Jun 15, 2021 | Branding, Marketing, Strategy
A few weeks ago, Apple released an upgrade of their operating system, iOS 15. This release includes a (potentially) monumental change in the digital world of communication. Its default is to turn off the ability of a third party to track your online activity. If you are relaxed about being tracked, you can opt in and continue to be tracked.
This will be an opening shot in a war between very powerful vested interests.
For years there has been genuine and rapidly increasing concerns about the volume and use of the data collected by apps, and the privacy invasion and leverage that data can generate. As the concerns grew, so did the mumbling from the advertising industry about the value of targeted ads, and soothing bullshit from Facebook.
Apple has gone in hard by making opt-out of tracking the default of the new release. I suspect Apple sees it as a point of competitive leverage that they can exploit. Their advertising is making this differentiation not just clear, but an explicit reason to move to Apple.
I think it is an absolute game-changer.
There are several dimensions to the vested interest battles I expect:
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- Facebook Vs Apple. The business model that has made Mark Zuckerberg one of the world’s richest men, and arguably one of the most powerful, is based on the ability of Facebook to track activity and market their ad services based on that ability to target. Removing that ability will compromise that model, and Zuckerberg has not demonstrated any sort of tolerance to any interference to his ability to accumulate more and more billions.
- Apple Vs Android. For many consumers, the ability to turn off tracking will deliver a valuable competitive advantage to Apple over Android. This presents Google, the owner of the Android system with a dilemma. Do they follow and compromise their own ad business, or allow Apple to retain such an advantage in mobile computing? Indeed, is the attraction of an automatic ‘No cookie’ environment as strong as I anticipate?
- Regulators Vs Tech. For the past 5 years or so, regulators have been suggesting that some sort of regulatory framework was necessary to protect the privacy of consumers from the rampages of ad targeting. At the same time, regulators have demonstrated a rancid inability to even understand the basics of the challenges that such regulation will face in implementation, enforcement and unintended consequences.
- Advertisers Vs Ad fraudsters. The emergence of ad fraud because of so called ‘programmatic’ digital advertising, has offered fraudsters the opportunity to milk billions out of the system unhindered. Advertisers controlling large budgets have been largely unwilling, and perhaps unable to stem these losses, so just paper them over with cliches and bullshit. In a 2017 presentation to the IAB, Marc Pritchard the CMO of P&G publicly took a stand against the ‘crap’ as he called it spawned by digital channels. Crap ads, and the fraud perpetrated by those who assembled digital advertising inventory. The P&G initiative to stop advertising in the absence of hard data about the reach to humans rather than bots, and the location of ads placed, was followed by several other major advertisers. Sadly, the words were more hollow than substantial, as the fraud continues. The fraudsters will not go quietly, and based on performance to date, advertisers are too timid, or seduced by the seeming ease of reach, to do much. Dr Augustine Fou in his research highlights the tactics, breadth and depth of the fraud being accepted by advertisers.
- Consumers Vs advertisers. Marketers have found their ability to communicate compromised by the never-ending demand for new and different content to throw at the digital channels. They no longer have the time, and increasingly the inclination, to do the foundation work that leads to creativity and advertising cut-through.
Apple’s advertising revenue is very modest, by comparison to Google and Facebook. It has little to lose from this change. Facebook and Google by contrast have huge ad revenues. In Facebooks case, advertising is 98% of its total revenue, for Google the number is about 80%.
This change by Apple, if it creates a surge of iOS market share from its current 15% will compromise these revenues, and erode the business model of both Facebook and Google.
It certainly creates a strategic dilemma for the Google owned Android software, powering around 85% of mobile devices currently. Do they follow Apple, or take another route?
For marketers who understand ‘marketing’ as distinct from the digital ‘new shiny thing’ syndrome, who treat ‘marketing’ as an integral part of their investment in future prosperity, it will be a boon. They will be much better placed to leverage real marketing skills that the large businesses have lost.
To the question posed in the headline: the degree to which consumers demonstrate they value privacy, will be measured by the rate at which they will switch to Apple to protect it. Alternatively, if Google decides to follow with Android, game over.
Note, an hour after publishing: I omitted to mention above that Google pays Apple something around 12 billion a year to remain the default search engine on iOS and Safari. This is so Google can collect information on your searches on Apple. For Apple, it is money for jam. If I am right, and there is a significant move towards the auto opt out in the new iOS upgrade, this 12 billion will erode over time, so Apple does have a bit more skin in the game than noted above.
Header cartoon credit: Dilbert explains tracking codes.
Jun 7, 2021 | Branding, Marketing
Brand is underplayed as a source of economic power in B2B. We seem to default to the tactical marketing tools used in B2C too easily.
Over the years I have concluded that there are only two core elements in B2B brand strength:
Trust.
Service.
