Tweeting for Lower Pay

A constant in the life of marketers is the inevitable change in values and lifestyle among different age groups.  There are decided differences among the Silent Generation (age 65+), Baby Boomers (age 47 to 64), Gen X (age 30 to 46) and Millenials (everyone else).

 

A pointed example of why it’s necessary to stay on top of lifestyle demographics is found in the just-released Cisco Connected World Technology Report.  This report focused on college students and young professionals, seeking to understand how important a company’s social media policies are to this population:

 

The result: a whopping 40% of college students and 45% of young professionals would take a lower-paying job in return for more flexible workplace access to social media.

 

Looks like the Herzberg Two-Factor Theory of Motivation (positive motivating factors, and hygiene factors that become a negative when absent) has another entry under the list of carrots employers can use to attract employees.

 

It’s a good bet that we’ll start seeing online employment ads touting environments that not only allow, but encourage, the use of social media - all in return for a slightly lower salary.

The Power of Frameworks - Where do I Begin?

When Nobel Prize winners in science and economics are recognized for solving particularly elusive and important problems, the body of their work is taken into account;  Nobel laureates are not one-trick ponies.  Though a singular contribution may capture the limelight, these people demonstrate a pattern of repeated success in solving problems.

 

Highly valued managers are likewise highly effective problem solvers.  While they never find a successful solution for every problem they encounter, their “hit rate” is high.  Similarly, their  record tackling particularly difficult and thorny problems likewise stands out.

 

There are many attributes that make for effective problem solvers in business (or medicine, education, etc.).  One of the attributes that consistently effective managers share is their ability to learn, use and refine frameworks.

 

Framework Defined

A framework is a comprehensive problem-solving method, based on proven principles (as well as assumptions and rules) that can be applied reliably to find a solution.  A framework:

• is a structured approach - physical or conceptual
• shows the relationship among its components
• is prescriptive and repeatable

Frameworks work when used properly

Though we all use frameworks, it’s tempting to take shortcuts or alter the underlying principles of a framework to suit our circumstances.  Consider how many people opt for making over-optimistic assumptions and performing “generous” math in planning their retirements.

 

Like airplane pilots who rely on their flight instruments to guide them in bad weather, effective managers develop the discipline to rely upon proven frameworks to guide their decisions.  

 

Takeaway

Frameworks make the going easier - when they’re used correctly.  Stay tuned in the weeks ahead to see a few frameworks that have proven useful in managing marketing decisions.

Getting Sales and Marketing on the Same Page

Even on a good day, getting sales and marketing on the same page is a seemingly impossible task.  For starters, by the nature of their work, Marketing and Sales focus on different tasks and priorities.  Consequently, they are often assigned goals that only serve to widen the alignment gap that already exists.

 

No wonder CEOs and COOs are frustrated!

 

There are, however, ways to narrow the gap considerably.  One of the more effective methods lies in creating joint goals for both functions.  

 

Here’s an example that is relevant to any start-up or firm entering new markets (geographic or vertical - both work).

 

The metric: time to first customer reference.  

 

Acquiring a new customer is one thing.  Cooperating to acquire one to which is willing to act as a reference has spin-off benefits for both functions.  Among them:

• Continuity:  Marketing’s focus doesn’t begin and end with supplying qualified leads to Sales.  A satisfied customer’s experience can be used in PR, featured on the firm’s website, or published as a use case - all fodder for a broader marketing campaign.
• Shared skin in the game:  The stake of a shared outcome brings shared focus, priority, effort, scheduling and - importantly - commitment and willingness to work through problems and glitches that are bound to arise.
• Having the wind at your back:  Establishing that all-important first “win” in a new market eases the path to market penetration, and lightens the load for future campaigns and sales.

 

Joint Goals Must be Relevant and Actionable

Not every goal you could think of is going to be appropriate.  Those that lend themselves well to establishing joint sales and marketing goals must:

• yield an outcome that is relevant and important to each
• produce short term results
• be measurable

 

Takeaway

Getting sales and marketing to work effectively together is a difficult, but not impossible task.  Assigning a joint goal will make difference.  Take a test drive with one goal first.  Add 1 - 2 others and you’ll likely have what you need to solidly align sales and marketing functions.

