Stop Using ‘Category Experience’ as a Criteria to Hire an Agency

If I had a penny for every time a client Request for Proposal (RFP) document asked if the agency has relevant category experience, I would be rich and retired today…

Not sure if this is something clients are taught in some secret “client” school but it has become a global epidemic and I for one am completely unable to understand why. For those not from the wicked world of advertising and marketing – when a prospective client is looking to hire a new ad agency they send out an RFP and it always asks if the agency has relevant category experience (they are most often eliminated if they do not). For example, Mercedes-Benz would look for an agency with automotive experience and Benadryl for one with pharmaceutical/healthcare category experience.

I have never understood why it is so important for an automaker to only find someone who has sold a car before. Or why they believe that an agency that has sold cars is the only one capable of selling another car. One would think that clients would seek out agencies that have the greatest salespeople. People who have done great work across many different categories; rather than limiting themselves to car salesman. If I were a client I would never limit myself when selecting a new agency partner. There is good reason why it is so hard for consumers to tell automotive, financial services and pharmaceutical advertisements apart. The best way to illustrate my point is by using a golfing analogy.

All professional golfers play on many different courses around the world. With every new course they need to navigate a totally different layout, wind conditions, sand quality and even climate and vegetation make a dramatic difference in everything from distance control to putting green speeds. Most good golfers are able to negotiate these aspects and sufficiently play a competitive round but great golfers have the ability to raise their game. They can take their past experiences and combine it with innate skills and talent, adapt their game, and excel in new and varying conditions. As a result, after spending a very short time learning the intricacies of the new course, they are able to master it and win.

Great agency practitioners are the same way. They have the necessary skills to adapt to the needs of any category and client because the fundamentals of great advertising never change – a great strategy, a powerful customer insight and creative work built on an idea. This is what differentiates iconic brands from regular brands and courageous clients from clients.

I have also found that agencies and agency folk with strong cross-category experiences bring not only a fresh set of eyes to a challenge but also richer perspectives that ultimately lead to better solutions for their clients. Over my career I have sold ice-cream, complex CRM solutions, baby products and even launched a television channel. It is our wealth of cross-category experiences that ensures we are well-versed enough to develop a corporate M&A strategy one day and help market a dandruff shampoo the next.
So the next time you are selecting a new agency, look for diversity of experience versus specific category experience – you might just end up being delighted by the ground breaking and category re-defining work your agency delivers.

HBO Go or No Go?

HBO’s announcement about launching a streaming only version of their popular service has been received with great joy and serious apprehension depending on which side of the fence you sit. For many years now consumers, specifically people who have cut the cable cord (cord cutters) have been clamoring for services like HBO and ESPN to go rogue. Cord cutters have said that they are willing to pay a monthly fee for these premium services if they were stand-alone and not part of a cable bundle; one that includes hundreds of channels nobody wants to watch. So for cord cutters and consumers like me, who currently live in both worlds, this is a big win and giant step in the right direction towards a la carte programming.

However, on the other side of the fence sit the cable and broadband companies who have balked at HBO’s move because it will disrupt their lucrative and outdated business models and threaten the uncomfortable status quo. Incidentally, the business model the cable companies are trying to protect is akin to going to a restaurant and being told that in order to eat your favourite desert you will have to order, and pay for, all the deserts on the menu – I doubt you would be eating there again! Comcast’s CEO recently publicly rebuked the HBO announcement; “Mr. Burke warned that, whatever HBO’s intentions, ‘it’s going to be a challenge for them to not cannibalize what is already a really, really good business’.” (Source: Wall Street Journal). It is worth noting that if Comcast’s proposed merger with Time Warner Cable gets approved by regulators, they would control 70% of the broadband market; and interestingly HBO will need to rely on broadband providers like them for the high speeds and massive bandwidths they will need for this gamble to succeed.

The reality is that when most established and entrenched companies make proclamations about changing their business model or radically disrupting the status quo, it is often a knee-jerk reaction to competitive pressures and therefore rarely ever thought through. Take for example CBS’s announcement, on the heels of HBO’s, about launching their own streaming service for $5.99 per month. CBS like other broadcast networks is free-to-air. This means that unlike cable channels all you need is to buy is an over-the-air-antenna and plug it into your TV and you can watch all the networks, as well as numerous local channels and public broadcasting stations like PBS; all in HD and all for free (Source: Lifehacker).

