4 Trends That Will Forever Change Media, Advertising And You In 2017 And Beyond

It’s been over a decade since the Internet transformed print media.

Very quickly the web’s ability to rapidly disseminate news, and articles, made newspapers and magazines obsolete. Along with their demise went the ability for advertisers to reach customers via print. What was once an “easy buy” for the auto or home section of a paper, or for magazines targeting your audience, simply disappeared. Due to very clear measuring tools, unlike print, Internet ads were far cheaper and more appealing to advertisers – so that’s where at least some of the money went.

In 2012 Google surpassed all print media in generating ad revenue. Source Statista courtesy of NewspaperDeathWatch.com http://newspaperdeathwatch.com/google-now-bigger-than-u-s-print-media-industry/

In 2012 Google surpassed all print media in generating ad revenue. Source Statista courtesy of NewspaperDeathWatch.com

While this trend was easy enough to predict, few expected the unanticipated consequences.

1. First was the trend to  automated ad buying. Instead of targeting the message to groups, programmatic buying tools started targeting individuals based upon how they navigated the web. The result was a trolling of web users, and ad placements in all kinds of crazy locations.

 Heaven help the poor soul who looks for a credenza without turning off cookies. The next week every site that person visits, whether it be a news site, a sports site, a hobby site – anywhere that is ad supported – will be ringed with ads for credenzas.  That these ads in no way connect to the content is completely lost.  Like a hawker who won’t stop chasing you down the street to buy his bad watches, the web surfer can’t avoid the onslaught of ads for a product he may well not even want.

2. Which led to the next unanticipated consequence, the rising trend of bad – and even fake – journalism.

Now anybody, without any credentials, could create their own web site and begin publishing anything they want.  The need for accuracy is no longer as important as the willingness to do whatever is necessary to obtain eyeballs.  Learning how to “go viral” with click-bait keywords and phrases became more critical than fact checking.  Because ads are bought by programs, the advertiser is no longer linked to the content or the publisher, leaving the world awash in an ocean of statements – some accurate and some not.  Thus, what were once ads that supported noteworthy journals like the New York Times now support activistpost.com.

3. The next big trend is the continuing rise of paid entertainment sites that are displacing broadcast and cable TV.

Netflix is now spending $6 billion per year on original content. According to SymphonyAM’s measurement of viewership, which includes streaming as well as time-shifted viewing, Netflix had the no. 1 most viewed show (Orange is the New Black) and three of the top four most viewed shows in 2016.

Increasingly, purchased streaming services (Netflix, Hulu, et.al.) are displacing broadcast and cable, making it harder for advertisers to reach their audience on TV. As Barry Diller, founder of Fox Broadcasting, said at the Consumer Electronics Show, people who can afford it will buy content – and most people will be able to afford it as prices keep dropping. Soon traditional advertisers will “be advertising to people who can’t afford your goods.”

4. And, lastly, there is the trend away from radio.

Radio historically had an audience of people who listened to their favorite programming at home or in their car.  But according to BuzzAngle that too is changing quickly.  Today the trend is to streaming audio programming, which jumped 82.6% in 2016, while downloading songs and albums dropped 15-24%. With Apple, Amazon and Google all entering the market, streaming audio is rapidly displacing real-time radio.

Declining free content will affect all consumers and advertisers.

Thus, the assault on advertisers which began with the demise of print continues. This will impact all consumers, as free content increasingly declines. Because of these trends, users will have a lot more options, but simultaneously they will have to be much more aware of the source of their content, and actively involved in selecting what they read, listen to and view. They can’t rely on the platforms (Facebook, etc.) to manage their content.  It will require each person select their sources.

Meanwhile, consumer goods companies and anyone who depends on advertising will have to change their success formulas due to these trends. Built-in audiences – ready made targets – are no longer a given. Costs of traditional advertising will go up, while its effectiveness will go down. As the old platforms (print, TV, radio) die off these companies will be forced to lean much, much heavier on social media (Facebook, Snapchat, etc.) and sites like YouTube as the new platforms to push their product message to potential customers.

There will be big losers, and winners, due to these trends.

These market shifts will favor those who aggressively commit early to new communications approaches, and learn how to succeed. Those who dally too long in the old approach will lose awareness, and eventually market share. Lack of ad buying scale benefits, which once greatly favored the very large consumer goods companies (Kraft, P&G, Nestle, Coke, McDonalds) means it will be harder for large players to hold onto dominance. Meanwhile, the easy access and low cost of new platforms means more opportunities will exist for small market disrupters to emerge and quickly grow.

And these trends will impact the fortunes of media and tech companies for investors  The decline in print, radio and TV will continue, hurting companies in all three media. When Gannet tried to buy Tronc the banks balked at the price, killing the deal, fearing that forecasted revenues would not materialize.

Just as print distributors have died off, cable’s role as a programming distributor will decline as customers opt for bandwidth without buying programming. Thus trends put the growth prospects of companies such as Comcast and DirecTV/AT&T at peril, as well as their valuations.

Privatized content will benefit Netflix, Amazon and other original content creators. While traditionalists question the wisdom of spending so much on original content, it is clearly the trend and attracts customers.  And these trends will benefit streaming services that deliver paid content, like Apple, Amazon and Google. It will benefit social media networks (Facebook and Alphabet) who provide the new platforms for reaching audiences.

