Marketing BS with Edward Nevraumont

Edward Nevraumont
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Two-part interviews with successful CMOs: Their careers and how they got to where they are, and a deep dive into marketing channels for a specific business. Companion to the Marketing BS Newsletter by Edward Nevraumont marketingbs.substack.com

  1. 02/08/2023

    Marketing BS Podcast: Theatrical Dynamic Pricing

    I realize there has not been an essay or a briefing in a while. I am trying hard not to let this newsletter distract me from writing comedy. It’s coming along nicely, but at some point I will pivot back to writing more here. In the meantime, I hope you continue to enjoy these short conversations I am having with Peter and we are hitting the more interesting marketing news in any given week or two. In other news, my 1960s comic book podcast is re-branding. “Super Serious 616” is becoming “WHAT IF… MARVEL was real?”. I wrote a little about why we are making the change here. The big impedes was a big advertising push we are doing later this week that should (if all goes well) blast us to the top of the Apple Podcast charts. The hope is that after an artificial boost or two to the top of the charts, we can use the momentum to maintain that position naturally. It will be an interesting experiment. In the meantime I think the quality of those podcasts have gotten better and better. If you are at all interested, now may be a good time to jump onboard. In the latest episode we discuss just how fast Thor would have to fly in order to cross the Atlantic Ocean in three minutes, and what that means for situations like saving someone from a speeding truck. Now onto this newsletter’s podcast: Full Transcript Edward: Peter, when was the last time you saw a movie in the theater? Peter: Oh, we go every couple of weeks. Every now and again, it's a very different experience now with, the big crazy seats and having to pick your seats in advance. And it's just, it's not like it used to be, but still it's a nice getaway. Edward: Nice. So you paused during covid, but then you're back at it the same frequency there before. Peter: Actually, even during Covid we'd go a couple of times. There was one time we went to tenant. Only people in the theater . Edward: My crazy tenant story is, for a buddy of mine's birthday, I rented the entire theater so the two of us could go see it. Peter: There you go. Well, we didn't have to rent the theater, we just bought regular tickets and you still got it. Don't think or so, but during Covid when no one was going to theaters, it was like the safest place you could be cuz no one else was there. So fair it out. So we'll still do it, every now and again. But it is funny how the industry has changed and maybe not funny, maybe sad how it's changed so much. Edward: Yeah, I think it's interesting how little theaters have changed over the years, and it feels like they're changing quite a bit now. As you said they've made changes in terms of the seats are fancier and more comfortable and they're serving better food and so on. But in terms of like things like pricing, pricing has been, Hey, pay one price. Everyone pays the price to walk in and sees the theater. When you're dealing with a product that has an expiration date, like after 8:00 PM on Thursday, anyone who's not bought the ticket, those empty seats in the theater are going unsold. It's very much like an airplane, but theaters have never been priced like an airplane. Peter: I have never understood that. Yeah, they should definitely be using different kinds of dynamic pricing. And of course it's not just them. It's gonna be the same thing with sports venues and concerts and yeah. It's funny in those domains, you keep hearing a lot about it. Sometimes controversial, but movie theaters seem to be just clinging to their kind of dinosaur ways. Although I guess just now starting to change. Edward: And then even things like. Not just dynamic pricing, but even pricing by title. If you go and buy books, books vary in price. Every book you buy, I don't know what the price of the book is gonna be until I look at the price on it. And they're all over the map. Whereas when you go to see a movie, whether you're gonna see a 500 million avatar sequel, or are you gonna go see a nice little small new indie. They're all the same price. Peter: That, and that's why it's so interesting. So there's that new, 80 for Brady movie just came out and there's all this headline news about it's going to have a different price as if this is a radical. Even in the articles, it's saying this bold move just cuz they're charging a different price for movie. Yeah, they're absolutely right. That should be the way it always works. Not, this kind of one time weird. Edward: And apparently it has been done in Europe, so in Europe they have priced blockbusters at different prices than like smaller indie, lower budget movies. But in the US there's been a tendency not to do that. And I think the logic is like right or wrong, the logic has been if we price a movie at a lower amount, it will signal that the movie is flawed in some way and therefore it'll drive, even though it's almost like the idea of a luxury good. If I go and start discounting a luxury good, then maybe. Price elasticity is a negative elasticity. It might drive people away because it's considered bad because it's a lower price and it seems like that was the fear in the US if we reduce the price of the movie, people are gonna think it's a bad movie and no one's gonna go. Peter: And that's why we shouldn't teach economics courses cause people jump to these ridiculous conclusions, you know? You know, it was the same thing with professional sports a lot of major League baseball teams were saying, oh, no, no, no, no. We can't change the prices. Same issue that we don't want to devalue the product. And now they're doing it all the time, not only charging different amounts for different games. But changing the pricing as the game gets closer and even based on weather and who's pitching and so on, that's just become the rule. Now. It's just a matter of how you do it. It's just weird that some sectors, like movies have just stayed behind and just haven't gotten with the times. Edward: I went and saw, David Chappelle and Chris Rock were in town here in Seattle in December, and we went to get tickets. They like most of the seats in the house were at set prices now. Like the better seats were, better prices and so on. But the best seats in the house, it said this on the website, our top seats are dynamic pricing changing on a day by day basis based on demand. Peter: That's kind of interesting cause like go to a restaurant where they have fixed prices for everything, but then there's that, special steak or fish market price, which implies that everything else charged isn't at. Prices, everything should be in a market price and people get used to it. That's The Thing a lot of these venues hesitate to do it because of some sense of fairness or something. It's like, oh no, we don't wanna go down the same path as the airlines, but people get used to it. People understand that, as long as they're not being gouged, the fact that they bought the tickets later or they're buying better seats they should be willing to pay a little bit more. Edward: That's right. And, I think, maybe the airlines get us used to it, to a point where now it's not a big deal when it happens in the movie theaters. I remember it was probably 2003, 2004 was the first time I went to movie theater where I bought my ticket, like I bought my seat of where I was going to sit. Prior to that, I think every time I went to the movie theater you'd buy a ticket and then it was first come, first serve for where you were gonna be in the theater, of course. And it was around that time, 15 years ago or so where they said, Hey, no, you can actually buy your seat and now you can buy in advance. And now you can show. Just before the theater, just before the movie starts. And I think the concern at the time, at least what I heard prior to that was we don't want to do that because we want people to get to the theater early so we can serve them the ads. And if we start letting them buy their seat, they can show up at the last minute and they won't be able to advertise to them. Peter: Wow, that's such bad logic given how much of a premium they can make for those better seats. It's a whole lot more than putting a couple of eyeballs in front of ads. And in some way the psychological weirdness of having to choose the seat, I think is actually less painful, less cognitively taxing than the idea of paying a little bit more money because, you're closest to the showtime. It's a different kind of process and people adapt to it and become second nature just as dozen these other domains. Edward: And what's fascinating too, I think is who controls this pricing. When I was at Proctor and Gamble, we could go to the retailer and say, Hey, we want Swiffer to sell for nine 90 but we couldn't tell them that Walmart would, whatever price we told them, Walmart would put it lower and we'd be like, please don't put it lower. We're like, we want this be higher. We want this be high margin product. We want everyone else to charge more money for it. But they could do whatever they wanted. We couldn't force 'em to do anything. Now, we could rent ads on television saying, go to your local retailer and pick up your Swiffer for 9 99. But at the end of the day, the retailer decided, and it's that it's the same way with theaters. And so Paramount, you mentioned 80 for Brady. They can't set the price. But what they did is they went and spent a whole ton of market research and then put together a research pack. Basically it was a sales pitch. So they went all the big theater change and said, we did some research and it shows that the price sensitivity for 80 for Brady is really, really high. And if you reduce your price, you can fill seats with older people who otherwise wouldn't even go to the theater at all. And they had to make a pitch. And apparently, I guess that pitch. . Peter: That's great. And that's the way it should be, to get, whether it's the theater owners or again, any kind of venue, to run experiments that take chances, I think there's a real opportunity, whether it's the studio itself or some third

  2. 01/23/2023

    Marketing BS Podcast: Have Electric Vehicles Changed the Rules of Loyalty?