What Occupy Wall Street is Really About

An analyst commenting on the U.S. Labor Department’s report that 80,000 new jobs were created in October (less than had been hoped) made this wry observation: U.S. corporations have increased hiring; the problem is that they are hiring somewhere else.

 

The Occupy Wall Street protesters are (the rioting fringe element aside) rightfully concerned that the good times are gone and showing no evidence of returning anytime soon.  Their frustration, vented on the financial sector and “the 1%”, though understandable, is directed at the symptom, not the problem.

 

The Problem: The U.S. is Losing its Competitive Footing

The United States is simply not the attractive mecca for business that it once was.  Just as water seeks its lowest level, dollars seek the most favorable commercial environment.  That environment, according to Harvard historian Niall Ferguson, lies in the East.

 

In his book Civilization: The West and the Rest, Ferguson describes 6 man-made institutions (he calls them “killer apps”) that explain the 5-century ascendency of the West to economic and political dominance globally. 

• competition
• science
• private property rights
• consumer protection
• modern medicine
• work ethic

He explains how these factors combined to contribute especially to the rise of the U.S.  He also goes on to illustrate how the East has been rapidly - and successfully - adapting these same methods to gain the upper economic and political hand. 

 

As this interview with Ferguson attests, it’s provocative stuff, and bound to fuel intense arguments at the dinner table.  If you accept his hypothesis, the link between the rise of the East and the economic difficulties in the West that are fueling protests like Occupy Wall Street is clear to see.

 

Implication: The Game is Changing

With the East catching up, the U.S. has to acknowledge the likelihood that it will continue to lose global economic and political leadership to China.  Unskilled jobs in the U.S. that have disappeared in the past 5 years, have disappeared for good.  The game has changed.  So have the stakes.

 

Takeaway

It’s not a Doomsday scenario; but it’s a very different story that the one we grew up believing.  Western corporations would do well to answer two questions:

• What are the difficult realities we need to face to think globally?
• What are the tough decisions we need to make to act globally?

Further Reading

A kinder and gentler view can be gleaned from ready Thomas Freedman’s two bestsellers, The Lexus and the Olive Tree, and The World if Flat.

 

Can an Orange Puppet Point the Way to Social Media Advertising?

A couple of interesting articles appeared on November 2, 2011 in both eMarketer and The Wall Street Journal regarding ad spending - with particular focus on Facebook.  It adds up in the form of fundamental questions facing marketers.

• How much of the ad budget should I shift to social media (SM)?
• Which SM sites fit our markets, if any?
• How can I tell if I’m getting bang for the buck?
• What happens if I move too quickly, or not quickly enough?
• Is there a way to “game” the system?

There are no easy answers.  But there is some intriguing data - and one clever use of Facebook.

 

 

The Shift to Social Media Ad Spend

By 2013 U.S. spend on social media is forecast to reach almost $5B (close to $10B globally).  That figure represents only an estimated 8.2% of all spend on online advertising.

 

But consider the estimates of U.S. advertising spend below.  Though forecasting is an inexact science, assuming these estimates are valid, though, online spend is expected to represent almost 25% of U.S. advertising within 3 years, with social media accounting for 8.2% of all online ad spending - over 2% of ad spend on all media.

 

Media	Share of 2011 Ad Spend	5-year CAGR
All media	100%	3.8%
Online	19%	14%
Social media	2%	35%

 

The Safe Bet is Facebook

Tallying $7 our of every $10 of social media ad spend, if marketers are going to play the odds - especially those for whom SM advertising is a grand experiment - Facebook is the handicapper’s choice (read the full eMarketer article here).

 

 

But Wily Firms Make Their FB Bets Prudently

As reported in the WSJ, comScore released data for 50 U.S. Advertisers in September, showing both overall impressions they received from the Internet, and the proportion of those received from Facebook - the familiar “Like” button.

