Month: October 2016

Austin is experiencing unprecedented growth and there is no end in site. Austin in being recognized as one of the fastest growing cities in the United States and the growth is not due to a particular industry, but rather a combination of the three P’s; people, purpose and partnership.

Back in the 50’s and 60’s city growth was due to a certain industry that drove economic activity that in turn grew population growth. With the world quickly changing and growing from its first two waves of the internet, and moving into the third wave of the internet city growth has changed from economic and industry stimulus to now what is being seen as cities that offer open collaborative environments where social and economical avenues are open to foster an environment of innovation.  The first wave of internet growth shows the likes of AOL, IBM and AT&T that were the beginning of the internet.  Then came the second wave that saw the like of FaceBook, Uber, Airbnb and other Start Up’s that introduced software that drove more innovation.  The third wave will bring further innovation such as the self driving cars, cure for disease such as cancer, and innovation of drones and robotics. Marketing has played a role in the second wave of the internet as analytics and big  data drove direct online marketing techniques that better understand the buying needs of the consumer.

What will the third wave of the internet bring? Marketing techniques will change as more analytics and big data plays a deeper role in our buying habits.

The  cities that are seeing the same sort of unprecedented growth are cities like Nashville, Phoenix, Pittsburgh, and New Orleans. These are cities where not a particular major industry is driving the population growth but rather the 3 P’s are playing a major factor.

 

Amazon’s direct to customer retailing model has redefined logistics, warehousing, and e-commerce in general, while at the same time redefining customer expectations of online ordering.

As its Prime membership has grown, more and more users expect faster and lower cost shipping and this is not only putting a strain on their ability to execute, but is also now starting to hurt their bottom line.

Amazon posted its lowest quarterly profit in over a year this past week. This is largely due to investing to keep up with the demand.

http://www.wsj.com/articles/amazon-posts-smaller-than-expected-profit-1477599108

While this caused shares to fall the overall outlook for Amazon is still positive. The problem will be how well it can balance surges in demand, like the upcoming holiday season, with new offerings like Prime Now that promise two hour delivery.

Amazon continues to push the envelope of its capabilities with these offerings but they are taking quite a risk at a time of year when consumer sympathy and tolerance for failure is typically at its lowest.

Amazon has never shied away from challenges. To stay ahead they have to push, but the costs associated with those efforts may be too much to bear.

This month, in October 2016, an a political ad dropped on YouTube, and presumably our local TV.  This ad was for the re-election of Republican Travis County Commissioner Gerald Daugherty.  The ad quickly went viral, and spawned many news stories.

The primary reason the video went viral was because of its humor content, and that it took a somewhat negative view of the candidate.  Other humor is generated in the structure of the ad being so different from traditional political ads in this cycle.  Most ads are negative on the competing candidate, rather than the candidate behind the ad.  This ad highlights a weakness and turns it into a strength: the candidate is seen here as an insufferable policy wonk, annoying and boring his wife.  For the wife, this is bad, but for the constituents, this is viewed as a positive, that he cares so much about policy.  It is especially noteworthy because so much of this election cycle has been entirely devoid of policy.  The entire ad comes off as very believable, humanizing, and reinforcing of the candidates credibility.

All of this is in stark contrast to the sorts of ads which went viral in previous cycles, such as Carly Fiorina’s Demon Sheep ad.  More often than not, the ad goes viral for reasons that do not promote the candidate.  Sometimes the ad just so entirely misses the mark, or it finds an unintended audience that finds the ad unintentionally hilarious.

While the ad in question here does have some vaguely problematic gender role overtones, it serves as a reminder that intentional humor and policy do still have a place in modern politics.

The video in question:

Sources:

http://www.forbes.com/sites/willburns/2016/10/26/travis-county-commissioner-gerald-daugherty-teaches-us-how-to-do-political-advertising/#4d5b0853048a

http://motto.time.com/4546787/gerald-daugherty-viral-election-ad/

In an interview, the marketing VP for M&M’s, Berta De Pablos-Barbier, told Diana Bradley that for M&M’s 75th anniversary, the marketing department is trying to do something every month to celebrate.  I don’t follow M&M’s on social media, and I haven’t noticed many commercials about the brand, so I’m not sure how successful this campaign is.  Maybe they aren’t marketing to my age group, or figure I’m already a consumer, which I am on occasion.  I do recall Red Nose Day earlier in the year, and have noticed the retro packages at the grocery store.  However, I had no idea there was a launch of “The Candy Man”.  A song that reimagined the Sammy Davis Junior’s 1972 version.  The company collaborated with Zedd and Aloe Blacc for the remake.  I was able to find the video online, and enjoyed how the old M&M commercials were included.  However, I had no idea this was on the web, or that M&M’s turned 75 this year.

http://www.prweek.com/article/1396611/cmo-q-a-75-year-old-brand-m-ms-keeps-its-marketing-going-stale

 

By Nicholas Van Zandt

For the past six years, Alphabet, the parent company of Google, has struggled to achieve its very lofty goal of competing against the cable and telecommunications giants in their effort to roll out high speed fiber optic internet networks.  On October 26, 2016 they announced what they were calling a “strategy shift”, but was more of a sizable curtailment of the program entirely.