Media has changed dramatically from the business it was in 2000. And that change is accelerating. It will impact everyone, because we all are consumers, altering what we consume and how we consume it.  And it will change the role, placement and form of advertising as the platforms shift dramatically. So the question becomes, is your business (and your portfolio) ready?

This Christmas People Matter — For Buying Ads As Well As Gifts

‘Tis the season of holiday giving. We hunt for just the right gift, for just the right person, to make sure they know we care about them. This act of matching a gift to the person has tremendous importance, because it demonstrates care from the giver about the recipient.

Once advertising was like that. Marketers built brands with loving care. They worked very hard to know the target for their brand (and product) and they carefully crafted every nuance of the brand – imagery, typography, colors, images, sounds – even spokespeople (famous or created) to project that brand properly for the intended customers. We’ve seen great brand images over time, from Tony the Tiger promoting cereal to start your day to Ronald McDonald bringing a family together.

SAUL LOEB/AFP/Getty Images

SAUL LOEB/AFP/Getty Images

Ad placement delivered the brand’s gift to the customer.

 And, once upon a time, how that brand was placed in front of targeted customers was every bit as crafted as the brand itself. Marketers worked with ad agencies to make sure newspaper, magazine, billboard location, radio show or TV program matched the brand. The brand was considered linked not just to the medium, but to the message that medium projected. Want to sell a muscle car, you promoted it via media focused on sports, DIY projects, men’s health – a positive connection between the media’s message/content and the advertiser’s goal for the brand.

And marketers knew that if they put their brand with the right media content, in front of their targets, it would lead to brand identification, brand enhancement, and sales growth. The objective wasn’t how many people saw the ads, but putting the ad in front of the right people, associated with the right content, to build on the brand’s value, and make the products more appealing to target buyers. Placement led to sales.

 Just like finding the right gift is important for the holidays, matching the gift to the recipient, finding the right ad placement was very important to the customer.  It was an act of diligence on the part of the advertiser to demonstrate to target customers “hey, I know you. I get where you’re coming from. I connect with you.”

Then the internet changed everything.

In the old days marketers really didn’t know how many people connected with their ads post-placement.  There were raw numbers on readers/listeners/viewers, but nothing specific. There was a lot of trust by the marketer that “owned” brand placed in working with the ad agencies to link the brand to the right media – the right content – so that brand would flourish and product sales would grow.

Yes, ads were measured for their appeal, how well they were remembered and audience coverage. But these metrics, and especially raw volume numbers, were each just one piece of how to craft the brand and deliver the message. It was reaching the right people that mattered, and that required people to make media decisions – and that required really  knowing the content tied to the ad being placed.

Marketers clearly understood that customers knew the product paid for those ads to promote that content. Customers linked the brand and the content, and thus it was important to make sure they matched. The content had to be right for the ad to have its intended affect.

But in the internet age, all that caring about customers, branding and links to the right content began disappearing. Instead, ad decisions were dominated by metrics – “how many placements did my ad receive?” “how many people saw my ad?” “how many people clicked on my ad?” “how many page views does this web site generate?” “how many page views does this writer/blogger generate?” The brand was being lost – the customer was being lost – in identifying how many people saw the ad, and whether or not they clicked on it, and where they went after the ad was presented on the web page.

And, the worst of all, “Do we have the information to know who this internet surfer is, follow them, and deliver ads to them as they cross pages and web sites?” At this point, content no longer mattered. If some page viewer was known to be looking for a desk, ads for desks would be placed on page after page the reader (potential customer) visited — regardless the content!

Marketers allowed their brands to be disconnected from the content entirely – ouch.

In the era of programmatic ad buying, content no longer matters. Follow the target, hammer on them with ads, even if the brand is positioned first next to  information on weather, and next on a site about buying inexpensive baby clothes, and next on a site about high end power tools.

The care and crafting of ad buying, which was crucial to brand building and demonstrating customers really mattered to those who created and crafted the products, and brand, was lost.

In 2016, we saw the ultimate in forgetting brand value while programmatically placing ads.  “Fake news” emerged. And marketers started to see their ads next to those fake (often invented and totally false) stories, just like they would be placed next to legitimate information.  The breakdown between content and brand was complete. In the unbridled pursuit of “eyeballs” brands were paying for the worst any media could offer – not journalism or legitimate content, but outright crap.

The election served to demonstrate this in an entirely new way. People went to websites, formerly considered “fringe,” such as Breitbart, to find out information on candidates and their supporters. And there would be ads. The ad was following the eyeballs, no longer the content. Family product ads, such as for cereal, were suddenly appearing next to content that was in no way associated with the marketer’s goal for that brand image.

And by being content independent, these programmatic ads were not just harming the brands – they supported bad journalism, and bad content.

“Click bait” became ever more important. With no people involved in ad buying, ads were no longer were tied to content so there was no “editorial” management of how the ad was placed. What those smart ad buyers once did, helping to build the brand, was lost. Now, any writer who could figure out how to use the right key words – and often outrageous content (of any kind) – was able to pull eyeballs. If s/he could pull eyeballs – regardless of the content – they pulled ads. And that pulled dollars.

Media brand value was dramatically lost – and journalism suffered.