 

The accompanying interactive graphic can be viewed here.

 

The article goes on to report how some savvy advertisers are finding novel ways to use Facebook to garner impressions, but without paying for FB ads (read the full WSJ article here).

 

Fox pure creativity and risk-taking, Ford goes to the head of the class with its Ford Focus ad featuring its new spokesperson Doug, an orange-colored puppet.  For close to $0 spent on Facebook advertising, Doug managed to pull more than 43,000 “Likes”.  Judge for yourself.

 

The Strange and Unforgiving Netflix Ecosystem

CBS Technology Editor Larry Magid summed up prevailing market sentiment by referring to Netflix’s 60% price increase in July as www.mercurynews.com-www.mercurynews.com" title="Larry Magid" target="_self">“clearly a boneheaded move.”  The decision to spin off its DVD rental business under Qwikster, quietly announced in CEO Reed Hastings’ blog, was arguably the bigger PR snafu.

 

However, as angry as some subscribers were, there’s no evidence to bolster the belief that Netflix acted to exploit customers.  Far from it.  Netflix was acting in its long term interests, and that of its customers too.  The issue lies in how Netflix made its choices.

 

Content Providers Not Making the Same Mistake Twice

This week, SJMN columnist Chris O’Brien wrote about the core problem facing Netflix: video producers have learned the hard lessons of the music industry and, aided by federal law, are not about to let royalty dollars slip through their fingers.  O’Brien points out two key factors that are shaping the streaming video business:

• There’s no massive black market sharing video freely as Napster did with music.
• Regulations that permit sellers to rent out DVDs do not apply to distribution of streaming video.

 

Consequently, the studios don’t “need” Netflix (or Amazon, Comcast, Apple, etc.); they have other routes to market.  The studios can set their own price, having distribution power protected by regulation.  And they do - so much so that streaming content purchases for Netflix could increase as much as 10X in two years.

 

The Bigger Picture

In Distinguishing Strategies and Tactics, the 5 C Framework was briefly described.  In brief, the framework depicts the factors that impinge upon a company’s ability to choose and successfully sell to its customers.  It is shown in the graphic below.

 

 

As the visual illustrates, the line connecting a company to its customers is not a straight one.  Collaborators (who supply to and work with the company) and competitors have a stake in winning customer dollars.  All of these operate within an environment (Context) in which uncontrollable factors - technological innovation, the economy, cultural norms, regulations and geography - affect the marketing landscape.

 

The simplicity and pleasing visual symmetry of the framework belies the complexity of what it models in the marketplace.  Applying the framework to Netflix yields a very different decision set than when it is applied to the company’s major competitors.

 

To illustrate the point, make these substitutions for the labels in the graphic:

• Company = Netflix
• Collaborators = Production Studios
• Competitors = Cable companies, Apple, Amazon, and so on
• Context = streaming technology + regulations governing content distribution

 

In fact, to be thorough, the Production Studios are also competitors (they can distribute directly as well as choose other distribution partners).  Likewise, in the case of cable companies, they are collaborators of Netflix as they own the “last mile” of cable that enables streaming content to reach customers’ flat panels.  As far as distribution systems go, this is difficult to navigate.

 

Harder to Get Right Than it is to Get Wrong

Netflix is nothing without the production studios; it simply would not otherwise be in business.  Adding to the challenges facing Netflix is the fact that none of its major streaming competitors has a physical DVD rental business, which is an entirely different animal.

 

The market is shifting to streaming video.  DVD rentals have reached maturity and are beginning to decline - in both volume and margin.  Netflix has a foot in both ponds.

 

So, in many respects, it chose to pass along future costs of its DVD rental business rather than subsidize it, enabling it to steer its margin toward expanding the much more costly acquisition of streaming content.  Its bet: that its customers could see the shift underway and would, with some reluctance, see their own best interests served by paying more today to ensure availability of a wide range of premium video content tomorrow.

 

It was a bet that has not paid off as hoped.

 

Takeaway

Frameworks like the 5C are not recipes for making better - or even good - decisions.  They do, as the name suggests, help “frame” the factors that shape situations in which decisions must be made.

