Category Archives: 1. Building Brand

Marketing Trends: Public Relations Budgets going Social?

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Sudden stormI haven’t been up for air in weeks. Somehow, despite the economic downturn, despite the nuclear winter in venture capital markets for early stage startups, SocialRep is humming. I’ve been buried in social media tracking scans for customers and prospects, and new inquiries are coming in over the transom. I’m also excited about an invitation to present at Thunderbird’s Winterim in New York in January, where I’ll be talking about our emerging framework for integrated social media marketing and technology. So how can I account for the uptick in energy despite the gloomy market? I’m starting to see my theory about natural selection play out.

Over the past couple of months, SocialRep has been tracking a massive swath of online dialog about marketing. Not surprisingly, the trends in dialog are overwhelmingly focused on the impact of the economic downturn, with various flavors of speculation, panic and punditry. Some examples:

  • A few weeks ago, various reports on budget planning for 2009 highlighted a marked migration in marketing spend from traditional to digital media. The nearly universal read on this move is that online marketing is more measureable than offline, but there was surprisingly little citical analysis of  the challenges with online metrics, and how those challenges are being addressed.
  • As the economic crisis deepened, the panic did too. Sequoia Capital stoked the flames with a presentation they posted online telling their entrepreneurs to “get real or go home”. The presentation went massively viral, spreading the talking points for belt tightening and death pool speculation for various startup sectors, but few specifics on the tactics companies should pursue to refine their market approach.
  • As if in response to the panic–and mindful of the bloodbath marketing usually suffers in a downturn–marketing pundits took up the mantra that, whatever you do, DON’T STOP SPENDING. Some (myself included) cited the anecdotes that companies like P&G, Kellogg and Chevy increased ad spending during the Great Depression and pulled ahead of competitors. But most simply pronounced the incantation forcefully, that smart companies don’t cut marketing, but didn’t offer specifics on how companies should adjust their programs. Jonathan Baskin called this trend perfectly.

Notice a pattern here? Lots of punditry and trend analysis, but very few specific recommendations for how companies should adjust their marketing programs to deal with the economic crisis. There were a couple of exceptions, most notably a lot of dialog about the dangers of discounting and how price cuts undermine brand equity. But in terms of substantive recommendations for adjusting marketing strategy and operations, not so much. So I was interested to see a tangible sign of how some companies are adjusting based on the sudden increase of inquiries at SocialRep.

~ free ~We’re still in the early stages at SocialRep. After beating the streets for Series A funding over the summer, we read the tea leaves and readjusted to focus our energy on customers and product. In this market, we’re going to live or die by our success in serving customers, not VCs. But bootstrapping a technology company can be tenuous. You need customers, but if you’re too opportunistic and grab at anything you can drag over the doorstep, you’ll quickly fragment your product and team by trying to be all things to all prospects. So you have to be deliberate in choosing customers, which means being a little more slow and quiet than would otherwise seem prudent. When you find a good market vein, you mine it, and pay close attention to the way your prospects frame the problem they want you to solve.

What surprised me was the sudden influx over the past few weeks in the number of companies that found us, and how they framed their interest in our social media offering. The common refrain was that, in the face of an emerging recession, these companies were aggressively reviewing every dollar of their marketing spend. One area in particular was not standing up to scrutiny: Public Relations. These companies complained about spending 5-figure monthly PR budgets on activities that produced activity without results. The mandate these companies had been given was to take the PR budget that was not performing and invest it in something innovative, like social media marketing.

Silencio!!! by Loud VillaNow I know this will provoke some howls, so let me make a preemptive disclaimer. I believe in PR. Or, I should say, I believe in good PR. And having spent 15 years on every side of PR, I can define the difference between good and bad PR. Years ago, when I was the editor of a magazine, my inbox overflowed every day with pitches and press releases that had absolutely no relation to what my magazine covered. Today as a blogger, I still get totally irrelevant PR-spam, more artfully framed as “blogger relations”. This is the lazily “scientific” ethic of bad PR: blast a fire hose of pitches and press releases at everyone that looks like they might be a journalist or blogger, and hope someone picks up your story. In the place of actual stories that influence the market, this approach produces monthly “activity reports” and media mentions in off-the-beaten-path blogs or news feeds.

Good PR is different. It’s about relationships and market expertise. PR companies in this category take the time to hire and train smart people who get to know a market, the competitive landscape, the products, and of course, the analysts, reporters and bloggers. They don’t spam their contacts with press releases; they build relationships based on sharing knowledge and insight. Reporters and bloggers answer their calls because they know their time won’t be wasted, and they may get an important tip. This kind of PR produces relevant stories that influence markets.