In their announcement, Alphabet stated that their expansion would be significantly curtailed and they would be reducing the staff in that business unit.  Furthermore, the chief executive overseeing the Google Fiber division stated that he was planning on stepping down so that the company could focus instead on new technologies and deployment methods for their high-speed internet.  No replacement leader was announced.

While Google does has not released the financials for the fiber optic project, there have been numerous reports that the expenditures related to this business unit were excessive due to the costs involved with digging up the ground to lay the cable and having to pay to connect homes to the network even if those homes do not subscribe.

It would appear that this decision comes after several years of facing cost overruns that the company could no longer support.  These costs, which one might have assumed that a company like Google could of foreseen, have apparently required the company to scale back operations and it is unclear if the full fiber optic plan will move forward.  Google, for its part, has suggested that their real goal was not to profit from this project, but instead to motivate the existing internet providers to move faster in their own implementations of high speed internet.

Content is proving to be king to many Wireless & Cable providers.  As an employee working my 18th year at AT&T  I wash shocked and many around me to see out company no longer go after wireless and wire line assets, but rather shift position and go after one of the largest content providers in the world. Time Warner has full assets to HBO, CNN, Harry Potter, and many more titles. Content will be positioned for the first time with over the top TV to any device any time and any where on the US and Mexico. AT&T owns Direct TV and has access over most of Central and South America.

As revenues continue to shrink with Cable and Wireless providers for existing services such as voice, SMS and data,  new avenues for revenue need to be created. Video & content will lead the new path towards new ancillary services. With software and automation driving operations cost down new margin will be established with a on demand network and content.

AT&T is adjusting to the convectional means of TV moving from the living room to be viewed anywhere and anytime in the  world that most of us. The conventional cable services are losing ground to the like of Netflix and over the top  video and content provider’s.   AT&T and many other cable providers are on the opposite end of content, and that is why the new era of mega mergers between the cable/network providers look for their perfect match on the content side.

We will most likely see the likes of Netflix and other content providers stock such as Walt Disney  rally as content is king.

What does this mean from an advertising perspective. Direct marketing will increase, and conventional marketing through conventional commercials will slow  as the broad audience begins to narrow and direct commercials will increase.

With generational change comes the changing of marketing focus.  Gen Z, the generation born roughly in the lase 90s  until now, has already been aggressively profiled by marketers, eager to find the right angle to influence their growing buying power and familial purchasing decision influences.  Here are some of the major takeaways I’ve seen,  both from a internal marketing presentation on Gen Z that I was fortunate enough to see here at St. Edward’s.

“Digital Natives”

The one people always start with is calling them digital natives, who have always lived with social media, particularly Facebook and Snapchat.  This means that they are essentially always viewing content, and they are labeled as tech savvy.  However, I believe it is a significant mistake to label them as ‘savvy’.  Savvy implies a deep knowledge of the underlying systems behind the tech.  While they are heavy users, that does not make them knowledgeable, no more than driving makes somebody a mechanic, and watching a lot of TV makes somebody able to troubleshoot one, but I digress, they are tech enthusiasts.

“8 second attention span”

It is notoriously difficult to maintain the attention of certain segments Millennials, and this is even more true with Gen Z, who you have an attention span of roughly 8 seconds.  It is said that Gen Z use 5 screens at once to Millennial’s 3.  I question how they came up with that metric, but it is roughly indicative of the difficulties of catching an eye constantly darting between multiple screens.

“Authentic Marketing”

Gen Z don’t want to be marketed to by celebrities, they want to be marketed to from real people, in real scenarios, describing real usefulness of the product or service.  A stark departure from the drop-dead humor approached use to appeal to cynical Millennials.  They also want to participate in movements, even marketing movements, particularly those which do societal good.

Sources:

5 Things Marketers Need to Know About Gen Z

https://www.mni.com/generation-z-marketing.html

WellsFargo CEO is booted out for the company and the replacement has a hard task ahead of her. With the image of Wells Fargo  tainted and the consumer banking customer having many questions around the integrity of their bank accounts, what are the next steps for Mary Mack, Wells Fargo Banking Chief?