 

Marketing 2.0 Infographic

Seth Godin popularized the term Permission Marketing to characterize how Web 2.0 technology is shifting marketing promotional tactics from a one-way, mass intrusions by marketers to two-way, buyer opt-in dialogues.

 

There is little doubt that marketing dollars are shifting from what we regard as conventional marketing to social marketing, or simply Marketing 2.0.

 

As it’s a complex landscape of change, understanding and keeping up with everything that is taking place is daunting.  So, here’s a simple visual which appeared on Mashable on October 31 that gives a good over-arching view of what is taking place (it appears below, but may be too small to read).

 

While I don’t agree with all implied conclusions contained within the infographic (its producer, Voltier Digital, has likely tilted it in favor of its commercial interests) as a general snapshot of the evolution that is taking place in marketing promotion it is certainly in the ballpark.

 

What Motivates You?

Why does a figure skater spend two hours, after her coach has left a six-hour practice, attempting to perfect her routine?

 

Why does a fifteen year-old stay wake until 3:00 a.m. to advance to the next level of a video game?

 

Why do some people arrive at the office by 6:00 am, and rarely leave before 6:00 pm?

 

Why do billionaires show up every day to work at all?

 

Motivation is the driving force by which we achieve our goals.  It is a very personal thing.  Motivators are the source of our motivation.  Understanding the motivators that are both relevant and important to individuals opens a door to understanding why people respond in different ways to the same situation.

 

Understanding the principles and mechanisms of motivation help us to:

1. Identify why and how buyers make purchases, so that we can better sell to them.
2. Build and develop high-performing workplace teams.
3. Understand our own passions, and tap into the energy that fuels our success.

Theories of Motivation

There are easily a good dozen theories of motivation - models that help explain why people act in the way they do.  Some are well-known and straightforward; others are developed for specific applications, such as education and learning.  

 

Here are the common ones, with links to more information if you want to deep dive into any of them.

 

Theory 1: Maslow’s Hierarchy of Needs

This is probably the best-known theory of motivation.  Who isn’t familiar with this?  The basic model suggests two things:

1. our unsatisfied needs dictate our behavior
2. the lowest levels of need hierarchy must be satisfied first; in other words, our focus is on satisfying deficits in any lower level before shifting our focus to the next higher level.

 

You can find our more about Maslow’s theory here and, if you are into scholarly pursuits, here as well.  Alderfer’s ERG theory - dealing with the core needs of existence, relatedness, and growth - is an offshoot of Maslow’s theory.

 

Theory 2: Incentives

This is likely the second best-known theory of motivation, explaining the influence of positive and negative reinforcement in shaping our behavior.  Learn more about it here.

 

Theory 3: Drive Reduction

This is actually a composite of several theories, all to do with drive.  Partly embedded in Maslow’s theory, drive theory helps to explain the underpinnings of our basic physiological and psychological needs.  It is explained here.

 

Theory 4: Herzberg’s Two Factor Theory

A standard offering of most management courses, this theory suggests that two factors - extrinsic and intrinsic - determine job satisfaction in the workplace.  They include motivators which give positive satisfaction (e.g. challenge, recognition), and hygiene factors which when absent or insufficient, become demotivators (salary, job security).

 

Theory 5: Self-Determination

This focuses on intrinsic motivational factors such as curiosity, care, hobbies and interests.  The  theory explains why people devote themselves to the mastery of endeavors like playing an instrument, developing expertise in a field, or being altruistic like Mother Theresa.

 

Intrinsic and Extrinsic Motivational Factors

Extrinsic (external) factors come from our environment, outside of us - monetary gain, trophies, threat of punishment, fear for our lives, etc.  Intrinsic (internal) factors come from within us.  When someone refers to another as “motivated” they usually mean that their behavior is driven by something internal to that person.

 

What Are Your Intrinsic Motivators?