In other words, you no longer needed the credibility of a brand like NBC, Wall Street Journal, ESPN, Forbes, etc. to obtain ads. Those old media brands worked hard to make edited content, reliable content, available to readers – and something a brand marketer could understand and use to build her customer base. But now all a publisher/producer needed was something that brought in eyeballs – and often the more outrageous, more salacious, more demeaning, more hostile, more ridiculous the content the more eyeballs were attracted (like watching a train wreck).

And the more this pulled ad money to non-journalistic, bad content, and away from legitimate content providers that focused on building their brand, the more it hurt journalism and marketing. What a decade ago seemed like a possible fear came true in 2016. Unharnessed media access by everyone was proven to lead to the growth of bad journalism as funds for good research, writing, editing and masthead curating was lost to those who demonstrated merely the ability to pull eyeballs.

Those who have benefited from this shift think programmatic ad buying is great. To them if people want to read from their site, look at their photos, cartoons and other images, or watch videos then these site owners claim there is no reason that advertisers should complain. “If people want this content, then why shouldn’t we be paid to create it. This is a monetized democracy of the media putting the customer in control.”

But that is simply not true. Customers link the brand message to the content on the screen. And there should be care taken to make sure that content and the brand message link. And that’s where programmatic ad buying is failing everyone.

Net/net, we need people involved in ad placement. Just as we care about the gifts we give at holidays, it takes a personal touch to make that selection work. It takes people to craft the delivery of ads.

Hopefully in 2017, the lessons of 2016 will become very clear, causing marketers and advertisers to rely far less on programmatic, and get people involved in ad placement once again. For the good of brands and for decent content.

Happy Holidays!

McDonald’s: Here’s Why Your New Big Mac Is Doomed

(PAUL J. RICHARDS/AFP/Getty Images)

McDonald’s has been trying for years to re-ignite growth. But, unfortunately for customers and investors alike, leadership keeps going about it the wrong way. Rather than building on new trends to create a new McDonald’s, they keep trying to defend extend the worn out old strategy with new tactics.

Recently McDonald’s leadership tested a new version of the Big Mac,first launched in 1967. They replaced the “special sauce” with Sriracha sauce in order to make the sandwich a bit spicier. They are now rolling it out to a full test market in central Ohio with 128 stores. If this goes well – a term not yet defined – the sandwich could roll out nationally.

This is a classic sustaining innovation. Take something that exists, make a minor change, and offer it as a new version. The hope is that current customers keep buying the original version, and the new version attracts new customers. Great idea, if it works. But most of the time it doesn’t.

 Unfortunately, most people who buy a product like it the way it is. Slower Big Mac sales aren’t due to making bad sandwiches. They’re due to people changing their buying habits to new trends. Fifty years ago a Big Mac from McDonald’s was something people really wanted. Famously, in the 1970s a character on the TV series Good Times used to become very excited about going to eat his weekly Big Mac.

People who are still eating Big Macs know exactly what they want. And it’s the old Big Mac, not a new one. Thus the initial test results were “mixed” – with many customers registering disgust at the new product.  Just like the failure of New Coke, a New Big Mac isn’t what customers are seeking.

After 50 years, times and trends have changed. Fewer people are going to McDonald’s, and fewer are eating Big Macs. Many new competitors have emerged, and people are eating at Panera, Panda Express, Zaxby’s, Five Guys and even beleaguered Chipotle. Customers are looking for a very different dining experience, and different food. While a version two of the Big Mac might have driven incremental sales in 1977, in 2017 the product has grown tired and out of step with too many people and there are too many alternative choices.

Similarly, McDonald’s CEO’s effort to revitalize the brand by adding ordering kiosks and table service in stores, in a new format labeled the “Experience of the Future,” will not make much difference.  Due to the dramatic reconfiguration, only about 500 stores will be changed – roughly 3.5% of the 14,500 McDonald’s. It is an incremental effort to make a small change when competitors are offering substantially different products and experiences.

When a business, brand or product line is growing it is on a trend. Like McDonald’s was in the 1960s and 1970s, offering quality food, fast and at a consistent price nationwide at a time when customers could not count on those factors across independent cafes. At that time, offering new products – like a Big Mac – that are variations on the theme that is riding the trend is a good way to expand sales.

But over time trends change, and adding new features has less and less impact. These sustaining innovations, as Clayton Christensen of Harvard calls them, have “diminishing marginal returns.” That’s an academic’s fancy way of saying that you have to spend ever greater amounts to create the variations, but their benefits keep having less and less impact on growing, or even maintaining, sales. Yet, most leaders keep right on trying to defend & extend the old business by investing in these sustaining measures, even as returns keep falling.

Over time a re-invention gap is created between the customer and the company. Customers want something new and different, which would require the business re-invent itself. But the business keeps trying to tweak the old model. And thus the gap. The longer this goes on, the bigger the re-invention gap. Eventually customers give up, and the product, or company, disappears.

Source: (c) Adam Hartung

Source: (c) Adam Hartung

Think about portable hand held AM radios. If someone gave you the best one in the world you wouldn’t care. Same for a really good portable cassette tape player. Now you listen to your portable music on a phone.  Companies like Zenith were destroyed, and Sony made far less profitable, as the market shifted from radios and cathode-ray televisions to more portable, smarter, better products.

Motorola, one of the radio pioneers, survived this decline by undertaking a “strategic pivot.”  Motorola invested in cell phone technology and transformed itself into something entirely new and different – from a radio maker into a pioneer in mobile phones. (Of course leadership missed the transition to apps and smart phones, and now Motorola Solutions is a ghost of the former company.)

