Social Media is Taking No Prisoners

Caught an interesting snippet on eMarketer Wednesday.  The headline:

Executives Fail to Focus on Social Media Strategy

The article goes on to summarize findings from several US and UK studies.  Its bottom line: while almost 80% of executives deem social business strategy important, only one-third as many see it as a strategic priority (27%).

Here are the two tables presented in the article if you’re not inclined to read it.

The article ends with the admonition that choosing not to focus on a social strategy is risky, and that companies must start putting a plan into action.

Stop the train!

I looked at the data and drew an entirely different conclusion.

Three years ago 80% of executives would have said that they didn’t have a clue as to what social media was.  In fact, pre-2010 data indicated that not only was SM not understood, but there was enormous caution around committing more than budgetary table scraps to experimenting with it.  The CEO when I worked at Sun Microsystems, Jonathan Schwartz, was the only Fortune 500 CEO with a blog.

That a quarter of Enterprise executives deem SM to be a strategic priority means that we have indeed traveled a long distance in a dozen quarters.  These corporate adoption rates are keeping pace with - or outperforming - the adoption rates of PCs, mobile devices and web investment by corporations over the past 15 - 30 years.

It is rare - especially in large organizations - to see executive attitudes change so materially in such a short period of time.  To be sure, some will miss the boat (there’s a reason the descriptor “laggards” is used at the tail-end of adoption curves).

The conclusion is otherwise clear: social media is not a short term fad.  It is here to stay.  It is changing - and will continue to change - entire industries, the workings of the market, and the relationship of buyer to seller.  There is no middleman: only you and your customer.  And your customer can never be put on hold again.

Those red and black bars in the charts are only going to grow larger each quarter.

Planning to Win by Planning to Fail

Good managers plan to succeed.  Great managers plan to fail.

Like learning how to walk, learning how to manage is an acquired skill.  It’s a mountain of success built on rocks of failure.  Some big, some small.

Great managers can size up a situation, consider options and make a choice.  And become skilled at doing it quickly, and almost effortlessly.  Early in their journey they learn, as Benjamin Franklin wryly mused, that nothing is certain in this world but death and taxes.  They come to know there are no “sure things”.  So they test for failure.  Things overlooked.  Assumptions generously made.  Cause-and-effect where none exists.

Great managers are champions of the null hypothesis.  They have acquired the discipline of turning every promising solution upside down on its head and figuring out how to make it fail.  They take nothing at face value.  They are the Chief Quality Control Officer of their own ideas.  Confident, yes.  Arrogant, no.

They’re quick to take a proposal from a staff member and subject it to swift and demanding scrutiny.  They dissect it to find out what will cause it to fail.  Then send the staff member back to the drawing board.

In doing so they are neither cynics nor tormentors.  They know that failure is best discovered in the meeting room rather than in the marketplace. They are preventing a colleague from making a poor choice.

If you yearn to become a great manager, develop the discipline of planning for failure.  By doing so you are less likely to encounter it.

B2B Marketing That Works

I once estimated that I had a hand in building or executing demand creation campaigns that supported over $150B in sales.  That’s a big number.  And it represents the goal of many hundreds of marketing programs and demand creation efforts.  Yet, that number would have been much bigger had even 1/3 of those campaigns been truly effective.  But they weren’t.

I’d estimate that perhaps 1 in 10 of the marketing campaigns we ran was really effective.  It sounds shockingly low to be sure.  But I’d wager that it’s not much different than the performance achieved by most B2B firms.  Certainly not those whose marketing I’ve had a chance to take a look at in the past 18 months.

B2B marketing is hard to do consistently well.

Why is it so low?  There are many reasons - some of which I’ll blog about another time.  For me, one stands out: the failure to measure the right thing, the right way.    Without good and valid measurement performance becomes art - it is in the eye of the beholder.  Which is why I’ve become such a fan of the insights of Rosser Reeves.  