It helps to understand what makes us tick.  By and large, most of us are going to respond to extrinsic motivators (fear, reward) in fairly predictable and observable ways.  However, our internal drivers are entirely personal.  What is relevant and important to one person (for example, the need to compete and win) can be entirely irrelevant and unimportant to another person.

 

Here’s a list of commonly recognized categories of internal motivation drivers.  Determine which ones characterize your behavior.  There are no right or wrong answers.

•  
  • Acceptance - approval from others
  • Achievement - the desire to excel, and avoidance of failure
  • Affiliation - harmonious relations with others
  • Curiosity - yearning to learn
  • Eating - enjoyment of food
  • Family - raising children
  • Honor - loyalty to family, ethnic, or organizational values
  • Idealism - social justice altruism
  • Independence - individuality, and freedom from control by others
  • Order - organization, stability, predictability, repeatability
  • Physical activity - exercise, physiological development
  • Power - telling others what to do, or organizing others to achieve a common goal
  • Romance - sex, being sexually attractive to others
  • Saving - keeping, collecting, protecting assets
  • Social contact - having friends and acquaintances
  • Status - social standing, importance and recognition in society or a social group
  • Tranquility - safety, peace, harmony, freedom from violence
  • Vengeance (competitiveness) - striking back, conquering, winning

 

Hard Goals Are the Best Motivator

You might be surprised to learn that motivation, as a serious topic for psychological study, was pooh-poohed 50 years ago.  So begins a 2002 paper published by business professors Edwin Locke and Gary Latham titled Building a Practically Useful Theory of Goal Setting and Task Motivation: A 35-Year Odyssey.  It’s worth a read.

 

Basically, Locke and Latham surveyed the literature on goal-setting and motivation, and drew several conclusions.  Here they are in a nutshell.

 

Goal-setting works, and hard goals work best

1. Difficult goals yield the highest level of effort and performance.
2. Encouragement (“Do your best”) is not as effective as goal setting.

Motivation increases because hard goals:

1. Focus our attention on goal-relevant activities, and away from irrelevant activities.
2. Energize us, resulting in more effort.
3. Prolong our effort either to make deadlines, or stay in it for the long haul.
4. Compel us to test out know-how and strategies until we find a solution. 

Our level of motivation is influenced by:

1. Commitment - the most important factor when goals are difficult
2. Importance - our belief in the need to achieve a goal
3. Confidence - our belief that we can succeed
4. Feedback - knowing our progress in relation to the goal
5. Task Complexity - our ability to master the skills needed to achieve difficult tasks

Is all this new?  Probably not.  But it serves as a good reminder that:

• we work most effectively when we rise to the occasion
• understanding the underlying principles of motivation are helpful in pulling together a goal framework that works effectively for us
• what works to motivate us, works to motivate others, too

Seeing the Forest for the Trees

Though we’d like to believe that things will become simpler over time, they don’t.  Complexity and detail grow.  There is zero risk of either of them subsiding any time soon.

 

The amount of information we must deal with to make decisions grows annually; it doesn’t shrink.  As the body of knowledge in every field grows, mastery becomes difficult.  As a result, the jobs we perform become more specialized.  We use technology not to rid ourselves of complexity, but to make complexity more manageable. 

 

It is harder to see the big picture, how the pieces all come together, and where where our particular piece fits.  All is not lost, though.

 

Managers can deal with increasing complexity and detail by envisioning what they do in a larger context, and using simple frameworks to make decisions.

 

Context = ecosystem.  It’s our surroundings - particularly those which directly affect outcomes, and over which they have little influence.  Economic,  technological, social, regulatory and geophysical factors shape the market’s operating environment.

 

Framework = systematic approach.  Frameworks build on well-known and accepted principles, rules and relationships that generally characterize how things work together.  They are the basis by which decisions can be tested against well-understood models of how things behave.

 

Looked at another way:

 

Context =  a radar screen for things that matter in the environment

Framework = viewing actions as variables that determine how things work

 

Jack Welch, GE’s past CEO, was fond of saying that superstars could “see around corners.”  In other words, they developed effective radar screens for picking up on the things that mattered most to their undertakings.  He also emphasized that Execution, the ability to wrap it altogether to get measurable results, was the key skill of effective business leaders.  It was his way of saying that leaders possessed uncanny skill at seeing the system of how things work together, and then focusing on those variables that made all the difference.

