Being smart in a recession

It’s tough to write anything meaningful or entertaining after such a rough day for the US economy but sometimes daily swings at Wall Street do not reflect the reality. At least by now no one can deny that we are in recession, despite the fact that this not yet official for the statistician in the department of commerce. Give them another 10 or 12 months and they will confirm it. 

There have been quite a few articles from AdAge to the WSJ about the implications for marketers, mostly focused on the same two elements:

• Keep spending, since brands who continue to spend can gain market share from weaker competitors
  
• Include a strong value message in your communication, since consumers are much more price sensitive than before
  

I think most of these articles and discussions are missing a few critical insights that should drive marketing in a recession:

•  Recession varies significantly by geography and by consumer segment. Marketers should use the recession to accelerate their insights about these differences and build more targeted and relevant marketing programs
  
•  In times of recession smart, entertaining, and relevant marketing can become a refuge for the stress and nervousness of most consumers. It does not mean that every brand has to produce an escapist 90 minutes movie but a brand can become a relief point for all the bad news from the real world. It’s not a coincidence that the Olympics had some of its best TV ratings ever.
  
• Most brands don’t adapt their websites and ecommerce offerings to reflect a recession mind set. This weeks New York Times magazine includes a simultaneously hilarious and sad article of how financial companies have not modified the communication from their web sites to reflect the current financial situation or their own perilous state.
  
• There is not better time to diligently understand the impact of all marketing spend by a brand. It amazes me that so many brands are still clueless about the impact of their marketing dollars and the lack of any kind of intelligence of how to optimize their marketing investments. Only spending on SEM because it’s directly measurable does not mean it is the best investment strategy. 
  

Recession hurts and puts a lot of stress on most marketers but it should force us to be smarter and more insightful.

Teaching in Marketing

A lot of marketers forget to stay teachers during their career. It’s critical that more executives in our discipline teach the younger colleagues in both fundamentals of marketing as well as helping younger people to truly innovate and disrupt our marketing discourse. It seems that a lot of marketing executives are just trying to survive another day, either on the client side through the pressure of daily sales performance or on the services side through the grind of ever more demanding clients. The overall business pressure is increasing, especially in today’s time of recession and financial uncertainty, which seems to leave less time for any true teaching. But good teaching in marketing is a critical necessity that will ensure the survival and strategic competitiveness of any corporation.

What is good teaching today in any marketing organization? A few elements come to mind:

• Good teaching is not about seeing the world the way that everyone does. Teaching is about training younger colleagues in being “Counterintuitive”. It is about taking a different perspective on an issue or challenge than anyone else. It is about challenging the status quo and general consensus.
  
• Good teaching is about helping younger colleagues to push their own expertise to another level. It is about not being satisfied with the first attempt that they are sharing with you but motivating them to try it a few times more until they have really put their teeth into their work.
  
• Good teaching is about sharing your own ideas or thoughts, the book insights you might have discovered, the observations that you have done. It’s about sharing knowledge and information transparency, it’s not about secrecy and hording of knowledge in your office and mind.
  
• Good teaching is about not taking yourself too seriously. If you can’t show younger colleagues that our profession is more than just a bunch of billable hours or an endless array of meetings, than you are not teaching the right thing.

Every marketing executive should consider themselves a teacher of our discipline. Teaching will truly determine the future of our discipline

Corporate Blog

My company Draftfcb will soon launch its Corporate blog (www.draftfcblog.com). I will be a regular contributor and I will refer you to it whenever I am posting something worthwhile. It is challenging to keep a corporate blog truly interesting but it is worthwhile to try.

Zagat for Colleges

One might think that most interesting consumer driven rating and recommendation web projects have been already invented or initiated but then you hear about “Unigo”. It is a website that tries to help families and college applicants with their college decision by combining the impressions, ratings, and recommendations of current students at all relevant colleges across North America.

Unigo will be officially launched for a broader audience in a few weeks but its concept shows significant promise. Studying it might help us to further understand how product and services purchase decision can be influenced in today’s universe where Online peer review is highly influential.

The importance of location

Richard Florida just published his newest book “Who is your city”, a follow up to his book “The rise of the creative class”. His key argument is that people underestimate the importance of their decision where to live. His book outlines that the living decision is as critical and important as the decisions about your partner and your profession. This theory is primarily based on the fact that despite the flattening of the world there is an ever increasing clustering of talent in a few mega cities and areas around the globe. And each of these mega cities has its own focus and flavor which should determine one’s living decision.

Information Arbitrage

Arbitrage has been a widely used term in the financial world, describing the practice of taking advantages of price differences in different markets. It is all about striking a combination of matching deals that capitalize upon the imbalance.

Today’s marketing universe has its own arbitrage phenomena that lately has been written about more often, for example Bill Tancer mentions it in his book “Click”. I am suggesting calling this phenomena “Information arbitrage”. Information arbitrage is occurring when a marketer takes advantages for his own brand over other brands due to one of three potential arbitrage situations: More Information, Better understood Information, Better used Information. It is all about capitalizing on an imbalance related to the availability and usage of data.

More Information refers the pure fact that one marketer might had more information than the rest of the category. Better understood information refers to a marketer’s situation when his analytical horsepower and intellectual capital is just better than the rest of the industry and allows him to uncover previously hidden insights. Better used information refers to the fact when a marketer allows the whole brand organization to have easy and meaningful access to information that allows for more and better insights driven decisions than the rest of the category.

