Is it Too Late for a Web Strategy?


Old spice man

If you don't know this man, then you're missing out on one of the more popular twists in popular culture and marketing of 2010. 

This is the Old Spice campaign's man of mystery.  Intentionally I did not insert the web video, nor am I interested in chasing down the viewer stats, though sales report isn't great.  It's here because the ad reference exemplifes multi-channel linked marketing strategy and came up  in last Friday's monthly Chicago Booth Alumni Club's Discussion around  Strategic Management Practices.

Wearing my research hat, and doubling as a typical consumer, the first place I turned to find the reference was to type the key word phrase "old spice man" into my google search bar located at the top of my web browser. My search was not to purchase, engage in conversation or to gain proximity to someone with product experience –that would need  some different key words.  The campaign as well as my search process shows the evolution of the internet and the effect of its influence in our lives.  The shifting trends exhibited below in this wonderful chart  was the focus by Chris Anderson and Michael Wolff in the provocatively titled September 2010 article in Wired The Web is Dead, long live the Internet

Internet traffic trends 2010

CISCO compiled data using the Cooperative Association for Internet Data Analysis (CAIDA). The chart suggests that Video and Peer to Peer traffic is increasing while the use of the world wide web is declining.  This data is somewhat misleading and the chart's suggestions that mobile apps, and other specialized channel options, will displace the web browser  is not so clear-cut.

Is this graph a credible and reliable translation of the geek speak from  CAIDA?  A more recent  analysis than what appeared in Wired, expresses the following:

" Continuing its growth in traffic, connectivity, and complexity, the current Internet is full of applications with rapidly changing characteristics."

Overall, CAIDA has found that traffic on the internet continues to grow,  which is not adequately represented by the two- dimensional graph CISCO and WIRED depicted. Growth does accurately reflect the transition and growing emergence of traffic off the world wide web and into  alternative internet based transmission paths (e.g. mobile based and other applications that allow real time streaming).  

This same transition mimics strategies used by effective  marketers who link the brand messages and campaigns across  multiple media platforms.  Key words provide the bridge. The more consistent their use across the growing number of media platforms,  the more certain an organization's promotion efforts will  intersect key consumer touch points on or offline.   Ideally, consumers pick up these same key words  and carry them across other natural communication channels, further enhancing the brand's reputation and in theory  increasing sales.

If your business is selling Search Engine Optimization (SEO) this emphasis on key words appears  great for business. It's not however where a capable marketing strategy should invest the majority of its budget.  Not merely because there is some danger to pursuing this strategy (see the The dirty little secrets of search in last week's New York Times); but the greater, more complex objective is reputation management and not key word optimization.  

 Historically, brand owners/creators controlled media messaging and placement.  To successfully sell, you "paid" for the privilege of being placed in front of consumers walking through the yellow pages or by a billboard, listening over radio/TV  or their eyeballs scanning newspaper or specialty publications. Product packaging, placement and promotion  are often  budgeted separately and only occasionally linked for a "special" promotion (e.g. cause marketing or a contest).  The rise of the world wide web, added the category of "owned" media to the marketing mix and budgets had to cover the cost of website development, content writers and traffic analysis, including SEO.  With Social Media, a third area– "earned" warrants increasing budget and management attention to monitor the customer-created channels and chatter of your brand enthusiasts  as well as brand detractors. (see complete description in Branding in the Digital Age by David Edelman). 

 The Edelman article's case study of a TV manufacturer across one touch point within the wider consumer decision journey proves far more  instructive than my earlier reference to the Old Spice ad and its multi-channel focus. 

"A costly disruption of the journey across the category made clear that the company’s new marketing strategy had to deliver an integrated experience from consider to buy and beyond . In fact, because the problem was common to the entire category, addressing it might create competitive advantage."    

Unlike Old Spice, the manufacturer opted to shift the marketing emphasis away from paid media.  Focusing on owned and earned media seems to enhance the effectiveness of their key words and multi-channel linkages, and engage traffic where it mattered most at the buy, and enjoy, advocacy, bond  touch points. This is not a prescription for all brands, but the case is instructive in identifying the disconnects and deficiencies in common web based strategies, or even of marketing extravaganzas disconnected from the ongoing conversations that are circling your business, product and/or brand.

Whether or not you belief in Chris Anderson's prognosis about the death  of the Web or buy into David Edelman's Consumer Decision Journey research, few organizations appear to have fully leveraged these changes.  Increasingly, an ability to execute and efficiently allocate resources to address the demands presented by the growing number of communication channels  will  distinguish successful companies from their competitors.  The changes create more opportunities for strategy to take a more commanding role in managing and driving the combined efforts, either internally or with the help of outside specialty firms.

Additonal Discussion Take Aways

  • Social networks are informative, free sources of intelligence that naturally build out and generate mutual trust and benefits to buyers and sellers. 
  • The role of the marketer is merely to influence and no longer the producer/director of the brand experience.
  • The responsibility for marketing  is changing and increasingly is upending internal role limitations  and requiring participation from unlikely sources e.g. corporate governance, communication standards and guidelines.  Employees share roles with customers and the more acquainted with internal policies, strategies and planning the more they can aide and assist in  wider message consistency. 
  • Authenticity has become ever more important.
  • Fluidity and increasing knowledge of terminology around the digital communications space is a valuable skills set…not just for marketers and IT folks. 
  • As reputation management rises and people do business more and more with the people that they know,  is there anything really being created of value, and are other marketing and sales efforts as necessary?
  • How do these lessons translate or enhance B2B sales? 
  • It's not the web vs. the internet differentiation that matters, as much as recognizing how one innovation(social media)  has brought into focus an array of  deficiencies and gaps within an organization (marketing departments) as well as an industry (e.g. advertising) The challenge is how to best integrate the old with the new. 
  • In the end, the prescription to know your customer before creating your strategy remains the first and foremost lesson. Knowing what your customer wants will always be helpful but successful business requires more.
  • True differentiation in products being marketed remain beneficial but the emphasis should be toward innovation in developing products. 
  • Important to remember the shape of the adoption curves with new technology and Chris Anderson's point that new doesn't replace old. New merely creates more table space to accommodate more preferences.  The challenge is the frequency we change, resort and revisit our marketing activities and resource priorities. 
  • Both  articles confirm the importance of social media and keeping up with changing technologies.  They also call attention to the  the challenges organizations  face in trying to bring them together  to create successful communities around their products and/or brands.