    Some quick updates: * I have an essay in progress. Will hopefully get it to you in the next couple of weeks * Stand up comedy is coming along. My first “big show” is on Tuesday. If you are in Seattle feel free to stop by at Club Comedy. * If anyone is interested in learning how to edit these podcasts and is willing and able to do fast turn-arounds, just reply to the email and let me know. It’s not hard and it’s kind of fun with the software I am using, but it is something I am ready to get off my plate. Quick Take aways: * Here is the article we talk about in the podcast (free link): With New EVs Arriving, Brand Loyalty Goes Out the Window * Here is the book Peter mentions: How Brands Grow * Too long/didn’t listen: EVs have not changed the rules of loyalty Full Transcript Edward: Peter, now that electric vehicles are around brand loyalty doesn't matter anymore. It's all the Wild West. That's what the Wall Street Journal is selling. Peter: Oh man, I've heard this song before . It's the same old tuned men whether it was gonna be the internet, oh, that's gonna change everything. Or social media or covid. It's gonna totally upset the rules of loyalty. Yeah, those rules are pretty locked in and I'm willing to say same story here. Edward: So what are those rules of loyalty? What are the rules that the Wall Street Journals claiming are garbage now? Or are they just missing the entire. Peter: It all depends on how we define the rules. Where I'm coming from it coming forward it is from the top down. If we just look at actual behavior and just look at the choices that people make over time and how often they switch around and what they switch around from in two, there's some very regular patterns to that. And we could talk about it, but all if you go a level deeper and say, what are they thinking? How are they making these decisions? Sure. Maybe the psychology's a little bit different, but from a business standpoint, that's all cheap talk. All we really care about is what are people doing? And in that regard it's no different than people rolling a dye to say, which, which of these different items am we gonna buy? Edward: What they're, so let me quote from the actual article. It says that basically in the past, whenever someone bought a Ford vehicle, 58% of the time it was a Ford vehicle. Now, when they're buying the Ford Electric vehicle, 66% of the time, it's not a Ford vehicle. So there's significantly more people switching to Ford to buy the electric vehicle than we're switching to Ford to buy the non Ford vehicle. Peter: Yeah. First of all, we don't even know if it's significant or not, but second of all, it's cuz the set itself is changing. The number of electric vehicles out there is really different. It, no that's just nonsense. It's cherry picked, rubbish. Yeah. The way it's interesting that we talk about cars cuz the people who first set out these rules that I'm referring to and I know you know it well. There was a guy in London called Andrew Berg and his heir Byron Sharp at the University of South Australia. They basically say that it's you have your die. I have my die. And what drives our choices is, It's just as if random, and it's remarkable how well that story works. The do sleigh model as we call it. And there's no reason to believe it'll be any different here. Do you think So? Edward: You say it's random, but that's not entirely true. It's weighted random, right? Because if I have, if I bought, if my last car was like a Subaru Forester I think when I go buy to buy my next car, I'm more likely to buy a Subaru Forester than amped. Whatever the average of all the other market shares are. I assume Peter: you are so right about that. It's, yeah. It's not that we're all rolling a six-sided equally way to die. In fact, it's not like we're all rolling the same dye that, that there's gonna be this distribution of dice and even that is gonna be well described by again, a. Jewish lay distribution. Look that word up. And yeah, you, but you have your die. And the important point is that your die doesn't change very much over time. So whether it is covid or internet or EVs, you're rolling pretty much the same die. And there's just so much randomness around the choices that you make that it appears that there are some patterns, but there's really. Much to it. The only thing that could be going on here is that we might sometimes. what these like guys like to call a structured submarket. So it could be that though that that just as gasoline split off into leaded and unleaded, then people would move into one corner of it. Maybe we'll see something like that. But it's not some kind of fundamental change in the way that people make decisions. Edward: So again, I go back to. We're talking about, there's no, like the brand loyalty is not a thing, but brand loyalty in that example is right. There's something to, even if it's not oh, I love my Subaru Forester. It's the fact that. That I had a Subaru Forester before, I'm more comfortable. I'm the type of person who would buy a Subaru Forester the first time, which means I'm probably still the type of person who's gonna buy it a second time. Plus the fact that now that I'm used to using it, right? So I'm the, and I know it works and I know it. Presumably it operated the way I wanted it to operate. And so when I go to buy my next car, my default choice is the same car I had before. Now it could change, but the default choice is there, and that's a form of brand loyalty. Peter: But, so there, there's two pieces to brand loyalty and you described them really well. One is just that you just have this natural propensity for whatever reason, to buy some things more than others. That part Absolutely. Positively. And that's why your die might be, a little bit weighted more towards the Subaru Forester. And mine might be weighed a little bit more towards, I don't know, a Tesla or something. Edward: And is that the selection effect? The fact that I bought a Subaru Forester means that, I'm probably the type of person who buys Subaru forests. Peter: Exactly. Yeah. Cuz then the second piece to it, which is the part I take issue with is this idea of lock in this idea that my propensities get shaped by my behavior over time. There's not much evidence to that. Again, if you're a supervisor person Yeah. Then you're gonna lean towards it more than most people would. But your propensity to do it isn't gonna get higher over time. It's pretty. Maybe, but it's gonna pretty much stay at that same level no matter how many times you, you roll that die or buy a car, that's the big piece of it. We don't see that kind of lock in. We don't see that kind of learning. We don't see all of that romantic stuff that we like to talk about where the customers learn to love us and we learn to serve them better. There's not much to that Edward: really. But I feel like. Say I'm doing, let's switch to a new category. Let's say I'm doing laundry. Let's say I moved to a new country, so now I have no brand loyalty at all. The first time I go in I, I look at the shelf and I pick one effectively at random, and I take that home and it works. I feel like the next time I go to the store to buy laundry, I'm gonna go and buy that same one. Just cause I know No, it works. Rather than trying to gamble on something that I don't know that. Peter: First of all, what you said effectively at random, there's gonna be a lot of influences on it. It could be the brand name. It could be where it's located on the shelf. It could be the colors, it could be stuff that you heard about, but you haven't even thought about, seeing ads for it on the subway or hearing people talk about it. So there's a lot of influences there that. Things look random, but they're not. And those messages, one way or another got through to you. So it might be less about the actual experience you had with the product and more about the, some of that implicit prior exposure you had to it, that's gonna drive those choices that you make. That's, that, that's the real important point. Edward: Sure. And so I, so you say, Hey, the, whatever those influences were the first. They're gonna influence me the second time, but doesn't, the fact that I used it and it worked influenced me like I feel like it does. I feel like. Once I have a chocolate bar that I like, I'm more likely to buy that chocolate bar again. Even if it was, let's say it was gifted to me. Let's say someone gave it to me rather than me choosing it. Once I have something that I know works, it feels like why wouldn't I stick with what works Peter: well? Because of all, you might, you just might have a propensity to, to stay with that chocolate bar, but there's all kinds of reasons why it might be just variety seeking, that let's just try something different. I like this thing, but, , Edward: that may, maybe that makes sense for chocolate bars, but I. For cleaning my clothes. You know what, let's just . Peter: But, but it could be a situational thing that, oh, my mother-in-law is staying with us this week. And, and she only likes certain kinds of things. And so there could be things that, that might be perfectly rational. Why you're switching around. But to, to me, as an outside observer, I'm just looking at that sequence of choices. And man, oh man, it looks an awful lot. , rolls of the dice. Now to be fair I mentioned all this work by Aaron Bergen Sharp, and they basically said, you have your dye, and it never changes. Now, I myself have written a bunch of papers that show that, that model's a pretty good first pass. But every now and again, people. Do throw the old die away and do start with a new one. So I don't rule out the idea of changes, what we technically call non-stationary. But the times that you do that tend to be relatively infrequent and they tend to be dare I say, random. It's not like necessary because of a pandemic or a or change in the macro economy. It's just, there's just something

    Marketing BS Podcast: Have Electric Vehicles Changed the Rules of Loyalty?