Rather than dwell on why things don’t work it’s more useful to understand something about the 10% that do work.  In all of my experience I observed that, time and again, successful B2B marketing campaigns share five things in common.

1. The target market is well and accurately described.  Painstakingly well-defined market and buying profiles take the guesswork out of creating demand.  A sturdy profile is like a pilot’s pre-flight checklist.  It leaves nothing to chance.  In B2B where the demand most often must be harvested by the sales organization, the target profile is both map and compass.  It increases the odds that a sales person will know, in advance, exactly who to prospect, where to find them, and how to appeal to them.
2. A superior value proposition.  For starters, there must be a tangible and relevant benefit to the buyer.  And to raise the bar that benefit must be unique to the firm among its competitors, and compelling enough to drive a spike in order to increase velocity and volume.  And that applies to every vertical or horizontal segment the firm chooses to pursue.  What resonates for a pharmaceutical buyer may be ho-hum to a heavy equipment manufacturer.
3. A concrete and compelling market offer.  In a world of seemingly limitless choice your offer must stand out from the crowd.  It must be concrete, easy to understand, easy to accept (not the no-brainer you might think it is) and beneficial to act upon.  An action to take, a period of time in which to act, a configuration to purchase - overall, a reason to decide in favor of your product, and decide now.
4. Buyer Engagement.  “If you build a better mousetrap the world will ...” most certainly not beat a path to your door, let alone know where to find your door.  You must proactively choose how to get buyer attention and present your offer.  The buyer can find you (the web) or you can find them (email, direct mail, social media, telesales, personal sales).  I don’t prefer one over the other.  I prefer both.  Together, acting in unison.  Just like meeting up at a restaurant.
5. A call-to-action for the Sales organization.  I have seen more potentially good marketing campaigns become also-rans because Marketing did not invite Sales to the party.  The first test of whether a marketing program can be sold is to sell it to Sales.  If Sales buys into it you are assured of a winner.  If you can transfer confidence to the sales organization you can expect it will find its way to the customer.  Sales is your test kitchen.  You must teach them the recipe.  Let them taste the finished product.  And show them how to make it on their own.  Only with guidance served up under a critical eye can performance follow.

Following these principles assures that the B2B marketer will enjoy satisfactory results for her efforts.

The Eccentricities of Warren Buffett

“Develop your eccentricities while you are young.  That way, when you get old, people won’t think you’re going ga-ga.”

- David Ogilvy

I admire Warren Buffett.  Anyone who can assemble the long term financial track record he has, and yet be plain-spoken, humorous, and unassuming in his approach to life is indeed rare.  Yet, he is considered an eccentric by many.  Unjustifiably so, I say.  

I grew interested in Warren Buffett in the 1990’s and studied Berkshire Hathaway’s annual reports.  Buffett offers a great many insights - applicable both to investing and to running a business.  There are three that I especially like.  They form the principles of effective, disciplined business execution. 