 

Any added thoughts, perspectives or cases are welcome.

Added citations

Edelman makes some of the same points in this article:

Four ways to get more value from digital marketing

By David C. Edelman, McKinsey Quarterly, March 2010

https://www.mckinseyquarterly.com/Four_ways_to_get_more_value_from_digital_marketing_2556

 

Trust Agents, Using the web to build Influence    by Chris Brogan and Julien Smith

NOW Revolution, 7 shifts to make your business faster   by Jay Baer and Amber Naslund

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Suggestions to combat shrinking profit margins


McDonald’s signs used to boast how many hamburgers it sold. Original McDonald's store #1 1955

In 1955, the dynamic tagline also communicated the growing public’s confidence in their product.  The millions soon became billions and when it  hit 99 the sign changed to read billions and billions served. Today, the message isn’t even worth posting.

Once upon a time, the growth rate of a company mattered. Simply stating the number of hamburgers sold  mutually assured the McDonald’s franchisee and its customer as well as inspiring  confidence in their investors.  Results to date are no longer proving inspiring, especially when it comes to the investment market.  This is not the simple adage by brokers and advisors warning shareholders that  past performance is no guarantee of future returns.

Today’s Wall Street Journal reports that advisors, no longer satisfied when a company meets its growth and profit targets, are looking further down the supply chain.

Threat Builds on the Margins,  read this morning’s headline.  It seems that rising commodity prices put pressure on  companies’ profitability.  This message echoed  the email alert that arrived last week  about CISCO, when its stock price took a dive in spite of the company posting increased earnings that were on target.

Management by definition is a process of staying on track.  Today many business analytic and business intelligence indicators exist which implies that smart companies notice the underlying rise in commodity prices and naturally take necessary steps to insure  their business and growth trajectory continues.  News of an increase in commodity prices is good if your business is selling commodities.  Higher prices lead to higher profits, right?  Remember two summers ago? The rapid ascent of both oil and energy prices did not result from higher production costs, increased scarcity or mirror  seasonal changes in demand.  Commodity prices are not easy to forecast and they anything but stable. The spike then as today could be the result of political tumult in the gulf region.  In part, rising agriculture prices follow  rising energy costs…more corn into bio fuels, or higher costs to driving the tractor or transporting the product to market.

Extrapolating that higher commodity prices  will however diminish  a company’s ability to deliver on its growth or profit targets minimizes the impact of  management to stay the course when the water gets choppy. rising material costs cut into quarterly operating projects Furthermore, this information or analysis won’t help a company like CISCO, where the pressures on their margin are a little different.  In many ways, routers and internet connections have become a commodity based business, the result of increased competition from capable suppliers such as HP and Juniper flooding this market.  For every market that CISCO has grown or opens, the competitors are quick to follow.

Margin pressures are a fact of life and how leadership responds, or reads and acts on the warning signs first visible to the commodity producers,  has repercussions up the supply chain. Innovation is a vital strategy for  large companies like CISCO, GE and P&G who can capitalize on their strengths and agility to  adapt, add new products, enter new markets.  Innovation allows them to jump the track and avoid barreling ahead into the inevitable abyss of a shrinking margin and/or market.  The process or approach they use does not disrupt the entire organization, not everything changes at once.  This strategy dedicates proportionate resources and priorities to ongoing development or M&A , with  standards and expectations that differ from those applied in the ongoing business units.  In time, the innovation once proven sufficiently robust for the larger corporate goals,  receives more  resources.

Innovation, yes, it is a good solution; but no matter what approach or model  that follows,  tension remains within the existing organization forecast and resource planning function.  It appears that even with a track record like CISCO, the market has enough uncertainty to short the stock.  Alternatively, consider addressing the shrinking margin problem by justifying your process, price and product value not in business or economic terms as the analysts do, but in customer terms.  Extending  this idea is the Shared Value construct that Michael Porter and Ed Kramer recently wrote up in Harvard Business Review, and similarly aligns with Peter Senge‘s whole systems approach around sustainability.  Both literally upend the traditional business economic model.

Shared Value revolves around the point of decision where a firm’s values intersects the values of its customers. where both choose to act out of respect for the bigger picture, the full operating environment and its constraints. Once again, it’s McDonald’s that exemplifies this approach.  It began with the war against Trans-fat that forced fundamental changes.  Today, McDonald’s offers  fancy coffee and sells oatmeal, the hallmark of good nutrition that led to a 3.1% growth in same store sales in January.  Both CISCO and GE incorporate this approach into their strategic plan and, in addition to Innovation, Shared Values helps them endure.  The value/returns are not  easily measured but maybe it’s because shared values are not so easy to assign.  McDonald’s may no longer have to tell its customers and shareholders how many billions of hamburgers they sell, but the more holistic an approach they take to delivering value and align it  with price, they continue to avert disaster.

If you have managed to measure shared value, or if you think the construct is beyond the bounds of competitive firms operating within an open market, I’d love to hear from you