McDonald’s could have re-invented itself a decade ago when it owned Chipotle’s. Leadership could have stopped investing in McDonald’s and poured money into Chipotle’s, aiding the cannibalization of the old while simultaneously capturing a strong position on the new trend. But instead of pivoting, leadership sold Chipotle’s and used the money to defend & extend the already tiring McDonald’s brand.

Strategic pivots are hard.  Just look at Netflix, which pivoted from sending videos in the mail to streaming, and is pivoting again into original content. But, they are a necessity if you want to keep growing. Because eventually all strategies become out of step with changing trends, and sustaining innovations fail to keep customers.

McDonald’s needs a very different strategy. It has hit a growth stall, and has a very low probability of ever growing consistently at even 2%. The company needs a lot more than sriracha sauce on a Big Mac if it is to spice up revenue and profit growth.

Clinton Won? No, Clinton Lost: Lessons For Marketers

Clinton Won? No, Clinton Lost: Lessons For Marketers

(AP Photo/Wilfredo Lee, File)

November 9, 2016 – Donald Trump is the president-elect of the United States. It is a stunning upset.  What are the lessons for marketers?

First, notice that candidate Hillary Clinton actually won the popular vote. With just under 120 million votes cast, Clinton gathered about 160,000 more votes than candidate Trump.  A victory of just over .1%. So it is fair to say that on this metric, number of votes, there was a win for Clinton.

But, of course, the complexity of America’s electoral college means that Trump won more electoral votes, and thus the election. Non-Americans struggle to understand the electoral college – heck, a lot of American’s don’t understand it. Put simply, it was the founding father’s method of making sure different geographies achieved representation so that more dense population areas would not control an election.

Given that everyone knew that in the end it was these votes – electoral votes – that mattered, it is important to think through the marketing implications.

Monday, pre-election, I wrote that it appeared the marketing campaign of candidate Clinton was superior to that of candidate Trump.  And, given that it achieved more popular votes, it may have been a superior campaign.  But since it did not achieve the goal, its worth revisiting to see where that analysis erred, and what can be learned.

 Product: Candidate Trump was very, very negative. He had nothing good to say about anything the incumbent president had done, nor anything good to say about candidate Clinton.  He was the epitome of negative. Although the Clinton campaign claimed it would “go high” as the Trump campaign “went low” this really did not happen. Clinton’s campaign tried to duke it out toe-to-toe on who was worst.

In the end, this hurt both candidates. Neither had great appeal to voters, and both had extremely high negatives. But by succumbing to a bruising bad-on-bad punching match the Clinton campaign missed an opportunity to present the candidate as very favorable. The candidate that punched the hardest – and no doubt with his constant attacks, including threats to indict candidate Clinton this gave candidate Trump a bit of an edge – was going to win.

 Lesson -Firstly, make your product favorable.  Make it something people really want.  Don’t say bad things about the competition until you’ve staked your favorable position.  Clinton never really achieved a favorable position with enough voters.

Second, if you’re going to get into a dirty fight, don’t bring a knife – bring a gun. In a competition of negatives, you have to be every bit as negative as the competition. No holds barred. The meanest, ugliest, hardest hitting competitor will win.

Price: Candidate Clinton absolutely failed to make the case that the incumbent’s economic policies had favored most Americans. Despite tremendous job growth, declining unemployment, record low layoffs and record high equity values there persisted a notion that the American economy was in the tank. The campaign completely failed to make the case that the policies enacted previously, and anticipated to continue with Clinton, would be good for people’s pocketbooks.

Meanwhile, candidate Trump hammered away saying that the American economy was a wreck. His appeals to reducing international trade and limiting immigration in order to create more higher paying jobs in America convinced a large number of voters that these policies would be better for the economy and most workers.

Concerns about potential debt increases and an extension of income inequality were poorly made, and did not counter the overriding sense that more jobs would come from Trump’s policies. Thus, a lot of people were swayed to Trump’s xenophobic view of how to improve America’s economy. They remain convinced that Mexico will pay for an immigration limiting wall, and scaling back (or eliminating) trading pacts like NAFTA will somehow cause an inspired growth in American manufacturing jobs, and higher levels of good paying employment.

Lesson – you have to make the economic case for your product.  You have to deliver a winning value proposition. Don’t expect customers to figure it out on their own, or assume they believe in your value proposition.

Place: This is where the breakdown was greatest for Clinton, and most beneficial for Trump. On Monday I noted several indicators that the Clinton campaign would do far better at getting out the vote than Trump. And, one could say they did given that Clinton won the popular vote.

But the Clinton error was relying too heavily on dense population states. New York, Illinois, California – states with very big cities that dramatically overwhelm the rural population produced landslide votes for Clinton. But in states with a more balanced population density, such as Ohio, Florida and Pennsylvania there was an insufficient effort at making sure non-city counties turned out for Clinton.

Contrarily, the Trump campaign won the battle for place by realizing they could win the rural states with limited effort. Large geographic swaths with low population density allowed Trump to pile up electoral votes (the ones that matter) almost unchallenged. Kansas, Oklahoma, Wyoming, Nebraska, South Dakota, North Dakota – all states benefiting precisely from the electoral system the founding fathers created – were key states that the Clinton campaign ignored in its distribution strategy.