1. Economic moat.  What Michael Porter devoted over 500 pages to describing in Competitive Advantage, Buffet captures in the simple two-word phrase he coined and popularized.  Simply put, a moat is the sustainable advantage a business has over its competitors.  It’s what allows a business to offer a product similar to those offered by its competitors, but which achieves superior profits.  With few exceptions, firms with substantial moats (Buffett likes to refer to these as moats teeming with alligators and crocodiles) are themselves exceptional markets.  They understand the relationship between their customers and their offering so well that competitors can only mimic the veneer.  Apple.  Nike.  Starbucks.  Heinz.  Coca-Cola.  A great brand is as good as a patent.  Sometimes better.
2. In it for the Long Haul.  Buffett is a value investor.  He buys based on the economic prospects of the business, management track record, and price.  As he likes to quip, his ideal holding period for a stock is forever.  His friend and teacher, Benjamin Graham, taught him the mental attitude toward market fluctuations through the allegory of Mr. Market, a remarkably accommodating fellow.  Daily, Mr. Market has a price at which he will buy your interest or sell you his.  And, irrespective of the economic stability of the business, Mr. Market’s prices change daily based on the euphoria or fear he feels with market events.  Like Buffett, great firms and their management do not blink.  They manage to the fundamentals of their business, and take a long term view.  They may be disquieted by conditions of change in the short term, but provided the fundamentals of the business are sound they do not become slaves to them.
3. Margin of Safety.  If there is a single lesson to be learned from Buffett, it is one also taught him by Benjamin Graham.  Margin of Safety is the underpinning of value investing - paying a price greater at a discount to the intrinsic value of a business to protect the investor from poor decisions, market downturns, and a future that is not knowable.  Well-managed and effective firms understand and apply this principle in their markets as well.  They do not make bets in the market; they do execute against measured risk.  They do not offer or withdraw products at whim; they execute carefully, methodically and patiently.  They preserve the equity of their brands as much as they preserve the capital of their shareholders.  It is no accident that Lexus, experiencing a recall of its LS sedan during the first year of introduction to the U.S., delivered loaner LS sedans to owners while the recall repairs were made.  It is no fluke that Apple’s market cap has grown 10X since its introduction of mobile “i” devices.  It is not a lucky streak that has caused Coca-Cola to hold its decades-long, seemingly impervious #1 market share position.

The very best, enduring businesses take the long term view.  Their managements understand the tenets followed by Warren Buffett.  Yet, their managements are not imbued with special powers unavailable to others.  It’s a matter of understanding the principles of sound execution, and having the discipline to follow them.

As Buffett says, “To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information.  What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework.”

Pricing to Value

F. Lee Bailey is a retired criminal defense lawyer who, in the 1960s and 1970s, defended famous clients including Albert DeSalvo (the “Boston Strangler”) and Dr. Sam Sheppard (inspiration for the film and TV series, The Fugitive) and Patty Hearst.  As an attorney he was a brash risk-taker, a showman who loved the stage, and a public figure who gained celebrity status by successfully litigating high-profile cases.

While being interviewed on a prime time TV talk show he was asked an interesting question: what was his fee for defending a client accused of murder?  His response: if successful, all of his client’s net worth.

The interviewer commented that it seemed quite a steep fee.  Bailey then asked his host: if you were charged with murder and faced the death penalty, would you go with an attorney other than me to save money you might never spend?

Few today would argue that Bailey was one of America’s best trial lawyers.  But at the time he was believed to be.  And that’s what mattered.  He realized that he held a unique position (albeit briefly so) in the public’s perception: there were thousands of trial lawyers, but there was only one F. Lee Bailey.

Bailey intuitively understood the value he offered in a very small market, and how to set his price.

I watched that show.  I could not get over the arrogance of the man, but the lesson was not lost on me.

Doing Advertising the Right Way - Part 4

Recap: Last in a 4-part blog covering the time-proven lessons of advertising legend Rosser Reeves, on whom Jon Hamm's character in Mad Men is based.

Lesson 9: The Danger of Creative Originality

If you’ve read the prior blogs on Rosser Reeves you’ve gathered that he believed that advertisers too often got caught up in their ad concepts.  He was an early proponent of empirical testing as he believed that what marketers intuitively like often does not perform at all well.

To underscore his point he relates two stories:

• First, a panel of creative directors from the top 25 Madison Avenue firms to pick the three worst commercials of the past several years.  Two of the three they chose had been campaigns that had garnered terrific results - one of the two advertised products coming from nowhere to grab 60% share!
• Second, a distinguished group of public officials, asked to select the best advertising of the year, chose a particularly striking corporate ad featuring the abstract art of painter William Baziotes.  It has 12 words of copy: “A teacher affects eternity; he can never tell where his influences stops.”  Reeves subsequently tested the performance of the ad, and found two things:
  • 100% of people did not understand the picture
  • 85% of them did not understand the ad’s message  

In both cases: why were these choices made?  Because, in the former, the ads were regarded as unoriginal, unimaginative and dull.  In the latter, the ad was chosen for its stunning originality.