 

Learning to think, decide and act in terms context and frameworks makes for great managers and leaders.

When to Take Action

Things aren’t working out the way you hoped with the online advertising campaign (or new hire, new product introduction, etc.)  Should you be stoically patient and stay the course, or immediately take action to set things right?

 

Good leaders seem to instinctively know what to do.  But it’s less a matter of instinct, and more a result of practice.  Such leaders are neither impulsive, nor are they fence-sitters.

 

They develop the skill of mentally testing and visualizing how a plan can unfold, and what could cause it to unravel.  They rapidly run through what if options in their heads, learning to recognize critical milestones and markers, and etching these into their mental plans.  The acquire such skill consciously and deliberately at first, and then unconsciously with practice as their confidence builds.

 

If key milestones and progress markers are being met the leader is patient, no matter how anxious others may be.  Yet, when a critical marker is missed, even if it’s not obvious to others, the leader acts decisively, knowing exactly what to focus on.

 

What appears instinctive is more often the result of methodical practice.

Delegation

On a radio interview I heard, a management writer defined delegation as getting other people to do what you don’t want to do.  Though tongue-in-cheek, he made his point.  

 

Some managers regard delegation as a means of disposal, retaining the things they covet while distributing the leftovers to their subordinates.  When workloads mount, they must assign some of the things they enjoy doing, often fiercely micromanaging those who have been given responsibility for them.

 

It’s a dismal proposition for the staff: either be assigned something that doesn’t matter to the boss and be left alone, or be given responsibility for something of value knowing that the boss will hover over you.  No wonder morale under such managers runs low.

 

Leaders, however, see every task as an intrinsic component of a larger value proposition, no matter how trivial it may seem.  They match the skills of subordinates to the organization’s activities to maximize the overall value that can be harvested by it.  They are conductors of an orchestra, directors of a play.  Their gift lies in the realization that the whole is greater than the sum of the parts, and their attention must then focus on developing high-performing teams.

 

Their staffs are energized, eager, and focused on contributing.  They are keenly aware that mastering abilities will create opportunities to expand their skills and take responsibility for ever-higher components of the organization’s value delivery.

 

All managers delegate.  Leaders delegate masterfully.

Reset or Rewire?

In a 2009 speech about relations with Russia, U.S. Vice President Joe Biden said, “It’s time to press the reset button.”  The phrase, adapted from the common instruction for personal electronics devices, aptly describes what we to do in situations when things simply don’t work properly.

When a pitcher’s throwing mechanics are off, the soufflé doesn’t rise, a process runs afoul, or a tried-and-true sales promotion is getting lackluster results, then pressing the reset button is often the fix.  Especially when a mistake or miscue has been made.  Some minor or unwitting change in how something is performed or executed can lie at the root of the mishap. 

 

Yet, if a pitcher’s mechanics are corrected, the oven temperature for the soufflé is raised, and the miscues in the process and sales promotion are detected and remedied, and the desired result still does not come about, then something else is going on.

 

Doing the Right Things, in the Right Way

Management is concerned with choosing the right things to do, and then ensuring that they are done the right way.  “Don’t fix what’s not broken” is a well-known cliché.  Managers learn to resist go back to the drawing board at the first sign that something isn’t working the way it should. 

 

Rule of Thumb #1: when results fall short, the default course of action should be to first examine implementation.  More times than not, the issue can be found there.  “Pressing the reset button” restores everything to its initial working order.

 

Sometimes, though, the problem lies not in how something is done, but what is being done.

 

What Worked Yesterday May not Work Today

If a policy, strategy, program or activity stops performing well, and no fault can be found in its implementation, then it is no longer serving its intended purpose.  Repeatedly pressing the reset button won’t make it work better.

 

The problem lies not in a reset or restore, but in the wiring.  Things need to be changed.