What appeared to be a Clinton campaign advantage, largely strong support by the Democratic party, overly-relied on winning population dense counties. This was effectively countered by a very good job by the Trump campaign of acquiring votes in more rural, less dense, counties.  This ground game, of making sure the votes were captured county-by-county, was decisive for Trump.

Lesson – distribution matters. It may seem boring. It’s a lot less sexy than writing ad copy or focusing on PR.  But it really, really matters.

Promotion: It turns out money, and extreme messaging, still matters.

The Obama campaign was masterful at using modern marketing techniques, including internet marketing, mobile and social media, to obtain support. The Bernie Sanders primary campaign also proved adept at using these tools for gaining a good following. While the Clinton campaign lifted this part of the playbook, their implementation was not as integrated, nor effective, as either Obama or Sanders. The pieces were there, but the appeal was not as targeted to specific groups and therefore not nearly as effective. Clinton’s team used these tools, but they did not invest in them with the skills exhibited by Obama or Sanders, and they failed at bringing enough minorities, youth and women to the polls.

Meanwhile, Trump’s campaign once again made the case that money matters. Large advertising programs still make a difference. Marketing is changing, but in a winner-take-all, and you only get one chance, campaign classic advertising and PR used since the 1960s really matters.  Things are changing, but they have not fully changed. If you are willing to spend enough money on traditional promotional tools, they still reach most of the people. It may not be efficient, but they are still effective.

Simultaneously, the old adage “any press is good press” proved valuable once again.  Tapes of Trump saying outrageous things, and outrageous tweets, served to provide ample free promotion for the candidate.  While many people complained about the message content, in the end simply being constantly in the news helped people get used to a very unusual campaign style.  An unorthodox approach, letting outrageous behavior become so common that customers were able to look past the negatives, allowed the constant access to become an advantage.

There are great lessons here to be learned by marketers today.

  • Distribution really matters. In the internet, Amazon.com age it is easy to think that if you build it they will come. But success still requires a lot of effort to make sure your product is in the right place when people are ready to buy.  And that means on the web, on social media and eventually physical location.
  • The trend is toward micro-marketing with targeted messages to targeted segments. But during the evolution old, brute force tools still make a difference.  To make a trend work for you, you have to work hard at building on that trend.  You cannot expect success merely by adopting the trend, you have to master highlighting the trend, and making it useful for your campaign to reach customers.
  • Even messages built on myth cannot be ignored, and in fact must be fought extremely hard. Chipotle’s has struggled to convince customers its food won’t make them sick, because the message was not effectively countered. Similarly, despite ample evidence of a strong economy Clinton failed to convince customers that claims of a weak economy were unfounded. The message may be mythical, but it remains important if not addressed and countered.
  • Make sure customers know how they benefit from your product.  Don’t be “good enough” or “comparable.” Make sure the real benefits to customers of your product are front-and-center. As Clayton Christensen says, make sure you know what job the customer wants from your product and clearly fulfill that job better than alternatives. Don’t rely on the customer to figure out why your product is superior, make the case quite clearly for them.
  • Don’t expect customers to understand your pricing. Make clear your value proposition. Regardless how you price, the value proposition must be immediately understood. Link how you will get the job done for the customer to the value you provide.
Trump Vs. Clinton: Old Marketing Vs. Modern Marketing Will Determine The Winner

Trump Vs. Clinton: Old Marketing Vs. Modern Marketing Will Determine The Winner

Republican presidential nominee Donald Trump debates Democratic presidential nominee Hillary Clinton during the third presidential debate. (Mark Ralston/Pool via AP)

Whoever wins tomorrow’s election, their success will have a lot to do with how they marketed their campaign. And in many ways, selling a candidate is not different from selling anything else.

Do you remember the “four Ps of marketing” from Marketing 101? They are product, price, place and promotion. Every newbie is taught not to overly rely on any one, and greatest success comes from a well planned use of all four.

Product: The candidates are about the same age and health. And while they represent very different parties, both have spent less time talking about what a great president they would be, and a lot more on what a terrible product the other candidate is. Message after message has denigrated the other, to the point where we hear most of the electorate is now less than happy with both.

Most marketers know that negative marketing is risky, because it tends to tar all products with similar negatives. Greatest sales happen when you convince people your product is superior in its own right – not just compared to alternatives. Barack Obama figured this out in both previous elections, and he was able to convince the majority of people he would be a good president. Unfortunately, in this election the competitive attacks have cancelled each other out, and neither candidate has a majority of people liking them. An opportunity lost by both candidates to make their product more appealing, and thus bringing out more people to vote for them based on policies and the core of how their presidency would make voters happy.

 Price:  One could say that the tax policies of Hillary Clinton make her a more expensive candidate than Donald Trump.  However, the long-term cost of the debt increase from Trump means that the price of his presidency will be costlier than Clinton. Let’s just be practical and say that neither candidate has positioned themselves as the candidate better for everyone’s pocketbook.

Again, an opportunity lost. Ronald Reagan did a superb job of positioning himself as being good for people’s pocketbooks, and it helped him unseat Jimmy Carter. Barack Obama made hay out of the economic crisis as Republican George Bush left office, helping him convince voters that he would be far better for their pocketbooks – via job creation – than his opponent.

