A recent conversation with a client looking for an ad agency was a reminder of just how little of its own dog food the industry eats. Her assertion that “they all look the same and say the same things” highlighted just how difficult brand differentiation is. It’s so hard in fact that even those who claim to do it for a living struggle to do it for themselves.
Marketers come to ad agencies for what they hope will be clear brand strategy, distinctive brand positioning and brilliant storytelling. Ad agencies should be the living proof of what is possible, and the work they do to position their own agencies should be the exemplars – and yet many seem, on review, to display an underwhelming ability to position their own agency brands in ways that make the choices clear and valuable for clients.
It’s not about the work – Visit umpteen traditional and digital agency websites and the first thing you’ll see is a plethora of projects, with Cannes winnings and other awards displayed proudly. The work is the product for agencies. Get that. The awards are the certificates of excellence. Get that too. But when everyone claims to do great work, when everyone wins awards (one year or another) and/or when you can’t see the relevance of any of the work to what you need, it fails as a differentiating factor.
It’s not about the people – Advertising, like all professional services, is a knowledge sector. It’s powered by people, and a great number of those people are very, very good at what they do. So having great people, or even a large number of people, is unlikely to transform your agency into the go-to – because there are thousands of great teams globally. Industry insiders get very excited about who is where and what they’ve done. To everyone else, it’s a hygiene factor. Again, marketers expect top flight agencies to have top flight people. It’s important for marketers to know who they are going to work with, obviously – but is it a compelling reason to prefer? Probably not unless they know the industry from the inside very well indeed. (They also know that the chances of them ever working directly with the creative ‘stars’ are close to zero unless they have a very, very large account.)
It’s not about the process – The methodology is the methodology. It’s how the agency gets you to the end point. It should be robust and measurable. But is it a point of difference? Absolutely not. Because, again, most agencies have robust and proven methodologies. It’s not a secret sauce anymore. It’s expected.
It seems everywhere you look these days there is a marketer proclaiming the death of demographics. From experts at Mindshare to JD Power and from publications as diverse as CMO.com and Brand Quarterly, it would appear that the era of demographic targeting has come to a close.
Unsurprisingly, much of the criticism has come from the US. In a year in which Caitlyn Jenner (pictured) has highlighted the transgender issue and Rachel Dolezal has done the same for the transracial discussion, the continued use of demographics to portray and predict a consumer’s references was always going to be contentious.
On a superficial level these critics have a point. Targeting the 28- to 40-year-old moms is clearly not the optimum way to market any product or service. But that was always the case. There have always been weak marketers who don’t do any research or segmentation and just conjure up a broad, stereotypical ‘target segment’ to make their marketing plan look more professional. In that sense, demographics have always been dead. A point I would encourage those obsessed with so-called ‘millennials’ to thoroughly contemplate.
To be fair, most decent marketers never used demographics this way. They recruited a representative sample of the market and asked for demographic questions along with a bunch of attitudinal and behavioral questions. Then they did behavioral segmentation in which the market was sorted into distinct sub-groups based on how they thought and what they bought. Only then, with a small distinct segment of consumers identified, did we apply the demographics and examine if a segment was demonstratively more likely to be older, female, urban etc. There’s a huge difference between assuming girls like pink and boys prefer blue and a representative survey of the population showing a statistically significant skew in color choice between male and female respondents. The difference between stereotypes and segments is data.
My defense of demographics may be outdated, however. The entire approach to marketing in which you commission research and segment the market may be going the way of the dodo if experts are to be believed. In the era of digital marketing, the premise of needing to segment and target in the traditional manner is transformed. Once you have a mountain of big data attached to a specific consumer derived from past search activity or from Facebook interactions, the relevance of a consumer’s gender or age becomes relegated to an afterthought. Despite what the financial services industry might warn, past performance of consumer behavior really does predict future performance. Marketers can buy eyeballs based on what they have previously looked at, rather than the age or gender of the skull that they happen to reside within.
Recently Budweiser has been taking flak for its continuing aggressive stance against craft beers. Social media reaction at least seems to be that this is an unfair fight and that the big corporate should not be competing in this way. I’m a long-time advocate of challenger brand strategy. I’m of the view that if you can goad the incumbent into a fight and portray your brand as the much smaller player with principles, then it’s game-on. But what if you’re on the other side of the counter? If you’re a major brand and you’re being hounded by an upstart smaller player, how can you respond without drawing flak or encouraging buyers to support the underdog-that-dared?