  3. 01/06/2023

    Marketing BS Podcast: Southwest Loyalty and some announcements

    Happy new year! Expect fewer posts this year. I will keep going with this podcast, but I am shifting my time commitment to (1) get the book over the line. No more excuses; and (2) Work on developing “business comedy”. I will write more about #2 at some point, but for now enjoy the podcast, and be happy if you weren’t flying Southwest the last few weeks! Full Transcript Edward: Peter, how were the holidays? Peter: Wow. It seems like a million years ago, doesn't it? It's amazing. We had that kind of one day after New Year's adjusting and then boom. But it was great. I went down to Antarctica and it was amazing. Super fun, super interesting. What about yourself? Edward: We tortured ourselves by taking our four little children to Guatemala and Belize. Peter: Wow, that's bold. That's bold. Edward: But I think the nice thing is both of us missed the travel meltdown that happened. I think we both got out before everything started falling apart across America. Peter: It was amazing actually being down in Antarctica. where it's kind of warmer and more pleasant than it was in most parts of the us. What a mess that was Edward: Go to Antarctica for the heat . Peter: Well, it was summer and, I think unfortunately the repercussions of that are still rippling through and it's gonna be a while before that all settles down. Edward: It's interesting. We were flying on Alaska and there's now a direct flight between Seattle and Belize City. and there were three flights before ours, and they're a limited number of flights now that go back and forth. Like they're only every couple of days. And the three flights before ours were all canceled, so we're on the edge of our seats and whether we were gonna get back on time. Peter: And between all the cancellations that were happening earlier in the summer for different kinds of reasons, staffing, and now all of the kind of Southwest mess, which is more kind of operational issues, we have a very different feeling in the stomach when we pull up to the airport these days. Edward: One of the news this week, southwest Airlines had a big, big mess up where every, all the airlines kind of had trouble, but I think Southwest had the most at one point, I think they'd canceled half their flights. It was like a huge, huge, huge. Peter: Yeah. And I guess, if you read, some of the, articles and blogs about it, it seems like it was, it was inevitable, right? That they've been on a bit of a downward spiral in recent years and letting go of some of the operational aspects that would've never happened back in the old days. But, it's a shame it had to hit. Abruptly, and it's such an inconvenient time. Edward: Well, that's what's gonna happen, right? When you run really lean, if everything's going well, it's not a problem. It's when things start to go wrong, all of a sudden they can go really, really wrong because that's when things break. Peter: Exactly. And of course, the lessons to be learned are, How not to let them break, but also how to, how to recover from it. And I still think there's a lot of lingering questions about that. Edward: I think the Wall Street Journal was just publishing earlier this week about how Southwest is now saying, sorry. They're admitting their failures. They're offering, they said 25,000 frequent flyer points so that passengers hit by the travel meltdown. What do you think of that? Like, what is the value. The passengers who are getting that treatment to get them to come back? Or is it the signaling to non passengers that, Hey, we really. Peter: It's very interesting. My, initial reactions be really, really fun to, to talk through, was not a positive one. About that move. Couple of reasons. Number one, devalues the point. It's like, we're just gonna throw some stuff at you. You spent all this time trying to get people to value points and earn and get status and all the great things you can do. But just to use it as a way just throwing stuff at you, it kind of makes you wonder about the value of that currency and what it really means to Southwest. So there's one reaction. What, do you think about that? Edward: I think they claimed in that same article they said, those 25,000 points is worth $300, which would, which you put each point at worth more than a penny, maybe it's $300 if you do it absolutely perfectly in how you use it. But I think most people value these points at less than a penny. But you're saying that the fact they're giving points at all rather than giving people the $300, in either future travel or $300 in cash, the fact they're doing it in points, what degrades the value of the point . Peter: I think it does, maybe less from a fungibility standpoint, but from a psychological one, we try to associate these points with good things and aspirations and bonuses and like, wow, look at all things we can do with it. But here we're framing it or they're framing it as, this is a way that we're covering our ass and, and making up for a problem. And, I think it taints the idea of, of what these points are all about. Edward: I'm just thinking, when I was traveling, I stayed at,, back before Marriott bought them. I was staying at Starwood Hotels and they offered points for all sorts of things, but that was their go-to for both good things for, Hey, do these things we want you to do and we'll give you bonus points., get our credit card, we'll give you bonus points, stay in our hotels, get more points. But they would also use them for when things went wrong. And I remember times where like, Hey, they messed up my hotel room. Or there was really loud noise at night. Or they had, the pool wasn't working. And in those cases when you said, Hey, you guys made a mistake, their go-to thing was, well, here's some points. And I don't think I felt bad about that. I felt, I think I felt good about that. Peter: = I think it's different. I think it's a very different situation because, I've of course been in many of those situations myself, but, when it happens on an ad hoc basis like that, it's like, look at me, you know, I was a good negotiator. Look at what I got out of them. So at that point, it seems like a bonus. , I got something that other people might not have gotten. Whereas in this case it's a blanket offer, so it's not so no one's gonna feel like that they got something that they earned it, they're being treated all the same, and it's just sort of being thrown at them. It's not the outcome of some kind of, negotiation or something like that. So I think it's the points are framed very differently. Edward: Should they have done it below the line? . So instead of announcing that the Wall Street Journal they were doing it, should they have just approached each individual independently and said, Hey, we felt really bad. What happened to you specifically? Here's 25,000 points to make up for. Peter: And maybe vary the amount of points based on what people paid for the ticket or just how much inconvenience they were. Something like that. I think if they tried to make it a little bit more personal instead of just, again, sweeping it under the rug. Here you go, people, here's your points. Now shut up and let's keep going. I think that it might have just felt a little different. Edward: Who's to say they're not doing that? Maybe, they led out with the top line saying, Hey, it's 25,000 points to everybody. Here's the Wall Street Journal article. But maybe below the line they're saying, Hey, we're giving 25,000 points to everybody. But for you, We're gonna give you 30 or we're gonna give you 40 because of what happened to you and we wanna make so special. Peter: Or maybe it opens up that negotiation where people will go back to 'em and say, 25 isn't enough. I deserve more. In which case they would feel a little better about those incremental points that they were able to negotiate for. One of the other things that I find interesting about it, and this just kinda shows our age over here a little bit, is that Southwest, unlike the other airlines, hasn't been as, Has dependent on the loyalty program. They haven't called attention to it quite as much, and for years and years and years, they actively resisted having one. They always said that, look, we're just giving you a good deal. We're gonna treat you really well. We don't need to sweeten it in the way that some of these other big evil and personal airlines do. I kind of admired that about them, but then eventually they caved in. Everyone has to have it, but Edward: now they're so much money and a credit card. Peter: They have to do it, and that's fine. It's inevitable they would, but now they're calling even more attention to the program. And again, they're doing it in a way that has nothing to do with loyalty, that has nothing to do with that good feeling. It's just another currency. And it, takes, something special out of it and makes you start thinking about Southwest in a slightly more, I don't know, commoditized way . Edward: Have you looked at cohorts like this? So, like either an airline or something similar where something really bad happens. The people who experience that really bad thing, do you see what happens to their lifetime value? Does it drop significantly? Peter: I love that. I I love that. I can't believe that you raised that before I did. We do that all the time. In fact, the most obvious example being covid. But plenty of others, you know, we'll, we'll find cases where there's some kind of either competitive entry or the company engaging in some kind of other big strategic change. Not so much the first thing to do, but maybe the most telling thing to do is to say, , what's the nature of those customers, of the customers acquired during that time and how do they compare, you know, better or worse to, to others? I think that's a really great analysis to do and ends up being, I think, much more telling about the impact of that intervention than just a lot of the kind of day-to-day moment to moment. Nonsense on so