 Place:  This is all about “get out the vote.” Here the advantage clearly goes to Clinton. Candidate Clinton has done a superb job of building a “machine” that has turned out a record number of Democrats to early vote.  And she has worked diligently with her party to make sure local support exists across the country to help take people to the polls, and encourage voting on election day.  By making sure her constituents make it to vote, she will likely do far better at collecting votes than her opponent.

Additionally, candidate Clinton is not only campaigning, but she has a two former presidents campaigning for her, a sitting first lady, a sitting vice president and her key opponent from the primaries. This breadth of support, canvasing across multiple states, further puts her message into voters ears right before the election, and encourages people to go vote for her tomorrow.  Her large fundraising, and ability to offer funds to down-ticket candidates, has helped make sure her message was clear at the local level.

On the other hand, candidate Trump is walking a nearly singular path, with precious little party support. While he swept the primaries, he has not built a strong machine to make sure that those beyond the party faithful – those who are undecided or independent – are going to make it to the voting booth to help him be elected.  It is one thing to excite people about your product, it is another to make sure people actually invest the resources to obtain it.

In Trump’s case the advertising has been relentless, but the local machine support to turn out registered party voters, and everyone else who might enjoy his candidacy, is quite weak. One reason candidate Trump keeps saying the election is “rigged” is because he’s now realizing he failed to put in place the distribution system to get his voters to the ballot box.

Further, those who are helping candidate Trump secure his message are few and far between.  Outside of family members there are few making the case to get out the vote. Despite two living former Republican presidents and one vice president available, none is helping him be elected.  Likewise, despite a large number of primary opponents, most of which pledged their support for whoever won the primary, there is only one (Chris Christie) that has been a notable advocate for candidate Trump.

And the party itself has not been mobilized to get out the vote for candidate Trump.  His personal wealth has allowed Trump to implement a credible campaign.  But his inability, or unwillingness, to raise lots of money to invest in down-ticket races has meant he has not garnered support from other candidates running for Congress, Senate, governorships, etc. to promote his message at a more local level.

For months we have been inundated with polls. But on election day it is not someone calling your house to hear for whom you might vote. Rather, people have to leave their houses, make time in their busy days and go to the election booth – then stand in line and vote. Mr. Trump has not done the sort of job one would expect for building the support necessary to make sure voters turn out for him.

Promotion: This might be where the two marketing programs most differ.

Candidate Trump has relied on advertising. Years ago marketing programs often relied on huge ad budgets to build a brand. Companies quickly learned that if you spent a lot on advertising you could drown out a competitive message, and bring your brand to the forefront. Simply on the basis of a big ad spend, heavily reliant on television, success was once possible. And the Trump campaign has used advertising like a soap company launching a new brand. Lots and lots and lots of advertising.

Notably, there has been little use of digital, internet and mobile advertising. Little use of social media to build trends and increase brand effectiveness. The candidate himself has gone almost entirely against modern thinking about social, mobile and internet marketing by unleashing tweets which have been simultaneously shocking, and often opposed to the brand message the advertising set out to create.  While entertaining, this has not met even the minimum standards of modern marketing.

Candidate Clinton has matched candidate Trump in television and other traditional media advertising.  Thus, her candidacy has not been overwhelmed by competitive spending  While most people are likely tired of the ads from both candidates, it is clear that when it comes to traditional ad programs Clinton’s marketing has met the competitive level necessary to neutralize any possible Trump advantage.

But internet, mobile and social marketing has been much more successful for Clinton. Barack Obama did a splendid job of using these tools to mobilize young and minority voters in previous elections. This sort of marketing often touches people much closer, and has a greater “one-on-one” appeal, even if it is a modified “one-to-many.” And the Clinton campaign has lifted those guidelines, perhaps not as effectively as the Obama campaigns, to convert Sanders constituents to her as well as independents and undecideds.

The Trump campaign relied almost wholly on advertising, and an effort at achieving greater public relations via outrageous messaging. This has kept the candidate squarely in the public eye. But every marketer will tell you that it is not possible to build high commitment for your product with advertising alone. It takes an ability to touch people on a more personal, closer to home basis. It is critical now, more than for many years, to create identification with local issues within the home and workplace, and often reinforce social relationships.

At this, the Trump campaign has been out of step with modern marketing, and overly reliant on tools that were more effective in the ’80s and ’90s. Thus his appeal outside of European heritage, Christian, white and mostly male voter groups has struggled.

The Clinton campaign’s use of these tools has spread her base considerably wider. She has been able to connect with minorities, women, people of color, people of different religions and other groups much more effectively. In tune with demographic trends in America, this greatly enhances her opportunity to obtain the largest share of market. Tied to a superior placement campaign (to get out the vote,) this use of modern tools gives her a significant advantage.

These two campaigns have lessons for all business leaders. Too often we rely on product alone to think we will succeed. But product is only part of successfully luring buyers. You also have to make sure your product is in the right place, accessible to the most people, at time of purchase.

And today budget is only a part of good promotion, because effective use of social, mobile and internet marketing tools can help you connect with your targets more closely, and more personally. New promotion tools can expand your base, identify new target markets, develop strengths in niche groups and achieve greater loyalty at lower cost.

In history, there are almost no great campaigns that were won just because a product was superior.  Nor because a product was cheaper. And despite some great ad lines (“Where’s the beef?” or “Plop, plop, fizz, fizz oh what a relief it is”) advertising has limited ability to actually make a product successful.  Those that win build a marketing program using all four Ps most effectively to build on trends and excite customers.