Reeves’ contention is that marketers, dealing with the enormity of product choices and amount of advertising in the market, have migrated to differentiating the advertising rather than the products they are promoting.

Reeves taught that it mattered little if an ad was viewed as creative or original, or if it won awards.  He debunked the myth of Madison Avenue by quoting historian Arnold Toynbee, “A myth is a curious animal; for it feeds upon itself, and he more it eats, the larger it grows.” 

There is only one true test of the worth of an ad: that it drove penetration (it is remembered by many) and usage pull (it shifts demand).

Lesson 10: Performance = a memorable message + high reach

Albert Lasker is regarded as the founder of modern advertising.  He built Lord & Thomas - better known by its name today, Foote, Cone & Belding.  His legacy is the Lasker Awards - 80 Lasker laureates are Nobel Prize winners.

At age 25, Lasker met John E. Kennedy, an ex-Canadian Mounted Policeman, who told Lasker that he did not understand what advertising was.  When queried, Lasker told him that advertising was communicating news about a product.  Kennedy’s response, “No.  News is merely a technique of presentation.  Advertising is salesmanship in print.”

Reeves defined it differently:

Advertising is the art of getting a unique selling proposition into the heads of the most people at the lowest possible cost.

And he further added that effective advertising has to achieve two things:

1. Create the right message
2. Project this message to the maximum number of buyers

It is this second point that leads him to put forth his view in response to a trade-off dilemma that confronts advertisers: is it better to reach a smaller audience more often, or a larger audience less often?

When the trade-off is between reach and frequency Reeves is unambiguous: always, always go for reach - the largest buyer base you can afford.  This is not just his opinion, but a conclusion reached based on considerable examination of A.C. Nielsen data.  Looked at another way, the data says: continually pounding on the same audience is a smoothly paved road to diminishing returns.

Summary of the Wisdom of Rosser Reeves

As I said in the first blog, if you can find a copy of Reality in Advertising buy it - even at the $150 in today’s dollars for a copy in good condition.  Read it, and then keep it on your bookshelf right beside Execution, by Bossidy & Charan.

Here, in short, are the 10 lessons of advertising from Rosser Reeves:

1. Effective advertising produces sales, but sales is not an adequate proxy for  measuring performance.  Penetration and usage pull are the key factors.
2. If a campaign is performing, maintain it for as long as it continues to perform no matter how bored the CEO becomes.
3. Strive always to convey one memorable message - one moving claim that the buyer can remember - knowing that as penetration into your market goes up, the message penetration for all of your competitors goes down.
4. Find and convey the Ultimate Selling Proposition (USP) in your message: a single, verbalized, unique, credible and powerful claim.
5. Attempting to exaggerate minuscule or cosmetic product advantages by portraying them as significant will alienate buyers and send them to your competitors.
6. Competitive product comparisons can pay off a USP handsomely provided that the attribute being compared is both significant and relevant to buyers, and the comparative brand is a recognized contender.
7. Feelings-based campaigns (brand image) don’t sell nearly as well as compelling and unique product claims (USPs).
8. Stay with one powerful claim, state it simply, and repeat it often.  Cramming in claims or creative inventiveness risks confusing the buyer and diluting your message.
9. Do not confuse ad creativity with ad performance.
10. With the right message in hand, initially opt for the highest market reach first, then frequency second.

Doing Advertising the Right Way - Part 3

Recap: Time-proven lessons of advertising legend, Rosser Reeves, on whom Jon Hamm's character in Mad Men is based.

Lesson 5: The Deceptive Differential

Ever sit in one of those ‘creative sessions’ where someone writes every single positive attribute and competitive differentiator of a product on the whiteboard?  Then this lesson is for you.