  4. 12/15/2022

    Marketing BS Podcast: Streaming Grab Bag

    Essay and Briefing production has been low the last few weeks as I have been spending more time on building a GPT-3 powered comedy writing tool (and writing “business comedy” with the tool). If you have not checked out ChatGPT in the last two weeks, you should really do so. It is much slower now than when it launched, but still mind blowing. If it is too slow you can just use the GPT Playground, which is powered by the same back-end. GPT itself moved from 3.0 to 3.5 right around when chat launched. 3.5 is very impressive (it can rhyme now!). Spend some time playing around! It’s not often that the most interesting, most advanced cutting edge technology can be in your hands this early (and practically free). Marketing BS is on vacation the next two weeks. In early January I will be back with another podcast episode (moving to Fridays), and hopefully some more text. Have a great holiday! Full Transcript Edward: Were you a Westworld fan, Pete? Peter: That first episode in the first season was one of the most awesome pieces of television I ever saw. I was hooked with the first season and maybe watched one or two more episodes. That was it. How about you? Edward: One or two of the first season, or finished the first season and then one or two of the season? Peter: Finished the first season, that was, must watch tv. And then in my view, it jumped the shark very quickly after that. In fact, when I saw that news that H B O is gonna give up on it I thought they were just killing the program, but I didn't realize they were actually killing the, getting rid of the catalog too. That, that's crazy. Edward: Is this the first example of hbo? So HBO has pulled stuff from their catalog before, like they, they pulled some Sesame Street episodes people were upset with, but is this the first time they're pulling their own content from... Peter: It's the first I know of and indeed, the Sesame Street thing is different because that's not their content, but for them to have stuff that, that should be uniquely associated with them and still does, and on catalog basis, we'll have some value for them to say, nah, we don't need this anymore. It does have me scratch in my head. Edward: So there's no actual cost for them, whether they put it on the platform or not. There's no cost. But what there is an opportunity cost, and I think that opportunity cost has really been ignored in the past. And now they're saying, Hey, we can take this product that we have and instead of using it on our own platform, we can turn around and sell to some, sell to Netflix, sell to Amazon, have someone else owed it exclusively instead of... Peter: But it does make you wonder, like sometimes you'll sell content outright and say, here, it's yours now. Or sometimes you'll just license content. Or access. You think about lots of examples where, I don't know where Verizon will let Comcast use Verizon's phone services as a private label kind of play. So they're not giving up on it, but they're saying, Hey, we can have other access points to it as well. I just wonder if, maybe providing broader access rather than giving up on their own access makes sense. Edward: HBO has done that before, they kept Sopranos on their system, but they offered Sopranos to Amazon as well. So you can go on Amazon Prime and watch Old Seasons of the Sopranos. But what was happening there is it was non-exclusive. It was still available at hbo, but also available at Amazon. I think what's happening here is that there is a higher value in a piece of content that's exclusively available someplace else, and HBO's gonna try to realize that with Westworld. Peter: So you think it's an opportunity play for them that they'll make more money by auctioning it off to the highest bid. you don't think a kind of a cost cutting move Edward: No, I don't think there's any cost. The cost to have more video on your platform is as close to zero as it comes. The storage cost is you're storing it anyway. And I think this and the streaming cost, if they're not streaming, that they're streaming something else, or they're streaming a competitor and you don't want your customers to do that. That's how you churn your customers. And so there's no actual cost for them to have it on there. There's an opportunity cost where they can go to Amazon Prime and Amazon Prime may pay, I don't know, 10 million to stream Westworld or 30 million if they get the exclusive rights to it. Peter: It's all about exclusivity. But again it's interesting how sometimes, people do put a premium on it and other times they say, nah, come on we don't care what door you come through. Edward: I think what's interesting is that all these streaming services are effectively competing with each other, but they're finding ways that they need to cooperate at the same time. And so you can go on Amazon. Amazon Prime is competing against HBO and Disney Plus and so on, but you can also buy HBO and buy Disney Plus when you're on the Amazon Prime platform. If you go on Hulu that's owned by Disney, you can buy HBO on through Hulu and so they're both, what's that word? Where you're competing and your friends at the same time? Peter: Frenemies. Edward: Frenemies. They're frenemies. Peter: Yeah. And that whole thing about the these kind of affiliate acquisition things that are going on just as you described that the companies getting some kickback from the content providers for selling subscriptions to it, that's something that we as consumers don't really understand a lot of money, a lot. Here it is company like, I dunno, Comcast will pay a bunch of money to get access to the HBO content, so get paid every time they bring subscribers in. It's weird how it goes both ways. Edward: I've tried to dig into that and I don't know what they actually pay. So when you buy HBO through Amazon, you pay your $15 a month, Amazon gets paid for that. I don't know if Amazon's getting a lump sum for getting the new subscriber, or they're getting like $5 a month for one subscriber. As far as I can tell, that data has not been shared publicly anywhere. Peter: The data's not shared. And again, I think very few consumers are aware that these things go on. So when a company starts calling attention to it, like Verizon is now doing, you want, maybe you want to elaborate on that a little. Edward: So Verizon, that is they offered a new deal yesterday. I believe that if you go and use their marketplace, I didn't even know Verizon had a marketplace. Like it never would've occurred to me to go and buy my HBO through Verizon. I have a Verizon phone, but that's not how, if I wanted to buy hbo, I'd probably do it through. Go to hbo.com or maybe I'd pull up my Amazon fire television and buy it. I don't think I'd open my Verizon app on my Verizon phone to go and buy hbo, but that's what they want me to do. And if I go buy HBO through my Verizon app, the. Verizon's gonna give me Netflix for free for a year. So they must be making something from that . Peter: Oh, clearly they are. And you gotta wonder what the play is there that maybe if they can be your gateway to more and more services, then you'll consider adding others and see them as a bonafide, app store in a way, even though we're, blissfully unaware of it. Maybe that's what they're thinking. Edward: I assume that once I subscribe to HBO through the Verizon store, I'm not, I'm still using the HBO app to watch my shows. I'm not going through the Verizon app to get the HBO stuff, which I think is what happens on Hulu. I can buy HBO through Hulu and now all of my HBO stuff is available right inside my Hulu app. Peter: So in a way they're trying to build a walled garden of sorts. But it's not so much financial considerations or even exclusive access, it's just that one, once you're seeing it through gateway, you're just not gonna switch. And then while you are using that gateway, you might access other things through it. Very different than, the traditional approach that apple's taking. Edward: It's customer acquisition, right? So if Verizon can get me to go buy my HBO through the Verizon app, and now all of a sudden I'm getting Netflix through the Verizon app, I've, they've now acquired me as a customer and getting that second, the second or third purchase, when I decided to go buy Paramount, maybe instead of going to paramount.com. My natural inclination, at least my on the margin, I'm more likely to go buy that through the Verizon app now as well. Peter: That's the bet they're placing. It'll be interesting to see if people feel any kind of loyalty to one Gateway or another. And what would drive that? Is it the brand? Is it the the interface that lets you access it? It's funny that we always talk about content being king, but now it's at least the presumption is that being the gateway to content might be the king. Not a lot of evidence for. Edward: It feels like in the real world, we see this all the time, clearly, like I don't buy my tide from Proctor and Gamble. P and g might have a direct to consumer tide business, but it would never occur to me to go to p and g or tide.com to go buy Tide. Instead, I either buy it through Amazon or I. Go to my local grocery store, my local Walmart, and pick up the tide. And it feels like in the digital world, the competition is like a drive away versus in the digital world, competition is a click away and it seems a lot easier switch from one storefront to another. Peter: Exactly. And what's interesting about it I don't know about you, but I have zero loyalty to any of them. I don't look at any of the, these interfaces and say, that's a good one. If anything, especially when you're doing it through the television, you're trying to spell out names of programs by using arrow buttons. Just horrible. So it's I don't think they've done a good job of, the customer experience of being content retailers in that regard. Edward: But I think there's something to be... there is a friction for leaving somewhere.