What the NBA All-Star Game Venue Change Teaches Us About Decision-Making

What the NBA All-Star Game Venue Change Teaches Us About Decision-Making

Most leaders think of themselves as decision makers.  Many people remember in 2006 when President George Bush, defending Donald Rumsfeld as his Defense Secretary said “I am the Decider.  I decide what’s best.”  It earned him the nickname “Decider-in-Chief.” Most CEOs echo this sentiment, Most leaders like to define themselves by the decisions they make.

But whether a decision is good, or not, has a lot of interpretations.  Often the immediate aftermath of a decision may look great.  It might appear as if that decision was obvious.  And often decisions make a lot of people happy.  As we are entering the most intense part of the U.S. Presidential election, both candidates are eager to tell you what decisions they have made – and what decisions they will make if elected.  And most people will look no further than the immediate expected impact of those decisions.

However, the quality of most decisions is not based on the immediate, or obvious, first implications.  Rather, the quality of decisions is discovered over time, as we see the consequences – intended an unintended.  Because quite often, what looked good at first can turn out to be very, very bad.

NBA-All-Star-ExitThe people of North Carolina passed a law to control the use of public bathrooms.  Most people of the state thought this was a good idea, including the Governor.  But some didn’t like the law, and many spoke up.   Last week the NBA decided that it would cancel its All Star game scheduled in Charlotte due to discrimination issues caused by this law.  This change will cost Charlotte about $100M.

That action by the NBA is what’s called unintended consequences.  Lawmakers didn’t really consider that the NBA might decide to take its business elsewhere due to this state legislation.  It’s what some people call “oops.  I didn’t think about that when I made my decision.”

Robert Reich, Secretary of Labor for President Clinton, was a staunch supporter of unions.  In his book “Locked in the Cabinet” he tells the story of visiting an auto plant in Oklahoma supporting the union and workers rights.  He thought his support would incent the company’s leaders to negotiate more favorably with the union.  Instead, the company closed the plant.  Laid-off everyone.  Oops.  The unintended consequences of what he thought was an obvious move of support led to the worst possible outcome for the workers.

President Obama worked the Congress hard to create the Affordable Care Act, or Obamacare, for everyone in America.  One intention was to make sure employers covered all their workers, so the law required that if an employer had health care for any workers he had to offer that health care to all employees who work over 30 hours per week.  So almost all employers of part time workers suddenly said that none could work more than 30 hours.  Those that worked 32 (4 days/week) or 36 suddenly had their hours cut.  Now those lower-income people not only had no health care, but less money in their pay envelopes.  Oops.  Unintended consequence.

President Reagan and his wife launched the “War on Drugs.”  How could that be a bad thing?  Illegal drugs are dangerous, as is the supply chain.  But now, some 30 years later, the Federal Bureau of Prisons reports that almost half (46.3% or over 85,000) inmates are there on drug charges.  The USA now spends $51B annually on this drug war, which is about 20% more than is spent on the real war being waged with Afghanistan, Iraq and ISIS.  There are now over 1.5M arrests each year, with 83% of those merely for possession.  Oops.  Unintended consequences.  It seemed like such a good idea at the time.

This is why it is so important leaders take their time to make thoughtful decisions, often with the input of many other people.  Because the quality of a decision is not measured by how one views it immediately.  Rather, the value is decided over time as the opportunity arises to observe the unintended consequences, and their impact.  The best decisions are those in which the future consequences are identified, discussed and made part of the planning – so they aren’t unintended and the “decider” isn’t running around saying “oops.”

As you listen to the politicians this cycle, keep in mind what would be the unintended consequences of implementing what they say:

  • What would be the social impact, and transfer of wealth, from suddenly forgiving all student loans?
  • What would be the consequences on trade, and jobs, of not supporting historical government trade agreements?
  • What would be the consequences on national security of not supporting historically allied governments?
  • What would be the long-term consequence not allowing visitors based on race, religion or sexual orientation?
  • What would be the consequence of not repaying the government’s bonds?
  • What would be the long-term impact on economic growth of higher regulations on banks – that already have seen dramatic increases in regulation slowing the recovery?
  • What would be the long-term consequences on food production, housing and lifestyles of failing to address global warming?

Business leaders should follow the same practice.  Every time a decision is necessary, is the best effort made to obtain all the information you could on the topic?  Do you obtain input from your detractors, as well as admirers?  Do you think through not only what is popular, but what will happen months into the future?  Do you consider the potential reaction by your customers?  Employees?  Suppliers?  Competitors?

There are very few “perfect decisions.” All decisions have consequences.  Often, there is a trade-off between the good outcomes, and the bad outcomes.  But the key is to know them all, and balance the interests and outcomes.  Consider the consequences, good and bad, and plan for them.  Only by doing that can you avoid later saying “oops.”

‘The Founder’s Mentality’ Recommended For Your Summer Reading

‘The Founder’s Mentality’ Recommended For Your Summer Reading

Summer is here, and everyone needs a business book or two to read. I’m recommending The Founder’s Mentality – How To Overcome the Predictable Crises of Growth by two very senior partners and strategy practice heads at Bain & Company — Chris Zook and James Allen. Bain is one of the top three management consulting firms in the world, with 8,000 consultants in 55 offices, and has been ranked as one of the best places to work in America by Glass Ceiling.

