is creating a slimy enough tag line to get the click, but then find a way to turn that visit into an actual customer for your product. Ancesty.com is the only legitimate company I have heard of that pulled this off (using an ad about a celebrity’s ancestry), but it took them thousands of iterations for ONE ad that worked, and it was never more than 1% of their marketing spend. Most of these ads are arbitrage plays that get clicks to sell more clicks…
Mulan: The film credits include a thank you to the local authorities in Xinjiang, where on the order of a million Uighurs have been forcibly imprisoned in “voluntary education centers”. The situation in Xinjiang may be the worse humanitarian crisis happening in the world right now, but it has been largely ignored in America, and is not high on the list of concerns for progressive Disney employees, so missteps like this happen. I expect nothing significant will come from the talks of boycotts (which are focused on the film, and not on Disney proper). Separately (and I do mean separately) the film has not performed particularly well - either as a premium offering on Disney+ or in theaters in China.
Marketing
Twitch:
NFL: Viewership of Thursday’s opener was down 12.3% YoY . Chalk one up to “change in habits” over “pent up demand”. Committed ad spend on the sport is still up
Walmart+: Walmart launched biggest ad campaign in years to promote their response to Amazon Prime.
SEO Title Tags: Moz did some A/B testing of title tags. The generalized conclusions were unclear and contradictory. More interesting for the process than the results.
iOS 14: How do you prepare for Apple’s tracking blocking? A good write up of your options.
Facebook: The social network is limiting number of ads you can run: <$100K/month in spend limits you to 250 ads. At >$10MM/month you are limited to 20K ads. Lots of ads variations used to be very important to making successful paid social campaigns. You would "throw spaghetti against the wall", and then scale what worked. But now lookalikes audience targeting is so much more effective, and the “answer” is to figure out WHICH lookalike to use, and then iterate on your creative and offer. You don’t need thousands of ads to do that, so this change really does seem to be about protecting bad advertisers from themselves (or naive advertisers from their bad agencies)
CPM rates: Digiday reports that CPM rates across the internet are up 16% over the month of August. It was good while it lasted…
Digital Video: Among homes that use digital streaming, only 1/4 of TV time is spent streaming, the rest is traditional television. Remember that when people claim that “no one watches TV advertisements anymore”
Digital Video 2: HBOMax will be offering an ad-supported tier in Q3 2021
Digital video 3: Top spending industries on digital video ads (these are not performance marketing companies - this is traditional brand spend at premium prices to get incremental reach)
Strategy and Business
Investor Memos: BVP published their original investor memos for companies like LinkedIn, Pinterest. and Shopify. Hindsight bias is dangerous (Everything is obvious once you know the answer), so interesting to read why BVP thinks they invested at the time. But these are all “true positives”. It would be even more interesting to read these alongside why BVP passed on companies that became equally great (true negatives), and why they invested in companies that failed (false positives).
Incentives: The economics of the Tour du France - total prize money is only $2.7MM but between 1992 and 2014 the average pro cycling team’s budget has increased from $3.6MM to $15.5MM and some individual riders command salaries of $6MM+/year. Teams pay for all this through sponsorships. While the sponsors would love a win, they are truly paying for exposure, which causes cyclists to attempt to maximize visibility during the race like breaking out of the pack even if it is not strategic for winning the race: “The entire Tour is about getting eyes on the company on your jersey, because if the sponsor isn’t happy and cuts funding, your team is probably shit out of luck.”
Discounting: Modern Retail has a piece on how “Direct to Consumer” brands have rethought their “never go on sale” rules and have started discounting. This will have a short term positive effect and then end badly.
Replication Crisis: Those who care about this stuff were abuzz last week when Alvaro de Menard published an analysis of over 2500 science papers and estimated their odds of replication. The most interesting findings was that the number and quality of citations had no impact on odds of replication. Interesting for marketers because Google based their (much better) search engine on the academic citation model. Links are still one of the most important components of SEO, but Google haas iterated and there are now LOTS of other elements used to ensure sort order isn’t filled with spam. Meanwhile in the academic world citation signals have become less useful (useless?) in measuring quality.
COVID and the new world order
Small Luxuries: Nielsen found that “consumers seek champagne and other indulgences.” Two decades ago at P&G we found that people who lived in relative poverty and could not afford our brands on a regular basis, would “splurge” sometimes as a treat - the way affluent people might splurge on a big trip. This seems to be the pandemic version
Telehealth: Telehealth rocketed to 70% of all doctor outpatient visits in April, but has since come down to 21%, but that compares to ~0% in before COVID. Looks like a step-change with sticking power
The Flu: It basically completely skipped the Southern Hemisphere this year. Two charts of many that all look the same:
Alcohol: Sales have surged since March!
GPT-3, AI and Machine Learning
Chess: Mastering chess was one of the first impressive AI feats. Now AI is being used to determine the impact of changing the rules of chess. What happens to the game is you are allowed to capture your own pieces? Or if pawns can move two squares at any point in the game (not just their first move)? The AI can play itself millions of times and humans can evaluate the impact on the game - and potentially make it better and more creative (as judged by a human)
Facial Recognition: Portland issued the most complete ban on facial recognition to date. But already there is a market for “super recognizers” - about 1% of humans have almost photographic memory of faces. Many of these people are employed to watch for terrorists (at airports) or banned gamblers (at casinos). Much of AI is just doing the same stuff we have always been doing, just cheaper and at scale.
Proofs: GPT-3 is now creating its own original mathematical proofs - and finding ways to shorten existing ones.
Careers
Capital Vision Services: The company manages 600 optometry practices. They are looking for a new EVP of Marketing in the Washington DC area
Fun
Civilization: A great profile of Sid Meier, the creator of the famous PC game series - including a tidbit on how it never occurred to him to include pandemics in his games
Witness Protection Program: Obituary for Gerald Shur, the creator of the program. Amazing anecdotes: “He personally persuaded corporate executives to hire a mafia hit man as a delivery route driver, once arranged for the wife of a Los Angeles killer to have breast enlargement surgery to keep her husband happy, and got the government to pay for a penile implant for one mobster turned witness after he became depressed.” This guy did not follow the bureaucratic organizational rules, but he got stuff done, "WITSEC witnesses helped topple the heads of every major crime family in every major city,"
Toilet Paper: The original patent for toilet paper shows what I knew all along - you paper should roll away from the wall.
Keep it simple,
Edward