  5. 12/08/2022

    Marketing BS Podcast: Fader's Books

    Last week I published the first chapter of Peter’s new book. This week I interview Peter on the book, who should read it, what the conclusions are, how it is different from his last two books, and why he is like George Lucas. If you are interested in buying the book, you can do that on Amazon, but this week it is 40% off if you buy direct from the University of Pennsylvania press. Use the code “HOLIDAY22-FM” Full transcript below. Main Takeaways: I fed the full transcript into ChatGPT and asked it for the main take-aways from the podcast. I then probed it for more, but it could not come up with anything else. I THINK that it only “heard” the first part of the podcast and ignored the rest. But here is what the AI thinks are the take-aways: Peter's third book, titled "The Customer Base Audit," is a prequel to his other books on customer centricity. The book focuses on providing insights into customer data and is considered a foundational work. Peter believes that if the book were released first, it would not have had the same impact as it does as a prequel to his other books. He believes that starting with the "sexy stuff" and then diving into the details is a better way to grab readers' attention and get them to care about the subject matter. Full Transcript: Edward: All right, Peter. We're back. We're back. Peter: It's always good to talk to you. Ed. What are we gonna talk about this week? Edward: We're gonna talk about your book. Peter: We're talking about my book. Love it. Edward: I know there's a heck of a lot going on in the world, but we're gonna take a break from fraud and we're gonna take a break from Elon Musk. We're gonna take a break from ai. We're gonna talk about your book. Peter: We promise not to mention any of those things. Edward: We told the audience that we're gonna do it. We did an excerpt from your book last week in the newsletter. So if you those listening who have not seen that, you should go back and check that out. And now we're gonna talk to the man himself. It's interesting, Peter, this is your third book, correct? I got the number right? Peter: It's crazy, but true. Yes. Edward: Okay. And so my concern always for like big thinkers when they're writing multiple books, is that the first book. The Thing that they've worked their whole career on. It's like the first Beatles album. They've worked on it for the last 20 years of their lives, and they get it down and now two years later, they have to get another album out and they just, okay, let's see what else we can get out. And the sophomore albums tend to be weaker than the first, I feel like with big thinkers like like Clay and Christensen when he releases innovators Dilemma. Earth Shattering book blows our minds on how to think about strategy. And then he proceeds to release four more books after that, that are frankly derivatives of innovators dilemma. Are you being derivative, Peter? What's going on? Peter: Actually it's a great question. Cuz this book actually comes first, and I mean that literally and figuratively that, if you look at the, of course the book is called the Customer Base Audit, but the subtitle is the first step on the journey to customer centricity. And literally it goes back to a conversation that I had with one of my co-authors, Bruce Hardy, back in 2004 long before I had any inkling of the other work that I would then write on customer centricity. So this stuff is actually much closer to the work that I really do for a living day to day with customer data and so on. Those other books are more of the the so what, like what do we do with the these insights. But this is the book that gives the insights. This is the book that if you were to read the first two and say, wait a minute, how would I know that this stuff is true? Prove it to me. This book does that. Edward: So is This is like George Lucas making Star Wars. So after he is made that then he can go back and make the movie he really cares about, Peter: It is the prequel to the other stuff. And again, in some ways it is foundational. In some ways it's really quite different. But I don't think anybody, I'm not saying everyone will like the book, but no one's gonna read it and say it's. Edward: Okay. And so which I guess if someone's coming to you for the first time, then do they read this book first as a prequel? Do they jump to the prequel? Or is it like, Hey, watch Star Wars first, enjoy that, and then read the next book to understand where that, where that song came from? Peter: Know, That's beautiful metaphor. And I actually agree with that. See, here's The Thing. I've been doing this kind of work forever. Even since, you were an MBA student 20 years ago and, 20 years before that. And for the most part, with some exceptions, like you people would ignore me saying it's all just quanti and who cares? So what, so I wrote the other books to basically say, pay attention. This stuff matters. You should care your business depends on it. And that's a great way to grab people's attention and get them to lean in and say, oh whoa, how do we do this stuff? This is the book that begins that, how do we do this stuff if we release this one first? People would've read it and said I guess that's nice, but so what? So it's nice to lead with the so what to lead with the sexy stuff and then have people roll up their sleeves and want to dive into the details. Edward: Got it. So the first book is customer centricity. Peter: Focus on the right customers for strategic advantage. Edward: And that, so that book is the why, right? This is how. Not. Not the how, but the why to do it. Why customer centric? So both the what and the how. Which is what and the why. Peter: Yeah, exactly. What are we talking about and why do we care? Edward: Cause people, I think back then, I remember talking to you and a lot of people think things like, oh, customer-centricity just means doing whatever all your customers want. Which is, that book says, no, that's not what it is. Let's redefine what customer centricity. Peter: That's right. And again, it's gotten a lot of people to pay attention and say, wait a minute, we should be doing that. Or, wait a minute, we've been thinking along those lines, but we thought we were alone. So let's start at the C level to get people to really care and to, care about, everything from incentives and organizational structure and corporate culture and stuff that I know nothing about. And then it's gonna charge the the. Quine nerdy people to to do their thing at the service of customer centricity. Edward: Got it. So number one is, Hey, yeah, buy in. We know what customer centricity is now and we think we want to do it. Peter: Yep. Edward: The second book is the Customer Centricity Playbook. Is that like the project plan to actually implement customer centricity? Peter: Exactly. It's the how do we do it. Yep. Edward: Got it. And so now we've gone full circle. Now we're back to the prequel, which is the customer based audit, which is the new book. And so that's about. I guess not. I was gonna say how, but it is it how Peter: it's first steps? It's step one of the how, which is get your data in order. Okay. Don't take our word for it. Look at your data. Let's not even run any models or forecast or lifetime value or any of that stuff, just given the data that you. Look at it the right way. And you'll notice that not all customers are created equal. And you'll get all kinds of insights about how customers change over time. Stuff that you know, I, and you to a large extent take for granted. But for most companies it's sometimes news they don't know about and sometimes it's the polar opposite of what they think they'll see when they look at their customers. Edward: Who should read which book first? Peter: See, it depends who you are. That's right. So if, so again if you're c level, as much as I'd like them to dive right into the audit I recognize its place, it would be start with books one and two again, just to be motivated to wanna lean in further. If you are someone who plays around with data, you're a data scientist or maybe you're someone in the CFO's office where you're comfortable with numbers you're, you're interested in accountability and rigor marketing often lacks. Then maybe you start with the audit and maybe after you see the patterns, then you start to say, what does this mean? What do we do about it? And that leads to books one and two. So it really does vary about, who you are and where you are in the org chart. Edward: Got it. So it, it feels like if you're the CMO and you have the authority to like make this happen, you should probably read the other two books. Probably read the first book. Read customer centricity. If you haven't been bought in on the whole thing, that's gonna get you bought, that's gonna get you bought in or you're gonna reject it, but at least you'll know what you're rejecting and so on. If you're not in the marketing department, so if you're not in the marketing department at all, if you're in the finance department, you could be as bought in as you are on customer centricity, but you're not gonna be. The marketing department to do what you want it to do instead, read the customer based audit. Now you can go and , it's right in the title. You can go and audit the marketing organization to to see what's going on with your customers. And you can provide that information just generally to the organization. And hopefully that causes things to move. Peter: That is exactly right. And really. That's a really big part of our motivation for doing this. A lot of the work that I've been doing recently, as has been this idea of customer based corporate valuation. Let's basically show the finance people that we can be their friend. We can be their partner by basically projecting revenue and free cash flow accurately and diagnostically. And again, this would be the first. Towards that. Cuz doing that requires models, projections, forecasts