Information arbitrage can be one of today’s most critical competitive advantages for any marketer.

Information without Meaning

Neil Postman might have written about the Post-Information world but this week’s fall of United’s share price shows something different. What happened? United’s share price fell by over 70% due to an incorrectly picked up story from 2002 about United’s bankruptcy filing. Yesterday Michael Oneal from the Chicago Tribune sheds some light of what happened and how old information resurfaced as new and highly viewed news.

“Tribune Co. said the story had received a "single visit" about 1 a.m. Eastern time Sunday but because traffic was so light to the site's business section at that hour, one click constituted "most viewed" status. Consequently, a new link was placed in the list of "most viewed" stories on the business page and the Google search crawler picked it up.

Google, in its own version of events published Wednesday on a company blog, said the problem began with the Sun Sentinel site. The site had given the United story no date stamp, the blog explained, so the search crawler looked for the only date available — the one that appears on every page of the site next to the Sun Sentinel masthead.

"The article failed to include a standard newspaper article dateline," the Google blog said. "but the Sun-Sentinel page had a fresh date above the article on the top of the page of 'September 7, 2008' [Eastern]."

What happened next is not in dispute. Traffic started to flow to the story from Google and eventually a Florida-based financial information company picked it up and posted it to the Bloomberg news service. United's stock plunged in response.”

We definitely don’t live in a Post-Information world but in a world that is dominated by meaningless information. And sometimes the lack of meaning and context leads to the strangest behavior.

Digital Intimacy

This Sunday’s New York Times Magazine has an outstanding article from Clive Thompson, who is writing about the impacts of the vast proliferation of Online Social Connection applications (e.g. Facebook and Twitter) on the social life of young people. He describes the tension between the growing networks of virtual friends, the feeling of connectedness to as many people as never before, and the constant story telling of people about their own life in a non-private but small circle environment.

It feels like a world that combines absolute transparency, self created reality shows without any breaks, and the urge to constantly describe you in a compelling manner. We all seem to become story tellers for our own small community of friends without any separation between On-and Offline, between relevant or irrelevant events, between private or public experiences. Most of us marketers have not yet full grasp the implications of this phenomenon for our marketing discipline. I will try to blog about this in the near future in more detail.

Digging in soil

Michel Houellebecq, one of France’s most famous authors, had an interesting piece in the September edition of Artforum. He writes about his compatriot and fellow writer Alain Robbe-Grillet and dissects his dislike of Robbe-Grillet’s novels. In his analysis Houellebecq includes a brief description of pedology, the study of soil, since both authors went to the same prestigious French school of agronomic engineering (one of France’s grande ecole).

Houellebecq writes: “The reigning method of pedology since its inception is soil cutting. It involves digging a vertical trench into the ground, its depth varying depending on the soil in question (generally, one continues down to rock stratum). Once the trench is made, what does one do? Well one observes.” What I love about his description is the similarity between the methodology of “soil cutting” and observations of consumer behavior. The key question remains how deep one is cutting and how one is observing. Digging in the wrong spot will only unveil the wrong dirt. And the absence of a theory of soil will lead to nothing or to just dirt, too.

Observations without meaning

A lot of consumer research is commissioned by marketers to find out what consumers are really thinking, feeling, and desiring. Too often it is forgotten that research does not tell you anything new or original. It can only verify or falsify an existing theory. Research without a concept, without a clear question or theory is nothing than a compilation of experimental facts, devoid of meaning. The French thinker Auguste Comte prefers to call it “empiricism emptied of meaning”.

Any market research needs a theory that guides its work. Too often marketers expect that research projects provide answers. But theories and concepts provide answers while research can only assess their level of correctness and truthfulness. Observations are important but they only gain meaning within the boundaries of a theory. Einstein summarizes it well when he says “It is theory, and only theory, that decides what must be observed.” More marketers should study the basics of sociology and social theory to make marketing research truly productive and meaningful.

Why Traders are more like Consumers than you think

One of my favorite business journalists, James Surowiecki from the The New Yorker, published last week a very insightful piece about the frazzled American Investor and his irrational behavior of trading more in uncertain times than in good times. Surowiecki writes about the increasing volatility on the US Stock market with a lot of days over the last few months where the S&P 500 Index has gone up or down by more than 2%. The main reasons are according to Surowiecki...

• “Herding” - Investors follow other investors and they seem to do it more in difficult times
• The dominance of quantitative-trading strategies which explicitly ride the herd effect. These trading models are based on other traders behavior, so if a lot of traders behave similar, than the model follows the overall market movement
• Investor’s desire to maximize potential gains – every sign of stock market volatility shows a window of opportunity which leads to higher volatility
• The Job of traders is to trade, so don’t be surprised if self confident traders trade, especially in times of uncertainty.

Surowiecki’s analysis and explanation reminds me again that the jobs of economists and marketers are more similar than most people believe. Both professions are deeply rooted in trying to understand human behavior and their often irrational activities. While marketers are trying to understand consumer’s purchase decision in the times of recession, Wall Street economist are attempting to explain trading behavior in days of irrational stock market performance.

And traders and consumers are more alike than different. Traders and Consumers buy products and services based on all available information and existing emotions, then they keep them, use them, or sell them. All this is a good reason to have more exchange and learning across both disciplines. Marketing departments should definitely hire more economically trained minds. It would be good for our industry.