They are mutually reinforcing, or indeed, depreciating, and are both multi-faceted, with variations that are as varied as the businesses that deal with each other.
The dictionary definition of Trust is something like:” A statement that is taken as truth in the absence of anything more than the word of the party giving it”.
So, trust is based on doing what we say we will do.
The definition of service would be something like: “An act of selflessly helping someone else”.
Again, as varied as the contexts in which it is used.
Clearly however, service drives trust, and trust is the fodder of service, and both go both ways.
You still must do all the stuff to get customers inside the tent, once there, they have at least once, accepted that you will do as you say. Do that, and the reasons they might move on for the next time are way more limited than if you fail on some dimension of the service that they believe is important.
Therein lies the dilemma. Every business sees ‘service and trust’ in their own context, within their own definitions of ‘Value’.
It is your task, as the seller to unravel that often unclear ball of expectations.
When you think you would benefit if your customers trusted you more, give me a call, an audit of your trust profile with customers may be enlightening.
Header cartoon credit: Scott Adams’ alter ego Dilbert does it again.
May 13, 2021 | Branding, Customers, Marketing
Having a point of differentiation that is sustainable, and sufficiently valuable to customers that they are prepared to pay for it, is marketing’s holy grail.
Everybody seeks differentiation, the challenge is to do it effectively.
It seems to me there are three dimensions:
The first is the product itself, pretty obvious. The benefits that the various product features that add the differentiated value to customers are not easily replicated by competitors.
The second is the means by which you deliver those benefits, which is your business model.
A valuable differentiation is one that competitors cannot or will not replicate without great expense and effort. Some of these evolve out of a significant change in the prevailing business model, such as happened when Amazon started to sell books, but most happen incrementally.
It is relatively easy for a competitor to copy one or two things you do, and usually they will get it pretty right, even 99% right. However, when you do a whole lot of things together, it is harder to copy them all, and even if they do, getting 5 elements of your strategy copied at 99% accuracy, delivers only 95%. Few customers will opt for 95% without a significant discount.
The third is the choices you make that exclude some customers but have an impact on your ability to better service those who remain. This is a strategic choice you make based on the needs of your ideal customer.
Years ago, part of my sales responsibility for my employer at the time was for the regional distributors we used. Across NSW we had numerous small distributors, most of whom took small amounts of product on each delivery. The logistic costs were often more than the gross margin on the sales, but the sales revenue in total was significant. I took the decision to deliver only in 1/2 pallet lots of any product, and put in a staged discount for increased pallet numbers. After the initial yelling finished, most distributors moved to one of our competitors, along with the margin losses. We were able to increase the levels of support we gave to the remaining larger distributors, and they were able to significantly increase their sales, and our costs dropped accordingly. That segment of distributor customers suddenly became profitable after years of losses.
If you cannot figure out how to differentiate in ways that are meaningful to a cohort of customers, you are destined to be defined by price.
No future in that!
Apr 19, 2021 | Branding, Marketing
Customers buy to relieve some sort of pain, or fill a need. Sometimes that pain is real, the need genuine, and sometimes it just takes the form of a psychological itch that needs scratching.
Whatever the form, source or type of the pain, nobody buys without it, so your product is medicine for that pain.
Why don’t you tell them that more often?
Be clear: ‘This product is for people who……..‘
Many years ago, I was the marketing manager of the Dairy Foods division of the then Australian owned Dairy farmers Ltd. We marketed Ski yogurt which had been swamped by the launch of Yoplait. Good advertising, packaging innovation, and a good product had massively increased yoghurt consumption, with Yoplait taking all the benefit.
The manufacturing process installed to produce Yoplait ensured that there were no discrete fruit pieces in the final product. It may have been strawberry yogurt, but the product was completely homogeneous. The process Dairy Farmers installed was different, and we could produce a product with discrete and obvious fruit pieces. (Note: I would like to claim this as strategic foresight, but in fact it was good luck which we aggressively leveraged)
The core of the platform of our marketing and innovation processes became ‘Ski: for people who like to see pieces of fruit in their yoghurt’.
We never used this line, but it was implicit in everything we did.
5 years later, Ski was market leader in a market many times bigger than when Yoplait had launched. While it may not have been painful to buy a fruited yoghurt with no discrete pieces of fruit, when the offer was made, the preference for many became immediately clear.
Sadly, both brands have since lost their way. The businesses that were running them were taken over by multinationals who understood absolutely ‘didley-squat’ about brands, and the need to continue brand building investment. In the face of the aggression of the most concentrated consumer retail market in the world, they surrendered their position by stopping brand advertising and innovation, redirecting the funds to price discounting. They forgot who the products were for, and the role they played.
Mar 18, 2021 | Branding, Marketing
Covid has created an unexpected brand building bonanza for big Pharma.