  6. 11/23/2022

    Marketing BS Podcast: Strategy vs Tactics

    Today’s episode further explores topics discussed in this week’s essay. In the preamble to that essay I said that there would be no content next week. I am going to reverse that. Next week will be an excerpt from Peter Fader’s new book. Stay tuned! Full Transcript: Peter: Ed, I love your piece on strategy versus tactics at Disney, Twitter and Dominion Cards. I love the way that you're weaving together a narrative that's taking three of the super hot, interesting topics and a fourth one that most people don't know about. Edward: It's funny, the whole Dominion Cards thing. I've been, I started playing this card game back in 2011. I went to the national Championships in 2012. And I just really enjoy it. It's like the only game I can think of where you actually need to figure out a strategy at the beginning of every game.  I've been sitting on this idea of dominion cards as a way to talk about strategy versus tactics for many, many years now. And I've never felt really found the right kind of hook to put it in. And then when this thing happened at Disney on Sunday, I was like, aha, the hook is here. It's time to pull this out of the filing cabinet. Peter: Love it. Well, as a, reader of the column and as someone who thinks about these issues, there's kind of two natural questions that just has to be asked. I wanna get your take on it. So, first. How do you define or where do you draw the line between strategy and tactics? Edward: I think strategy is figuring out what you should be doing and it's trying to figure out what the end point is of where you're going for, and tactics is all the stuff that gets you there. Strategy can be done a bit in isolation. You can go back into your ivory tower and think about what the dynamics are coming out with your strategy and then tactics are going to be very much based on what's happening on the ground. What's happening at any given moment, how the competition is reacting, how economics is changing what type of people you have on your team and any given moment. Those are all tactical decisions like that a consultant is not going to be able to help you with unless he's actually there on the ground. Peter: So I always have a hard time with it, to be honest. Maybe this is just me being narrow minded or something. It's not just the next move is it the next three or four moves. Be specific about strategy versus tactics in chess, and then let's branch out to these other real world stories. Edward: I'm not an expert in chess. I'm actually teaching my kids how to play now, I'm learning along with them. But I think in chess there is a correct strategy. I think strategy in chess is things like control the center of the board would be a strategy. Be willing to sacrifice your piece in order to gain position in the board, or, move your pieces in such a way that you're able to castle fairly early in the game. Those would all be strategies, things that you're working towards over a longer period of time. Tactics are, given what my opponent has just done, what should I do next? And tactics can, you can look far into the future for tactics. There's nothing that stops you from looking nine moves ahead to the right tactic would be in that particular situation. But I think strategy stays in chess at least. I think strategy stays the same. There are correct strategies into chess and there are incorrect strategies in chess. Whereas tactics are gonna change every given game depending on what your opponent does. Peter: So let's take that, and again, it's still little fuzzy. I mean, you're being more specific, but still, and I'm not gonna press you on exactly where one begins and ends, but Disney. Disney. Disney. Disney. It seems like the narrative as you said is Iger had the strategy. Chapek's job is to come in and execute on it. Few missteps here and there. Expand on that beyond what you've said in the piece about that trade offering strategy and tactics. Edward: I think most people are agreed, even the disgruntled shareholders, is that Iger's strategy was the correct one or is the correct one, which is that the cable bundle is getting hammered and Disney in the past basically had a huge amount of leverage over the cable providers and was able to extract large amounts of money from the cable providers by the fact that they had this differentiated content both the traditional Disney content, but also the sports they had with ESPN. And that was a great place for Disney to be and it still is, frankly, they still extract a huge amount of money from the cable providers, but that is not the future. Clearly we see more and more people, especially young people cutting the cord, not going with cable television and moving into streaming. And it was really a question of when did Disney need to move in that direction and how long could they keep their pound of flesh from the cable companies and hold onto that as long as possible?  So the strategy then becomes let's move on. Let's go direct to consumer and scale up our Disney Plus product. There's tactical problems in doing that because, Disney bought Fox, which came with 20th Century Fox, which allowed them to add a whole ton of more content to get like the breadth required to win in a streaming war. They got control over Hulu, but they didn't get full ownership of Hulu. And so Comcast still owns a chunk of Hulu in the US which makes all sorts of challenges for Disney on a tactical level on how to actually get to the place where they wanna be. But I think the strategy is clear. It's we wanna get to the point where we are owning that direct to consumer relationship. We are monetizing through a subscription product. We are monetizing through additional add-ons that people can do on top of that. And we are monetizing through our vast aray of merchandising, theme parks, cruise ships, and everything else to allow people to spend more and more and more with us. That strategy is still where they're going the last two big things Iger did before he left, were launching Disney Plus and buying Fox, Peter: LEt's be clear that Chappek isn't against any of those things. Strategically as you've pointed it out, he's on the same page. It's all just tactics not being quite the same as what Iger might have done or might now do. Edward: And even on tactics, I'm not sure, if you look at the things that have hurt the stock price and where Chap has taken ahead, like first of all, Disney Plus has grown faster than they ever thought they would. He over delivered on that. Whether that was his doing or the, the fact is the metric is much better than anyone expected, but there were mistakes along the way. He has fought. There's been lots of fights with the creative side of the organization. Chapek comes from the theme park side. He came into the CEO role and then immediately Covid hit and the theme parks all went to zero. So he was forced to figure out how to do Disney plus where all their revenues coming from for the foreseeable future. Now things have flipped and the theme parks are just minting money. They're doing really, really, really well. But he's pissed off a lot of people by raising prices dramatically. But again, I'm not sure what Iger would've done differently in that case because the demand for the theme parks has has gone way, way, way up. So in the short term, you can't go and build more theme parks. So supplies is what it is. And so you're left with two choices. Either you are raising prices or you are giving a poor consumer experience, either because the parks are just packed full, and they're just unpleasant, or you're turning away people at the door who have booked a vacation. And so none of those options seem great, and of those options, it feels like raising prices was probably the one that Iger would've done as well. Peter: Exactly. So here's the big question. I agree completely with that. It might be that how things play out now tactically and strategically would be the same regardless of which Bob is at the helm, but just having Iger just seems to have this warm glow that will just make the same tactics, not only more palatable but downright genius because they're coming from Iger instead of Chapek. What do you think? Edward: I think that's absolutely right. They're in such a tough spot right now. There's so much going on and it's super, super, super risky what they're trying to do. I think everyone knows that there's really no choice but to go down this path. But also everyone knows that it's a really hard path to go down. And so not only do you need to have the right strategy, which I think people think that is true. You need to have the right tactics, which frankly I don't think Chapek, if he messed up on tactics, it was on a marginal basis. But where there was a bigger mess up was a bunch of execution of those tactics. And so things like the Black Widow movie early on in the pandemic, they decided to take that out of the theaters and put it onto Disney plus. And I think that was a very rational tactical thing to do given the situation they're in. But in execution, Chapek got into a big fight with Scarlette Johansen, who really came down hard, sued Disney. They hurt their relationship with her. Now. Disney ends up hurting their reputation as a good place to go and work if you're a top tier creative. In the short term, maybe they make a little bit more money on the movie, but in the long run they damage the relationship with the very people that are creating the product that they need to excel with. Peter: Fair point. All right, let's pivot from DS to SBF and FTX. There you say that, or at least you're quoting SBF saying strategy was fine. The tactics were at fault. You don't really mean that, you're just saying that's what he said, but you think otherwise. Edward: I'm no financial expert, but I've been following it as closely as I can and it sure looks to me like there was all sorts of... So Fbf owned two companies. He had ftx, but he also had the trad

  7. 11/03/2022

    Marketing BS Podecast #3: Bluecheckmark Metrics (Now with Transcript!)