CBS also makes a lot of money by negotiating hefty “re-transmission” fees from cable providers, which form part of our monthly monster cable bills. So the first question is why would the cable companies continue to pay these hefty fees when CBS is making the same content available through other means? Additionally, from a customer standpoint, live sports like NFL games are not included in the streaming service. Let’s face it, CBS hardly has a reputation for stellar and premium content that people are willing to pay extra for; not sure many people are doing high fives about the fact that “Two Broke Girls” will be available to watch via streaming. Also, if I want to watch the first six seasons of the Good Wife, I can do this for free as an Amazon Prime member, or see them on HuluPlus under my current subscription (where I can watch many other shows), or simply download 2 seasons at a time from iTunes for roughly $65-$70; which is still cheaper than paying for one year of CBS’s ‘All Access’ streaming service  — you do the math.

HBO on the other hand is not like a CBS (other than the misfortune of having Time Warner as it’s parent company). It has always been an entrepreneurial company with innovation as part of its core DNA. It single-handedly changed the television industry; lifting the quality of content and thus saving us all from a TV-hell filled with nothing but the Kardashians. However, the quality of content that forged HBO’s brand reputation also forced the rest of the industry to raise its game, and many have followed-suit by creating their own original and award winning programming. AMC has had huge ratings and critical success with “Mad Men”, “Breaking Bad” and “Walking Dead,” while Showtime has given us “Dexter”, “Nurse Jackie” and “Weeds”. Even Netflix has gotten into the content game with “House of Card” and is now stepping fearlessly into the feature film business with a recent four movie deal with Adam Sandler (Read my take here: “Netflix, Data, Drunkard’s and Adam Sandler”).

So unlike CBS, I believe HBO is doing this for the right reasons and more likely to think it through and get it right, now that they have woken up to and accepted the new consumer realities. This I suspect also led to their decision to go ahead and piss on their powerful cable partners whom they did not care to inform ahead of making their announcement.

HBO knows that they can no longer distinguish themselves on quality of content alone. As a result they would be competing (with the likes of Netflix) with one hand tied behind their back as long they are relegated to being stuck as part of the traditional cable bundle.

Second, they have read and accepted the tea leaves on the changing pattern of television consumption. Online video has been growing for some years but the acceleration has been marked in the last year. An Adobe study shows that for the first time online video viewing habits are going mainstream and no longer relegated to tech savvy early adopters and cord cutters; “Researchers tracked 165 online video views and 1.53 billion logins over a year, and they found that total TV viewing over the internet grew by 388 percent in mid-2014 compared to the same time a year earlier — a near-quintupling.” (Source: Wired Magazine). This means that even people who have regular cable subscriptions are choosing to watch more of their TV and movies online via internet connected devices.

Most importantly, HBO is clearly paying attention to their customers changing viewing habits that have decimated the old Nielsen TV rating system. People no longer want to watch shows based on a Fixed Point Chart (industry jargon for the TV schedule published by a channel). Instead, they prefer to watch it a few days later or simply binge watch an entire show or season during a weekend or long haul flight.

While I do not have a crystal ball and cannot predict the success of HBO’s standalone service, I do know a couple of things. It is certain that they, like Netflix, will face tremendous opposition and hurdles from movie studios, cable operators and broadband providers; all interested in preserving their lucrative status quo. However, HBO will also have the wind in their sales based on the fact that customers are demanding a breakdown of the straight-jacketed cable model and getting more used to consuming content in an a la carte, anytime, anywhere, pay as you watch model.

My money is always on companies that try to deliver on their customers’ needs and focus on making life easier for them, rather than try to force customers down a path driven by the company’s myopic goals and bottom-line greed.

Why Ron Johnson’s JC Penney Experiment Failed

Ron Johnson is credited with delivering two of the most successful retail models of this century as the man behind Target and Apple Stores. So what went wrong with JC Penney?

It seems that Johnson decided to ignore his own tenants and instead chose the path that many other corporate leaders seem to follow today – he simply changed the most superficial aspects of the JC Penney brand – the logo, colours, slogan and physical retail environment and delivered it via a shiny new ad campaign. He completely forgot to change the things that matter more and are responsible for delivering a successful brand experience; the company culture, internal and front-line employee’s buying into the vision and having the training and commitment to deliver on it. And I believe another thing he missed or underestimated, before rolling out his re-invention, was the core JCP customer appetite for the pace and extent of change.