 

Rule of Thumb #2: when a reset doesn’t fix the problem, then rewire.

Good management is about knowing the difference, and knowing the order in which to proceed with a fix.

Knowing When Something is Strategic

On September 26, I blogged about the distinction between a strategy and a tactic.  In short, a strategy is a plan that describes how resources are organized and focused over the long haul to achieve important aims.  Tactics are the actions that bring a strategy to life.

 

A strategy without action is not useful.  Likewise, tactics performed in the absence of a coordinated plan are like closing one’s eyes and throwing a dart at the board in hopes of hitting a bullseye.

 

I also emphasized that, though we may not realize it, the vast majority of us spend our waking hours executing tactics - not creating strategies.  That’s ok.  After all, tactical execution is what makes strategies work.

 

Of all the tactical actions that a firm takes, some of those actions are so important to the success of the firm in the market that they are said to be strategic, i.e. critical components of the firm’s plan.  All strategies are comprised of tactics; but not all tactics are strategic to the firm.

 

The Canary in the Cage

There’s a simple test to tell if a tactic is vital to the success of a strategy: simply stop doing it and see what happens.

 

If a tactic is critical, stopping it (or altering it in a significant way) will soon affect the firm’s performance.  If the tactic is not integral to the firm’s strategy, then the strategy will continue to perform (though perhaps with some inconvenience or inefficiency). 

 

To illustrate this, look no further than what happened to Coca-Cola when it altered its taste formulation in 1985, weeks later, they were forced to introduce Coca-Cola Classic in response to consumer backlash.  Or, more recently, consider what happened when Netflix changed its pricing model, and then decided to separate its streaming and mail order businesses.

 

Looking at What We Do

Working at something that is recognized as being essential to a firm’s strategy translates into job security.  Being great at it is the best job security one can have.

Where Our Tax Dollars Go

Graphic artist Jess Bachman discovered that the U.S. Federal Government is quite transparent when it comes to telling us where it plans to spend our money.  The only problem is that the data is buried in spreadsheets containing hundreds of thousand of tables when, printed out, weigh 50 pounds.

So, Bachman labored for weeks to find the data, and then convert it to a simple visual, understandable set of information.  Edward Tufte would be proud!

You can purchase it from Amazon as a 24” x 36” glossy poster for $20.  Or, you can simply view it here.  If the web page loads properly, you can click on any part of the poster to magnify it.

Enjoy!

 

Mirrors and Windows

The basic principle underlying all marketing strategy is the creation of value: developing offerings that create value for buyers, while creating value for the firm and its partners.  When both sets of values live in equilibrium, the long term health of the firm improves.

 

As firms get larger, managements become more removed from daily interaction with their markets - with the demands of Wall Street ringing daily in their ears, it is easy to lose sight of the balance.  When achievement of the firm’s strategic objectives becomes a proxy for providing customer value (e.g. “What’s good for General Motors is good for the U.S.A.”) the firm’s health is at risk.

 

When asked once what keeps him awake at night, the CEO of a Fortune 500 company responded, “The thing I fear most is that the office windows become mirrors, reflecting back to us the image of the world as we want to see it.”

 

Does your organization look through windows?  Or does it stare at its own image in mirrors?

 

When was the last time you stepped outside to make sure?

The Choices We Make

A common lament of doctors is that patients don’t follow prescribed treatments.  Sometimes, a patient chooses to follow only the parts of the treatment plan that are agreeable.  At other times, a patient will end up back in the doctor’s office insisting that the treatment plan has been faithfully followed, either embarrassed or fearful to admit that they took some shortcuts.  In doing so, they undermine their own welfare.

 

Managers take similar shortcuts too, and find themselves wondering why a problem persists.  For example ...

 

You present a four-step plan to a boss who agrees with three of the steps, but not the fourth (which may be the lynchpin to the entire plan).  As you’re the expert in the area, and know the three-step version won’t work.  You have an obligation - to your boss and yourself - to stand your ground and explain why.  If your boss remains unconvinced, your only option is to come back with an alternative.  Agreeing to a plan (for which you are accountable) that you know won’t work is not an option.