    I have been exploring a new AI tool that is allowing transcript creation while I edit the episodes. It’s not perfect, but it’s pretty great for those who prefer reading to listening. I plan on including transcripts of all episodes going forward. Also: Apologizes that yesterday’s essay did NOT have more than 1-second of audio. I am still working through these tools. The audio should be live on that post now (I chose not to re-send it to your email) In This Episode Fader and Nevraumont discuss Elon Musk’s plan for charging $8/month for a blue checkmark (plus other benefits). What metrics should they use to know if it’s working? Can subscription revenue compete with advertising revenue? What are the different types of Twitter users? Keep it Simple, Edward Full Transcript Edward: So, Peter, do you have a blue check mark? Peter: I do. I'm so fortunate. Of course the question is how long will I keep it and what will I have to pay to do so, and what benefits will I get associated with it? Edward: How did you get it? Was there a process you went through? Did the school help you do it? Peter: No, it was actually through my previous company, Zodiac the one, we sold to Nike. That at that point the CEO said, You know, we ought to get blue check marks just to give us more credibility. It was a pretty simple application process, but you know, a lot of people who have been trying to go through it, who are at least as qualified as I am. It seems like there is, or at least was, something pretty arbitrary about it, but hey, I'm one of the lucky ones. , Edward: You're part of the in group. When I was at General Assembly, the, my head of PR came to me like basically on day one on the job, and she's like, We need to get you a blue check mark. And I had to go and change my Twitter account was linked to my Gmail address and I had to switch it to my general assembly email address, and then she went to town and did her PR stuff to try. Get the blue check mark, but it never happened. Two years of trying it and never got the check, I even as a CMO of general assembly I was not renowned enough to get the check. Peter: That's exactly my experience cuz I think you honestly, in a position like that, deserved it more than me. I think maybe the professor thing helps, but there's plenty of professors with the big followings and great content who don't have it either. So maybe that's what the, All the musk nonsense will actually bring some order, some predictability to who gets a check or who gets which kind of check cuz there really should be more than one of them. Edward: There kind of is. So I guess for those who... I imagine all of our listeners know what's going on right now, but just a really quick summary is that Elon, there was a rumor that went out. Was it Vanity Fair or The Verge? It was the Verge last weekend that talked about how all the blue check marks are gonna have to pay 20 bucks a month just to keep it. And then yesterday we're recording this on Wednesday, yesterday, on Tuesday, Elon came out and said, No, it's gonna be $8 a month. And it includes not just the blue check mark, but a bunch of other kind of benefits, if you will. And then on top of that, really red down people like Joe Biden for example, will get a, not a blue check mark, but like an. A descriptor underneath them that says that they're authentic and real. Which was the original purpose of the blue check mark to begin. Peter: Right, right, right. Yeah. Really a validation, not just a status symbol. But if you look at some of the benefits that they're talking about, some of those benefits make sense for creators. Some of the benefits make sense for readers, and I think it's important not to mash the two together. That's why they really should be a different kind of subscription based on what you're using. Twitter. Edward: I guess so, so big part of this, it's interesting. The last essay I wrote for for marketing BS couple of weeks ago was all about paying for status. And this, it feels initially like this is paying for status and a lot of that's what it is, right? So you pay to get the blue check marks right now are primarily a status tool, although I know you have some features that us non-black marks don't have. But going forward this is going to replace that blue check mark you are paying for the status. But the benefits you get seem to be around production. So if you, the tweets that you produce are more likely to be seen by other people you're, you get listed first in the mentions. You get move to the top of the replies. And so there's a bunch of features like that. So you, the stuff that you produce is more likely to be seen, I don't think. And that makes sense. Yeah. And that's good for everybody in some ways too because it kills the spambots or if you're a spambot, you're not going. Verified, you're not gonna get the blue check. And so all the spam bot stuff gets pushed to the bottom. But so does everybody. So do all the non blue check mark. People get pushed to the. Peter: Now for me personally I, yeah, I'd pay something to keep the blue check, but I'd also pay something to improve my reading experience. I would love to have more control over the timeline. I'd like to get inside some of the curation algorithms and, tweak them to, to, to my benefit. To me that that's more important as a Twitter consumer than a Twitter. Edward: And, but now, so those benefits though, should, are those benefits that they should be charging for, because every social media platform has that, which is, hey, we want to show people the content that engages them, that they would enjoy. Why if you're able to do that, if you're able to show people better content, they're gonna use your platform more, and you're gonna make more money on ads, at what point would you be like, Hey, you know what? We could make this person's experience better, but we're gonna put that behind a paywall and we're gonna give them a worst experience. That just, it feels like that's not The Thing you want to be charging for. Peter: That's a big philosophical question, but you're right. That, that this is how everybody does it. So presuming that a Twitter's gonna follow that mold, the most obvious one of all is if I pay a reader subscription. Don't show me any ads, right? Just like with Spotify, give me, gimme the ad free version or maybe have, a new Netflix one where it's a lower price with some reader control but some minimal number of ads. So there should be something about that. But also if I'm gonna pay that I wanna have complete control over whether things are in chronological order or whether I want to trust their recommendations I'd. Do my own curation like that. Edward: That's fair. But you can do that now. It's Twitter's ability to produce things and new product features have been very slow. But right now I think your default is a algorithmic feed. But it's fairly simple to change that to a chronological feat if you want to. I don't think many people do but it, but the ability is, Peter: I find that it still does chronology in a weird way and sometimes then jumps back a few hours in time and maybe it's just me, I don't know. But they, they definitely can and should clean that up. But like I said, there, there should be different kinds of features for different kinds of users that would involve different kinds of subscriptions. And of course there'd be the grand subscription that would give. Everything for a super power user who's creating and consuming, get all those features. Some, bundled price. Edward: Nice. And so right now, I was I guess the question on everyone's mind right now are the screaming and shouting people on Twitter are talking about the fact that hey, the, like Steven King for example the writer. Went and posted something about how he's, there's no way he's gonna pay for this because Twitter should be paying him. And in some ways he's right. Because if you look at right now the new Blue Check mark program is gonna be, the benefits are not for the readers. I guess the little bit they think he said something about half the normal ads that you would normally see, but majority of the benefits are, hey, the status benefit and a bunch of production benefits, like your content gets seen more often. So it's producers that are gonna be charged for this, but at the same time, isn't it the producers that create the value for everybody else? Peter: Of course that's true with all social media platforms. I don't think Twitter's any different in this regard. And I think a lot of people are making noise about it. Because of who is in charge now. I think it's just a visceral reaction. Oh, it's Elon Musk. I think if Twitter had announced changes like this at another time, a lot of folks, I'm not gonna speak for Stephen King or some of the other celebrities would say yeah, it's about time that, that I get those extra boosts that I deserve. And you know, what, eight bucks a month I'm paying more money than that for a lot of other content subscriptions that are used far less. Edward: Fair enough. How what do you think, how, what percentage of Twitter's revenue then, if this, assuming this thing works and it's successful at all, like, how much revenue can you get from this subscription product versus the advertising model? Peter: It's a great question. It goes right into my strike zone, which is we could look at the next year o over the short run. They're so reliant on advertising that there's no way that they could come close to matching it with subscription revenue. But in terms of long run customer lifetime value, if they start to ratchet down the ads and focus on bonafide benefits to creators and readers through a different well calibrated subscription services. You give 'em a couple years and they could completely flip it and make it almost entirely subscription based. And that's the direction they should be moving in. Not only would that be steadier income, you'd have a better sense