Many corporations still believe that advertising and marketing can compensate for lack of a quality product or a great customer experience. It is a shortcut that will ALWAYS fail. This is an age old battle we in the advertising industry have fought with clients who do not want to spend the time or invest the money to build a truly great brand. They want quick, easy and cheap ways to a successful brand. There is not one. Advertising campaigns can only sell what already exists; they cannot create what does not. In fact, I would argue that you end up damaging your company and brand more by making promises that your product and customer experience do not deliver. In the end, customers are less likely to forgive or try you again. The man who at both Apple and Target was the antithesis to this fast and easy way seemed to succumb to external pressures with JC Penney and try to deliver a massive turn-around in a few quarters rather than over a period of years.

With every brand re-invention you have to start by answering two fundamental questions; what still works for the brand and should be carried forward, and second how far can you move forward without losing your most loyal customers; while ensuring you gain new ones. This is not about finding the best possible compromise but it is about ensuring that you don’t throw the baby out with the bath water and lose your most valuable customers by creating something that is so alien to them, so unfamiliar that they no longer have an emotional connection with the brand. Also, you have to be cognizant of the fact that old brands have a long history and bring with them baggage, so you have to move them forward and update them in ways that do not allow you a totally clean slate, like Mr. Johnson had with Apple Stores. Perhaps, Mr. Johnson decided to try and re-invent this old brand like he had a clean slate, without understanding what worked and what his most loyal customers would not be willing to live without, at least in the short-term. As a result he alienated his most loyal customers before he had the time to attract a new customer.

Mr. Johnson should have spent his first year simply unveiling his vision with internal management and employees with an aim to start building support, passion and committed to delivering this vision to customers; while taking time to study JC Penney’s brand history and better understand their most valuable customers. All this much before any shiny new ads and re-designs hit TV channels and store shelves. One thing I will say in his defense is that Wall Street is responsible in large part for creating an environment of quarterly results mentality; where CEO’s are under tremendous pressure to deliver growth every few months. This is simply not the way you can ever build a successful company and brand. It takes time and years of investment and management commitment to create the likes of an Apple, Amazon, IBM or American Express. That said, there will always be external pressures and corporate leaders also need to push back (on Wall Street and investors) so they can take the time to bring all the stakeholders on board with their vision, before leading the way in executing it on far more realistic timelines.

Marissa Mayer and The New Yahoo Employee Policy

Marrisa Mayer is absolutely right that real and meaningful relationships cannot be built purely from behind computer screens, via email, or over the phone. I don’t care what anyone says about the proliferation of technology and the ease-of-access it has provided for an increasingly mobile workforce, and it has, but it is still not close to being a substitute for face-to-face contact and the casual in-person encounters in lunch rooms or other parts of an office that form the intangibles of building human relationships.

I admit that people can be extremely efficient working remotely. It is easy to interact with various departments, have meetings over Skype and pretty much complete every task you need to, in order fulfill your job responsibilities. I also know many companies today are entirely virtual, and are thriving, but I bet even their CEO’s will admit that with more money (or much lower travel costs) they too would want their employees to meet more often, in-person. Ultimately, every company leader realizes that you cannot create that highly intangible yet extremely valuable thing we call “culture.” Corporations that have it feel more familiar, warmer and more like a home away from home for employees. They provide a common purpose, and those that do it better, create a sense of belonging to a tribe.  Just think about the amount of time we all spend working …

Here the rub; you simply cannot build meaningful relationships with people you have never sat across the table from, shared a latte with or broken bread with. A very wise CEO once told me that “everything that happens after 6pm is far more important than what transpires during the workday; this is where the magic happens.” He was absolutely right. It is during these moments; when you share the experience of having faced an abusively irate client, discuss the dressing down your boss got in front of you, or have a colleague offer to do something for you, so you can leave early, because they overheard it was you anniversary– these are the things that form the bonds that make up the intangible glue of real relationships. And these moments only transpire when you let your hair down, share a laugh, throw out a random idea based on something you just overheard, or because someone confessed a problem they were facing over lunch. Try taking your finance guy out for a coffee and ask him what he thinks of your latest project, and you will start to understand what I mean.

So while Ms. Mayer was right to bring people back into the office, it seems she may have relied a little too heavily on data to drive he decision and therefore failed miserable on how she executed Yahoo’s new policy (source: Business Insider). As much as I have talked about the virtues of being in the office, I feel equally that there needs to be a balance. People should be able to work from home a few days a week, and this is where technology has provided the ability to do it seamlessly (just not all the time). It should not be one or the other. If I were Ms. Mayer, I would have made it mandatory to be in the office every day for the first six months, for new hires, and then three days a week after that.