 

Or, after much back-and-forth debate, your company devises a new marketing plan.  Some parts you like, others you don’t.  You have a choice: agree (though reluctantly) and commit to supporting it; pretend to agree, then privately modify the company’s plan to fit to what you think will work better.  Agreeing to a plan (for which your boss is accountable) to keep your boss happy, and then following your instincts, is likewise not a sound option.

 

All things being equal, make the choice that does not land you back in the doctor’s office worse off than when you began.

The $10B Social Media Ad Gamble

With worldwide spending on advertising expected to reach $500 billion in the next year, it is both a big industry and a major component of marketing spend.  In the 15 years since the internet hit the mainstream, the industry has undergone significant change.  Now, with the rapid rise of social media, the difficulty in effectively allocating advertising dollars has ratcheted up a notch.

 

Advertising Fun Facts

To understand why, let’s begin by examining baseline spend on all forms of advertising.  The table below shows expected 2011 advertising spending (worldwide and for the U.S.) for all media, the subset of online media, and its subset of social media.

 

 

	Global Spend $B	Yr/Yr Growth	U.S. Spend $B	Yr/Yr Growth	5-Year Annual U.S. Growth
All Media	480	3.7%	175	3.8%	3.8%
Online	80	16%	33	18%	14%
Social Media	5.5	146%	3.0	148%	35%

 

Sources: eMarketer, GIA, IAB, Kantar Media, ZenithOptimedia

(Caveat: individual forecasts disagree markedly among themselves and, as with all forecasts, one needs to judge which method seems the most reasonable.  Example: For 2011, the range of global ad spending is a low of $460 million and a high of $492 million.  The discrepancy widens over the term of the forecast horizon.  For the purpose at hand, medians are used.) 

 

In round numbers, online media will soon account for almost 20% of all advertising spend, and is expected to grow in the U.S. by 14% annually through 2016.  The expected growth through 2016 for social media spending (forecasters are cautiously sticking their necks out on this one) is expected to come in between 30% to 40% annually (the midpoint of 35% appears in the table).  Why the broad range?  There are simply too many unknowns with social media advertising: it’s short of history, and long on experimentation.

 

Within two years (2013) forecasters are comfortable calling out a global spend in the neighborhood of $10 billion - with half of that spent in the U.S.  Here is one outlook.

 

 

$10B is a Big Number

Compared to an expected worldwide spend on advertising of over $500B by 2013, $10B seems a mere drop in the bucket.  Here are some benchmarks, though, that put this $10 B figure in perspective.  

$10 billion is about the same as:

• All U.S. online ad spend in 2004
• All U.S. online display advertising in 2011
• All banner ads purchased worldwide in 2011
• The expected total of all U.S. Classified newspaper advertising from 2010 to 2016
• Expected 2011 U.S. online ad expenditures by the computer, financial services, and automobile industries combined.

The $10B Allocation Gamble

From initial online advertising in 1994/95, it took 10 years for the U.S. to reach an aggregate spend of $10B - a period of considerable trial and error (much of the latter).  With new media it often takes years to understand the frameworks and best practices that determine effective promotional spend, and to acquire and refine the skills to pay it off.

 

Social media ad spend is no different - and, arguably, even more challenging to get right.  Shifting ad funds from one medium to another is easy.  Getting the same - or better - performance from those re-allocations is not.  Those who experiment and run by gut instinct are indeed taking a gamble.  Those who approach the opportunity with vigor, and a systematic method of allocating, monitoring and tuning ad spend have the odds in their favor.

 

Managing advertising spend is similar to managing an investment portfolio: one must arrange the portfolio to support strategic goals, then manage it to keep it on pace to achieve those goals.

Effective management is a matter of: 

• having concrete, reliable and valid performance measures
• testing market behavior and planning assumptions before diving in (measure twice; cut once)
• establishing performance milestones at short intervals to determine if programs are paying off as planned

There may as yet be proven certainties in social media advertising, but systematic management can keep it from being an expensive object lesson.