All around us we hear animated conversation about the relative merits of the Astra-Zeneca, J&J, Pfizer, Moderna, and other Covid ‘vaccines’.
Each has its own proponents who seem to be across the detail of the latest research emerging from around the world as we participate in the biggest drug trial in history.
Pfizer and Astra-Zeneca took most of the brand building honours at this early stage, but there are many others in the race. The Chinese and Russian versions, while cloaked in mystery were deemed ‘potentials’ but they carried little weight, at least in the ‘western’ world. The only common ground is the general dismissal of the Trumpian favourite hydroxychloroquine as a viable vaccine. Even if it was a genuine option, I suspect the celebrity endorsement of the former President would have seen it flushed down the loo.
This is a brand building opportunity the like of which I have never seen before.
The winner will have a huge position in the market for many years. The R&D has been funded and facilitated by unprecedented public funding, the usual clinical trialling time frames shattered by necessity, billions of dollars of free publicity, and an assured market into the foreseeable future, as well as the pole position in further publicly funded R&D.
Marketing nirvana.
Mar 16, 2021 | Branding, Communication, Marketing
Is it wider distribution, provocative headline on a Facebook ad, play with price, or find a celebrity to endorse it for free???
It is not any of these, or many other options that probably sprang to mind.
The answer is both simpler, and way harder than any of these, and very few do it well
It is defining the problem you are solving in a way that adds value for a customer.
Unless you define the problem, how can you propose/define a solution that someone is prepared to pay for?
People buy solutions to the problems they see and feel, but often go unrecognised before they are pointed out. Those solutions to unrecognised consumer problems are always the outcome of deep research, creativity, and usually experimentation by the marketer.
Who knew we needed a better MP3 player before Apple produced one?
Often the challenges we face as marketers are hidden deep in our psychology
There are the functional problems we solve, which is where most of us stop.
Then there are the deeper psychological needs that are met in some way by the stuff we buy, that do not receive the same consideration, but they are the real drivers.
It is in that intersection of the functional and psychological that the gold lies hidden.
Who really needs a Rolls Royce to get from point A to point B?
Nobody.
Functionally we do not need the Roller, a battered up Hyundai will do the job. However, arriving in a Roller says something about us, it sets a frame by which many others will judge us, which fulfils deep psychological needs.
Food, shelter, community, reproduction, safety, status, these things all play a role in the things we surround ourselves with.
You go out and buy a Harley Davidson, you are making a statement, not buying a bike for transport.
Does the person who joins Weight watchers join just to lose weight, to fit into last year’s dress, or to feel better about themselves, to attract a mate, impress their friends and peers with the great new bod?
Untangling this can lead you to your value proposition, but it is a tough road, and not often travelled well.
How do you define the hidden problem that has your product as the only solution?
Combine the ideal customer profiling, the typical ‘who, what, where, and why’ analysis, with a ‘Pains, Gains, Jobs to be done’ analysis.
Then work, test, research, iterate, and with patience, you may end up with the profile of a customer that when they hear your pitch immediately thinks: ‘they are talking to me’.
2 examples from my personal experience.
Meadow Lea margarine. Meadow Lea was one of many margarine brands launched after the regulations dictating what could and could not be added to vegetable oils to make a spread, and production quotas, were finally removed in 1975. Initially the brands concentrated on the obvious benefits of margarine: spread-ability, price, and a healthy low cholesterol alternative to butter, and the market expanded rapidly. Meadow Lea marketing management spent a lot of time and effort really understanding the drivers of the choice of brand, while competing with everyone else. In the mid 70’s, women were entering the workforce in large numbers for the first time, combining the paid work with the traditional roles of housewife, cook, cleaner and mother. The result was an exhausted and frustrated cohort of younger women wanting their effort to be recognised. ‘You ought to be congratulated’ expressed that psychological need exactly. It resulted in Meadow Lea rapidly going to market leadership by a very wide margin at premium prices.
Local bookkeeper. An acquaintance who ran a local bookkeeping service for small businesses was having real trouble gaining clients. He tried all sorts of tactics from local advertising, networking at every opportunity, to bashing the shoe leather door to door. Nothing worked. Over a coffee one day reflecting on this, we arrived at the conclusion that his service was not about book-keeping, but about saving the owners of small businesses the time and frustration they were expending on their books, that could be better used elsewhere. To him, this seemed like a revelation. The next time I saw him was at a local networking event, at which, when his turn came to spend 30 seconds spruiking his business, his opening line was ‘My job as a book keeper is to help my clients get more sex’. Once the laughter died down, he explained that owners of SME’s had much better things to do with their time than book-keeping, so why not let him do that for them while they spent their time in other ways. He remains successful, although, sensibly, there is no reference to sex on his website.
When you need assistance digging down to the real motivators of activity, call someone who has done it before, successfully.