  8. 11/02/2022

    Marketing BS: Almost Real Fidelity

    Hi everyone, Post-send note: In the original post the audio was only 1-second long. That has been fixed now. As mentioned in yesterday’s email, I will now begin including an audio version of these essays. The audio is created in my voice with an AI. For those who listen please provide feedback on the quality and whether it is worth continuing. Between Meta’s stock collapse and Musk’s takeover of Twitter, the future of social platforms dominated headlines last week. On that note, today’s essay looks at VR/AR and Meta’s new headset. —Edward Real Fidelity In January 2020 — before most North Americans had heard of COVID-19, let alone started processing its impact — I wrote a Marketing BS essay that connected the science of music technology (CD vs vinyl vs live concerts) to videoconferencing and office productivity. Specifically, I coined the term “real fidelity” to explain why our enjoyment of an experience — music or sports or work or anything, really — is significantly shaped by our perception of its “realness.” Eight months later — with many people using technology to connect with colleagues, classes, and friends — I wrote a follow-up post that expanded upon the idea: The term fidelity refers to the formats we use to communicate sounds, images, or experiences. Fidelity plays a fundamental role in the effectiveness of a marketing strategy. For instance, video can deliver a message more effectively than audio. And a video played on a large, high-definition screen is more impactful than one played on a small, low-quality screen. The most powerful fidelity is real life. A live presentation in an auditorium (usually) holds people’s interest better than a YouTube video of the event — a phenomenon that many parents discovered [in 2020], while watching children struggle with Zoom-style classes. In that second essay about real fidelity, I used the concept to explain why companies like Netflix, Meta (then Facebook), Google, and Amazon were betting on a post-pandemic return to the office. The reason? Co-workers felt like something was missing from their collaborations. Despite the improvements in technology, videoconferencing didn’t feel as “real” as face-to-face interactions. Humans crave that sense of “realness” — so much so that it drives many of our decisions. As I wrote in my first essay about real fidelity: At times, our compulsion to attend live events seems to defy logic. I would never pull up YouTube and watch an hour-long lecture, but I was drawn to go see Bill Clinton during one of his “live in conversation” tours. For an $80 ticket, I sat at the back of an enormous theater, with a view far worse than the one I could have watched on my laptop.  That is the power of real fidelity. Better Fidelity On October 11, Meta announced that their new virtual reality headset, called “Quest Pro,” would ship by the end of the month — at a cost of $1500. Unlike their earlier Quest headsets (cost ~$400), the new device is aimed at the enterprise market. The Pro model offers multiple technical upgrades that support AR (augmented reality), like higher resolution, wider peripheral vision, automatic eye tracking, and the ability to see full color in both the virtual and physical environments. Plus, the device’s improved processors allow people to engage in more seamlessly immersive (and therefore “more real”) business meetings, brainstorming sessions, and more. Most pundits from the mainstream media, as well as many of the smart analysts I respect (Ben Thompson, Benedict Evans, John Gruber, Kevin Roose, John Carmack, etc.) reacted to the Quest Pro announcement with skepticism. There seems to be a critical consensus about two key points: * Meta is too early: Useful VR is still ten years away — especially the social aspects. Plus, there are limited barriers to entry; when VR tech finally matures, another company can just come along and leapfrog Meta. * Customers don’t want full immersion: Meta believes that VR is the future for both office productivity and personal recreation. This strategic bet assumes that immersiveness is a defining characteristic in the tech continuum from desktop computers to laptops to mobile devices to VR. But smartphones are actually LESS IMMERSIVE than desktop computers. The shift from desktops to laptops — followed by the mobile revolution — was the result of consumer demand for convenience, not immersion. Where’s the evidence that customers are clamoring for VR experiences? Point 1 could easily turn out to be true: Meta might be too early for VR, just like many mobile-focused companies in the mid-90s were too early. For Point 2, though, we still don’t know how consumers will feel about immersive tech (it’s hard for any of us to have a strong opinion until developers refine the VR gear and platforms). Instead of focusing on immersion, then, I might suggest an alternative way to frame Point 2: “convenience is the most important element for bringing a new product to scale.” Getting someone to try something new is HARD — just ask P&G about the challenges with teaching people to use fabric softener. As such, I agree with critics who think Meta faces an uphill battle convincing consumers to make “putting on a headset” part of their everyday routine — especially at a cost of $1500. (The early research isn’t encouraging. Only 28% of current VR set owners use their devices daily.) And yet… VR has a “killer app” — presence. And, as I wrote in my first real fidelity essay almost three years ago, presence really matters. There are many types of experiences that work much better (or only work at all) when humans are physically together in the same space. By definition, VR cannot achieve 100% real fidelity, but the technology is definitely approaching interactions that “feel” real. Nothing on a two-dimensional screen comes close. Could VR attain a level of sophistication that replicates the feeling of collective presence? Meta seems to think so. And if VR does, in fact, ever manage to offer a reasonable facsimile for physical presence, here are some likely applications for VR (in order of “corporate-ness”): * Meetings * Conferences * Sales * Learning * Comedy * “Hanging out” * Tabletop gaming I’m probably overlooking some other important use cases, but that list of seven is a good place to start discussions about how things might play out in VR. Meetings Clearly, Meta understands that workplace meetings will be a core piece of their VR business. The company has already launched Horizon Workrooms — “a virtual space that brings teams together in the metaverse.” There is a web app version of Workrooms that anyone can use on their computer, just like a regular video call. But to access the VR features, you need a (base model) Quest headset. And with a Quest Pro, you can unlock AR functionality, which allows you to build a virtual model of your physical office; that way, you can interact with other people’s avatars in your familiar office environment (with the same placement of your monitors, keyboards, etc.). With Workrooms, you can also bring your computer into the space, so you don’t have to give up multi-tasking in big meetings (or if you want to pull up a slide or a spreadsheet, you don’t need to leave “the room”). You can collaborate with colleagues on whiteboards. You can throw around ideas. Plus, Quest Pro can replicate elements of human communication. If you smile in real life, your avatar smiles. If you look away, your avatar looks away. If you put up four fingers to drive home a point, so does your avatar. Workrooms is more than just a novelty — Meta is developing a business tool that evokes the “presence effect” of collaboration. If you have not tried a headset yet, I highly recommend it, if only for 15 minutes: The experience really does feel like you are “there” — as long as you can get over the cartoon-like graphics. It is nothing like the rows of video screens you experience on Zoom or other video platforms. Moreover, the virtual space offers some advantages over real life (beyond the obvious convenience of working in different parts of the world regardless of time or distance). In addition to Workrooms, there are third-party software programs that allow you to build and manipulate three-dimensional designs, create and shape chemical molecules, and generate housing and infrastructure projects. Given that most people haven’t even put on a modern VR headset, it’s incredible how many high-quality third-party applications are being developed — and most are free or very inexpensive. Last week, I was working with some clients; they are debating whether to remain a remote-first company or to establish a physical office. They see the benefits of building a company culture with in-person collaboration, but they also recognize the challenges (real estate costs, recruiting talent, and office distractions). I suggested they pause their decision — until they purchase three Quest Pro headsets ($4500) and experiment with some team meetings in Horizon Workrooms. When I receive their feedback, I will report back. Ultimately, I expect virtual meetings will be THE feature that eventually convinces users to adopt Meta (or whatever company leapfrogs them). For the rest of today’s essay, I’ll describe how other activities might develop viable use cases for this nascent technology. Conferences Let’s be clear: no one decides to attend a conference because of the keynote speakers (no matter how prestigious they might be). The profile of the speakers is a way to signal the conference’s quality, so that potential attendees know the event (and its networking opportunities) will be worth their time. For many people, the value of a conference comes down to these things: * Sales * Account management (i.e., meeting with existing clients all in one place) * Job search (sub

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Two-part interviews with successful CMOs: Their careers and how they got to where they are, and a deep dive into marketing channels for a specific business. Companion to the Marketing BS Newsletter by Edward Nevraumont marketingbs.substack.com

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