The first step is a change in the sales culture from one that has left in imprint of scandal to one that needs to represent trust and servitude of its customers.  How can this be done? Its needs to first start with how to incentivize its sales force without out the unneeded pressures for cheating to meet heavy sales goals at the cost of a fragile customer base.  The bank has been fines $185 billion million dollars and an image that is extremely tarnished.

In the wake of the bank’s settlement the company scrapped all sales goals but will keep its cross selling initiatives in place that helps its customer with purchasing other services from Wells Fargo and what now appears to be the culprit to the misconduct of its employee’s.  There are 100,000 employee’s at Wells Fargo and over 6000 branch stores and figuring out the retail-branch initiative structure it vital in next steps for the bank. What caused the problem were sales goals were set so high that they were unobtainable and this caused immense pressure for low wage employee’s that felt they needed to cheat to keep their jobs. This seems to be a problem not only at Wells Fargo but in many company’s.  What was the outcome, over the past five years branch employee’s opened over 2 million accounts without customer knowledge.

Wells Fargo has a $185 million dollar fine, an image that will cost marketing millions of more dollars to turn the impression of Wells Fargo around and an employee base that is lost in direction and still wondering if they will lose their jobs. This time not because of lofty SALES goals but rather s shrinking customer base.

I bank at Wells Fargo and I can say there has been some thought for the first time on my long marriage with Wells Fargo to leave the bank. The only reason I do not is because Wells Fargo has done a great job in keeping me happy through their cross sales efforts and I have multiple service through the bank.

 

In the text book, chapter 10 addresses services and speaks to the importance of customer-service.  Customer relationships builds loyalty, and customer service is part of that relationship.  Due to the increase in self-service technologies, customer interactions are less frequent.  When the interactions occur, it needs to be positive.  The article, Customer Care is Your Best Marketing Strategy, talks about the importance of customer care and how technology is changing the frequency of customer interactions.  Customer service isn’t only important for customer loyalty, but also for positive reviews on the internet.  Posting experiences is easier now than ever before, and are increasingly accessible.  A negative review can prevent a consumer from even trying a product or service.  Now, more than ever, those interactions with customers are important.

Customers are not only the consumers, but the employees of the company as well.  If the employees are satisfied with the company and understand how they are part of the company, then they will be able to portray that towards the customers.  The article made an interesting point that the people in marketing are not usually the ones interacting with the customer.  So it’s important to communicate customer service skills to the frontline employees.

https://www.entrepreneur.com/article/254834

 

Nicholas Van Zandt – Blog 6

On October 14, Salesforce announced that it was backing out of their bid to buy Twitter in what became a significant blow to the social media company that has seen declining stock and was reported to be desperate for an acquisition.  This announcement was not met well with Twitter’s stock price, which experienced a seven percent drop immediately following the news.

Twitter experienced remarkable growth following its founding in 2006 as it successfully positioned itself in the social media space with a unique offering.  However, behind the scenes the company experienced significant problems with managerial turmoil and many have criticized the company for having a lack of product innovation.

In addition to Twitter’s share sizable drop in price, their total users count has been declining precipitously year-over-year.  As the company’s success is largely determined by their number of users the reasons behind their mutual declines are nearly identical.  As eMarketer reports, their declining share of the social media market has largely been attributed to the rise of competing platforms to include Facebook, Snapchat and Instragram.

Since Salesforce walked away from the deal, Twitter’s CEO Jack Dorsey is now back at the drawing board to identify a plan for what to do with a rapidly declining company that nobody wants to buy.  In addition to Salesforce, Google, Disney and Microsoft were initially showing interest but ultimately decided such a purchase for them would not be a good fit.

These companies in deciding against the purchase asked the same questions as many of Twitters former shareholders: What is Twitter’s unique value proposition and does it offer an attractive return to advertisers that will monetize the platform.  These advertisers were charged a premium but did not see a viable enough ROI as compared to competing platforms like Facebook.  As a result Twitter’s share price plunged over 80 percent just a few quarters after its IPO and now Dorsey is left with some very difficult choices as his last best hope of salvaging his company has evaporated with the Salesforce bid departure.

Sources:

Liana Baker and Jim Finkle, “Twitter Charts Solo Path as Salesforce Rules out Takeover,” Reuters, October 14, 2016.

Matthew Ingram, “Here’s Who May Want Twitter Now that Salesforce Says it Doesn’t,” Fortune, October 14, 2016.

Seth Fiegerman, “Twitter Stock Tanks as Salesforce Backs out of Bidding,” CNN Money, October 14, 2016.

“Twitter’s Share of US Social Network Users is Dropping,” eMarketer, August 15, 2016.