The most ironic thing about Ms. Mayer’s approach is that while she may have used data to inform and even make her decision, she clearly needs to learn that she also needs the human touch when executing and implementing policies across the organisation; especially when her objective is try and get people to build better inter-personal relationships.

Will the #Apple fall far from the tree?

First, I want to wish Steve Jobs the best and hope his health improves.

I guess we all knew this day would come. The board, the shareholders, the employees, the analysts and the evangelists; it’s just that we had all hoped it would be much, much later.

Whether you are a fan of Steve Jobs or not, what nobody can dispute is the fact that he single-handedly turned a fledgling company and tired brand into the world’s most envied and admired; one that is now on a path to become the world’s first trillion dollar company. However, what is most fascinating about the Apple story is how he achieved this. His vision, passion and workaholic nature are well-known but Jobs took this to another level entirely. It is said that he was involved in every decision right down to determining the type of wire that will secure MacBook’s in the Apple stores – that is both incredible and insane. Jobs’ is the only CEO I can think of who seems to go against conventional wisdom in every sense and still come out on top, every time. He is a classic example of someone who zigs, when everyone else is zagging.

Most CEO’s will tell you that the key to successfully growing your company, after you become a certain size, is to hire really smart people and then give them latitude to operate and a wide berth to do their jobs – and get out of the way. Not, like Jobs, remain involved in every minute decision; like what glass to use on the staircases of your retail stores. We know Job’s remained involved in every decision, even as Apple blew past Microsoft and Oracle to become the most valuable technology company on the planet.

Even more amazing is the fact that while the whole tech world seemed to acknowledge that the old Microsoft “proprietary” technology model was a failure and no longer sustainable in our new global ecosystem; filled with consumer demand and a need to constantly adapt and innovate in an open source way. So “open” has become the new buzzword for software development and management philosophies. Even companies like Procter & Gamble are now embracing this for rapid product prototyping, development and go-to-market strategies. On the other hand we have Apple who have created a completely closed and proprietary ecosystem for their products – and have been more successful than any other company. It is almost as if Steve Jobs’ philosophy and management style are completely counter-intuitive. This applies right down to the bets Jobs has made over the years. Like launching a tablet when everyone said that there was never going to be a market for a device that was not quite as small as a cellphone and not quite as powerful as a laptop; and we all know how that turned out.

We have been told that Apple has a very deep management bench and that may well be true but when a larger than life CEO like Steve Jobs vacates his position, he leaves a very rare and large hole in a company that few other leaders do.

So the 337 billion dollar question with Tim Cook is; how far will the Apple fall from the tree?

Pepsi: In Need of a Refresh?

“When industry market share numbers came out in March, showing Pepsi-Cola slipped to No. 3, analysts quickly accused PepsiCo—and Chairman and Chief Executive Indra Nooyi—of taking their eyes off the company’s biggest brand.” (WSJ article: http://on.wsj.com/iF1Jel)

Just a couple of years ago Ms. Nooyi was considered a visionary and the messiah who had come to transform Pepsi. Today, the same people are raking her over the coals for not delivering in “the numbers” in the short-term.

Granted that Ms. Nooyi has had some major missteps along the way with the disastrous re-branding of Tropicana and the Sun Chips LOUD bag fiasco but I think that is to be expected when one is trying to fundamentally change the DNA of a company and brand.

From the beginning, Indra Nooyi, made clear that she was embarking in an ambitious and risky plan to change the complexion of Pepsi Co. by making it a more responsible and health conscious global company. She never hid the fact that she was going to do this by re-orienting Pepsi’s product portfolio to be healthier and less “junk-filled.” This is the equivalent of a corn flakes brand entering a country like India where people ate hot and spicy meals for breakfast. This brand laid out a strategy that said they would not expect to break even for at least 10+ years because their first objective was to change generationally entrenched consumer habits.

The same applies for Ms. Nooyi’s strategy. It is based on a long-term vision and relies on changing consumer habits over the period of a generation, not over a quarter. By taking advantage of a global health trend that is only going to grow in the future she is among that rare breed of CEO’s actually doing their job by thinking about the company ten to twenty years down the road.

I truly believe that one of the major reasons US companies today fail to dominate like they once did in the global marketplace is because so many have become slaves to this quarterly earnings and profit mentality driven by Wall Street.

The reason companies like Kellogg’s and IBM have succeeded and stayed dominant for more than 100 years. It is because they still take the long view; which often means investing and/or taking losses in the short-term to enter a market or implement a new strategy, which pays huge dividends and sets the company up to dominate in the future.

There is no substitute for a CEO’s long-term vision and strategy for a company.