Reeves observed that marketers who trump up trivial, picayune and questionable product attributes pay the price in the long term.  Misleading and trumped up claims prove to be a road to ruin.  A research colleague saw this time and time again in the data, leading him to conclude two principles: 

1. Advertising pushes sales of good products up, and bad ones down.  Promoting unsubstantiated claims reinforces their absence in the minds of buyers.
2. Corollary: promoting minuscule differences which buyers cannot observe ends up over time killing the product.

This principle extends into all forms of marketing, and not just advertising.  Any B2B marketer who has chosen to focus on minutiae and accentuate the positive - be it in collateral, on the web, or in field briefing documents - has very likely incurred the wrath of the sales force once they get burned in the marketplace.  There are seldom second chances!

Lesson 6: Product Comparisons

Build a better mousetrap and the world will beat a path to your door - Ralph Waldo Emerson.  Not if they don’t know about it!

Direct competitive comparison is often the most practical way to demonstrate product superiority.  But it is the slipperiest of slopes in marketing.  For starters, it’s illegal in much of Europe, e.g. Germany.  And it can lead to litigation and counter-advertising (e.g. AT&T and Verizon) making the cost of the tactic significant.  Reeves found competitive advertising ultimately highly effective provided that two conditions are observed:

• Comparative differences must be significant (see Deceptive Differential above), important and truthful - borne out by facts, not merely opinion.

• The comparative brand must be a recognized contender - you can’t kick sand in the face of the little guy.

Lesson 7: Standalone Brand Image campaigns do not pay off as well as USP-based campaigns

Reeves is cautious regarding branding.  I wasn’t sure I agreed with his POV at first, until I finished reading everything he had to say on the matter.

He was certainly not big on fads like subliminal advertising - and the simple reason that results in one test could not be duplicated in further tests.  The notion of scientific method, research and painstaking analysis is a cornerstone of Reeves’ belief in how marketers should conduct their affairs. 

It is due to this philosophical viewpoint that Reeves seriously questioned the effectiveness of branding when it is based on psychological and motivational factors alone.  He was a strict believer in the tangibility and measurability of USPs.  He put it succinctly if not bluntly: the USP is the philosophy of a claim; brand image is the philosophy of a feeling.

Here is why he reached that conclusion.  Statistical analysis of the data for a 20-year period showed these end results in these proportions for USP campaigns:

USP Campaigns	Brand Image Campaigns
10 good campaigns	2 good campaigns
6 excellent	2 excellent
2 brilliant	2 brilliant
2 failures	14 failures

On their own, brand image campaigns seldom lead to good results; but when conducted together with value proposition-based USPs, often lead to excellent results.

Lesson 8: The power of monotonous Simplicity and unvarnished Repetition

Reeves tested out everything thoroughly before going to market with a campaign - his practices were not cheap, but they were effective.  His reasoning was simple: unless the message moved from an ad to the buyer’s head it was useless.  Occasionally, something unusual would be observed - as in the case of four variations of a cigarette ad, all with the identical USP spelled out.

Here are the message retention results for the four variants: 6%, 25%, 54% and 91%.  The message is clear as day in the last ad, and almost totally obscured in the first.  Here are some things that can make - or break - a campaign.

• Repetition (frequency): fifteen years of data show that, even among the largest U.S. campaigns, 70% of the population cannot recall seeing widely run ads.  Case study: a small manufacturer kept refining and improving its USP and, after 3 years, gained share against four competitors with combined ad spend of 40X its own.  Lesson: if it’s good, you can’t repeat an ad campaign often enough.
• Secondary claims: secondary claims can distract from, and wash out, the primary USP claim.  Tertiary and further claims, all packaged up on the same campaign, typically end up confusing buyers.  Lesson: it takes extraordinary skill to introduce more than one message and have it stick.
• Stunning graphics, video and models: glossy and overdone campaigns can make for visually stunning and memorable ads.  But not memorable messages.  Who among us does not remember a favorite ad (funny, slick, risque, stunts, stunning visuals) but cannot recall the product?  Lesson: it's the message that has to stick - not the technique.