The problem is, the ratio of good to bad PR is not good. And even among the better PR companies, an understanding of how to manage the dramatic shift from traditional to social media is still largely predicated on the notion of cultivating asymmetrical influence more than reciprocal dialog. Moreover, few traditional PR companies have the culture to passionately embrace the tech-driven social media paradigm. So in the face of a market downturn, when belts are tightening, we’re seeing companies looking at the money poured into PR, and deciding that now is the time to try something new.

What does “something new” look like? That’s the topic of my next post. In the meantime, here’s a hint: social media marketing is just like PR, in the sense that there’s “good” and “bad” SMM. And the distinction is based largely on the same dynamic–activity vs. results, influence vs. relationships.

Brand Equity–Measuring the Gap between CMO and CFO

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BluecokeOver the past few years, I’ve had the great pleasure of getting to know Jonathan Knowles–one of the smartest marketing thought-leaders around, and an expert on marketing finance. I interviewed Jonathan for a number of columns when I was writing for BusinessWeek Online, I invited him to speak before the CMO Council, and he’s keynoting this year’s Elite Retreat in Hawaii. Among other things, Jonathan turned me on to the theories of Lev Baruch, and the growing role of intangibles in defining the market value of businesses. He’s also written what I think is the most readable and entertaining book on marketing ROI.

Jonathan has just written an important article for the AMA’s Marketing Management magazine that looks at the differences between accounting, finance and marketing views on brand equity. The article, along with a number of other related marketing/finance resources that Jonathan has written, is available on his site on a page that lays out some of the basics marketers should know about brand equity and marketing finance.

One of the critical observations that Jonathan has brought home for me over the years, and which is discussed in his AMA article, is the dramatically different world views that characterize marketing and financial thought. This is a deceptively simple concept with dramatic implications. For example, Jonathan writes:

the (unspoken) assumption of most finance people is that customer decision making is dominated by purely rational criteria.

The equal and opposite assumption of many marketing people is that customer decision making is driven largely by emotional and psychological triggers. These unspoken assumptions dominate the expectations marketing and financial people bring to the table, and yet they are rarely discussed. This is only one example of the gap between CMOs and CFOs–a gap that begins with the very definitions of words we both use to communicate vastly different ideas, such as the meaning of “value”.

I can’t do justice to the depth of Jonathan’s work in a short post–Jonathan’s great gift is that he makes complex ideas accessible and easy to understand. But these are important articles that every marketer should read, especially as the unstable economy drives greater scrutiny into budgets and program performance.

Marketing’s credibility depends on its ability to explain to business people the value of what they do, beyond basic sales response activities. The concept of brand equity is core to the argument about how marketers are creating a long-lived asset for the business in the form of a brand. But to pass the pass the sniff test for finance people, marketers have to show that marketing-created assets actually generate incremental cash for the business. Which means marketers have to go beyond their usual attitudinal metrics to demonstrate impact on actual customer behavior.

Jonathan lays this all out in the Marketing Management article, and suggests four arguments that marketers can use to show that brand equity is adding to the value of the business. Essential reading.

Do Branded Ticker Symbols Effect Stock Price?

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My good friend Victor Cook has a great new post at Customers And Capital rounding up some analysis of the intersection of branding and stock valuation. Victor has been hard at work on the development of an Enterprise Marketing Framework that establishes the connection between marketing expenses and shareholder value. If you’re not familiar with his work, check into our book discussion and review of his book Competing for Customers and Capital. It covers critical ground for any marketer planning a roadmap to the boardroom.

In his latest post, Victor looks at the impact of ticker symbols on stock performance and digs up some fascinating studies that show a real connection. It turns out naming your stock symbol something memorable–like Southwest’s "LUV"–can measurably improve the performance of your stock over stocks bearing symbols that are easily forgettable acronyms. Exactly why this is the case opens up some interesting avenues of speculation, which Victor outlines before inviting readers to offer their own theories.

Here’s mine: Companies that are savvy enough and confident enough to see their stock symbol as a channel to communicate their brand to investors have a more strategic and holistic view of marketing than companies that see their symbol as just a functional index entry. That makes a semantic symbol a marker for companies with more sophisticated and integrated marketing organizations. What do you think?

Check out Victor’s post. It’s one more stellar example of Victor’s work connecting corporate marketing and finance.