Since both authors are still part of Bain, the book is somewhat bridled by their positions. No partner can bad mouth current or former clients, as it obviously could reveal confidential information — and it certainly isn’t good for finding new clients who would never want to risk being bad-mouthed by their consultant. So don’t expect a lambasting of poorly performing companies in this review of global cases. But after reviewing the work at their clients for over 20 years, and many other cases available via research, these fellows concluded that most companies lose the original founder’s mentality, get bound up in organizational complexity, and simply lose competitiveness due to the wrong internal focus. And they offer insights for how underperformers can regain a growth agenda.

founders mentality

Photo courtesy of Chris Zook

Moving From Mediocre To Good

I interviewed Chris Zook, and found him rather candid in his observations. When I asked why people should read The Founder’s Mentality I really liked his response, “Many people have read Good to Great. But, honestly, for many organizations the challenge today is simply to move from mediocre to good. They are struggling, and they need some straightforward advice on how to make progress toward growth when the situation likely appears almost impossible.”

 You should read the book to understand the common root cause of corporate growth problems, and how a company can address those issues. This column offers some interesting thoughts from Chris about how to apply The Founder’s Mentality to eliminate unnecessary complexity and make your organization more successful.

Adam Hartung: What is the most critical step toward undoing needless, costly, time consuming complexity?

Chris Zook: The biggest problem is blockages built between the front line and the top staff. Honestly, the people at the top lose any sense of what is actually happening in the marketplace — what is happening with customers. 80% of the time successfully addressing this requires eliminating 30-40% of the staff. You need non-incremental change. Leaders have to get rid of managers wedded to past decisions, and intent on defending those decisions. Leaders have to get rid of those who focus on managing what exists, and find competent replacements who can manage a transition.

 Hartung: Market shifts make companies non-competitive, why do you focus so much on internal organizational health?

Zook: You can’t respond to a market shift if the company is bound up in complex decision-making. Unless a leader attacks complexity, and greatly simplifies the decision-making process, a company will never do anything differently. Being aware of changes in the market is not enough. You have to internalize those changes and that requires reorganizing, and usually changing a lot of people. You won’t ever get the information from the front line to top management unless you change the internal company so that it is receptive to that information.

Hartung: You say simplification is critical to reversing a company’s stall-out. But isn’t focusing on the “core” missing market opportunities?

Zook: Analysts cheered Nardeli’s pro-growth actions at Home Depot. But the company stalled. The growth opportunities that external folks liked hearing about diverted attention from implementing what had made Home Depot great — the “orange army” of store employees that were so customer helpful. It is very, very hard to keep “growth projects” from diverting attention to good operations, and that’s why few founders are willing to chase those projects when someone brings them up for investment.

Hartung: You talk positively about Cisco and 3M, yet neither has done anything lately, in any market, to appear exemplary

Zook: It takes a long time to turn around a huge company. Cisco and 3M are still the largest in their defined markets, and profitable. Their long-term future is still to be determined, but so far they are making progress. Investors and market gurus look for turnarounds to happen fast, but that does not fit the reality of what it takes when these companies become very large.

Hartung: You talk about “Next Generation Leaders.” Isn’t that just more ageism? Aren’t you simply saying “out with the old leaders, you have to be young to “get it.”

Zook: Next Generation Leadership is not about age. It’s about mentality. It’s about being young, and flexible, in your thinking. What’s core to a company may well not be what a previous leader thinks, and a Next Gen Leader will dig out what’s core. For example, at Marvel the core was not comics. It was the raft of stories, all of which had the potential to be repurposed. Next Gen Leaders are using new eyes, dialed in with clarity to discover what is in the company that can be reused as the core for future growth. You don’t have to be young to do that, just mentally agile. Unfortunately, there aren’t nearly as many of these agile leaders as there are those stuck in the old ways of thinking.

Hartung: Give me your take on some big companies that aren’t in your book, but that are in the news today and on the minds of leaders and investors. Apply The Founder’s Mentality to these companies:

Microsoft

Zook: Did well due to its monopoly. Lost its Founder’s Mentality. Now suffering low growth rates relative to its industry, and in the danger zone of a growth stall-out. They have to refocus. Leadership needs to regain the position of attracting developers to their platform rather than being raided for developers by competitive platforms.

Apple

Zook: Jobs implemented The Founder’s Mentality brilliantly. Apple got close to its customers again with the retail stores, a great move to learn what customers really wanted, liked and would buy. But where will they turn next? Apple needs to make a big bet, and focus less on upgrades. They need to be thinking about a possible stall-out. But will Apple’s current leadership make that next big bet?

WalMart

Zook: One of the greatest founder-led companies of all time. Walton’s retail insurgency was unique, clear and powerful. Things appear to be a bit stale now, and the company would benefit from a refocusing on the insurgency mission, and taking it into renewal of the distribution system and all the stores.”

It’s been almost a decade since I wrote Create Marketplace Disruption – How To Stay Ahead of the Competition. In it I detailed how companies, in the pursuit of best practices build locked-in decision-making systems that perpetuate the past rather than prepare for the future. The Founder’s Mentality provides several case studies in how organizations, especially large ones, can attack that lock-in to rediscover what made them great and set a chart for a better future. Put it on your reading list for the next plane flight, or relaxation time on your holiday.