Start by recognizing the strengths that you have to play with: an established place in the market; the reach that comes with your networks; the reserves to play the long game; and the resources to at least match, and at best overpower, anything that others may throw at you. Chances are you also have history (and therefore track record) on your side and hopefully that history proves your commitment, experience and expertise. Those are a lot of attributes to work with. The key is to use them carefully.
If you don’t want to take a direct approach in response to what you are being challenged on because you are concerned, probably quite rightly, that it will play straight into the hands of those throwing stones, here are four oblique but highly effective ways to minimize the effectiveness of the insurgent.
1. Counter-offer rather than counter-attack – In the short term, go to market with a great offer that simply makes choosing you so much more attractive. In the longer term, take the opportunity to discreetly re-shape your positioning so that you are less vulnerable to the position that the challenger is taking. Be careful in both cases not to make what you are doing appear as a response to what the challenger is claiming or a competitive strike.
2. Congratulate your customers – Mount a charm offensive. Be humble and grateful. Acknowledge. Remind the market just how popular you are as the leader and what that means in terms of what you deliver every day. Position this as a key benefit for your customers that the challenger brand will simply be unable to match. This approach is an excellent way to first recognize and then galvanize those who continue to be loyal to you. It’s also a quiet but effective way of using the pressures of scale and footprint to remind your distributors of why they should continue to prioritize you and not chase the sector’s latest bright shiny object.
I love this observation by Jay Deragon about the Social Learning Curve: “All things social are creating a herd of copycats following practices, methods and behavior created by the frenzy of learning something new…”
To what end? is the inevitable question.
Once learned, something is no longer new. In fact, it retains distinctive value only while the numbers of people who have access to that knowledge remains small. And yet, thanks to all things social, the chances of that happening are becoming less and less. And the pressures to democratize what one knows are also increasing.
So everyone feels a pressure to learn, and many brands feel a pressure to share, but once accessed by many people, learning retains diminishing competitive advantage. It quite literally devolves to common knowledge. It becomes how ‘everyone’ does things, what ‘everyone’ agrees on, the way ‘everyone’ sees the world. Soon, what was new is basis.
The tipping point for example. Once breakthrough. Now mainstream.
I happen to really like Collins’ book ‘Good to Great’, but if you believe that by reading it today somehow you will emerge with an understanding that presents you with a clear competitive advantage, you couldn’t be more wrong. Why? Simply because everyone you’re competing against has read it too. And between those readings, the reviews, the lectures and assignments at every business school across the world, and the many subsequent discussions, all the learnings are now widely circulated and applied. There is no secret to be had. ‘Hedgehogs’ are now relatively commonplace.
That dynamic impacts so many brands in the knowledge business in three ways:
Most of us are ignorant about prices. Experiments have shown that people will:
- Pay more for an item priced at $39 than one priced at $34
- Spend more when the dollar sign is removed (1,500 vs. $1,500) and more again if the comma is removed (1500 vs. 1,500)
- Think that prices written in a smaller font are less than the same price written in a larger font.
- Buy relatively more premium-priced beer than standard-priced beer if a third super-premium beer is added to the choices on offer but buy relatively less premium-priced beer if a cheaper beer is added to the mix
- Pay a lot more for any particular brand of beer when it’s being sold in a fancy hotel than if it’s being sold somewhere less fancy like a grocery store
(Good summaries of these and other examples can be found here and here.)
What is a marketer to do when faced with such ignorance? There’s economic reward to be gained by devising pricing and payment strategies that confuse the hapless consumer into handing over more money. But what about the impact on brand reputation?
Unbundling: Unbundling means pricing items or services separately rather than as part of a package. It’s been a lifesaver for the airline industry generating a lot of additional revenue. (Spirit generates almost 40% of its revenue from these non-fare fees.) Consumers hate these fees but pay them anyway because they shop on fares and just grumble about the add-ons. That makes the economics too compelling for airlines to ignore whatever the cost to the brand. Southwest is an exception. With a brand built on being a consumer champion and acting differently from the main carriers, it’s committed itself to a no-added-fee strategy and has made that an important part of its overall marketing message. It’s cost them a bundle but, in this case, adding the fees would have been off-brand and even more damaging to its reputation than it’s been for other carriers.