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Marketing in the Face of a Wall Street Crash

Serendipity is an odd thing. It’s as if the future is written all around us on little post-it notes, but we never read them until an event unfolds and we suddenly realize that, just maybe, we might have seen it coming.

A few years ago my best friend’s dad gave me an amazing collection of thousands of books. I’m a writer, my wife’s a librarian, we were like kids in a candy store. It’s taken years to process the books, and we still have 20 boxes in my garage. So a couple of months ago I was down in the garage sorting a stack of books and one book stood out. Because of its cover. Because of its author. Because of its simple title: The Great Crash. 1929.

John Kenneth Galbraith, the influential popular economist, wrote the book in 1954 as “an economic history of the lead-up to the Wall Street crash of 1929”. Given all the concern over the past year about the mortgage crisis, it seemed like a timely topic, so I put it on a short stack to read. I finally got down to reading the book on a trip back east and literally just finished reading it last Friday. That was the day the “extraordinary weekend” started before the 504-point crash on Monday. It’s an understatement to say that I felt like I had just read the history of what is about to unfold before us.

Without overstating the parallels between 1929 and 2008–the mechanisms behind the collapse are undoubtedly different–the pattern is hauntingly familiar, right down to the constant stream of assurances from vaunted economists and elected politicians that “we’ve now seen the worst of it”, “a turn around is just around the corner” and, my personal favorite, “the fundamentals of our economy are still strong”. This is what Galbraith called the collective belief in the power of incantation. I’ll let others argue about the economic comparisons of 1929 to 2008, but the human factor–the wholesale denial of destruction even while it’s underway–is breathtakingly familiar.

I hate to be the alarm clock if you’ve been oversleeping, but it’s time to wake up and get it together. We’re in for a rough ride, and it’s not going to be pretty–especially for marketers. I’ve spent the past year pouring all of my resources into a marketing technology startup. It’s a scary time to look up and realize you’re standing on a small rock in the middle of a raging sea and a gathering storm. But it’s even worse to keep your head down and spout incantations about how it’s all going to turn around real soon now. So here’s my blog-condensed playbook of what lies ahead.

It’s going to get a lot worse before it even starts to get better. We’re only seeing the beginning throes of chaos in our financial system. We’ll see liquidation panic play out over days and probably weeks. The government will make various attempts to stop the bleeding, but eventually they’ll be left to do nothing but call impressive meetings of Very Important People who deliver more incantations. The impact on available cash and credit will force companies to cut spending deeply. Jobs will be lost on a large scale, and just like past recessions, marketers will be heavily over-represented in the RIFs. At many companies, marketing executives and managers will be released and become freelance consultants, marketing associates and directors will take over and run marketing operations primarily as sales support. Lead generation will of course lead everything.

That’s the bad news. And make no mistake, it will be ugly. The good news is, chaotic disruption is a huge opportunity for innovation, though it’s not for the faint hearted. In any system, change can only be accomplished by disruption and reorganization. Instead of looking at the disaster ahead as wholesale destruction, look for the patterns of reorganization–and find the companies that have the intelligence and bravery to share your world view. Look for the opportunities to solve problems and help companies grow when others are running scared. Proctor and Gamble, Kellogg and Chevrolet were companies that invested in advertising during the Great Depression while the vast majority of companies cowered in their caves, and during the worst financial meltdown of our history (so far anyway) they managed to grow and build a sizeable lead over competitors leading into the recovery.

Who are the companies that will be investing in growth as the financial system crashes around them? And what will they be investing in? I know where I’m placing my bets. While much of the Web 2.0 hype will be silenced in the coming months, I’m betting people will go online to connect with peers more than ever before. To share their fears, to relate, to vet anything that anyone is telling them about what’s happening, and most of all, to find opportunities. I’m also betting that the decks will be cleared for a new generation of marketing tools and marketing personnel for whom social media and community isn’t a trend, but a given. This is the transition point.

Seriously. It’s time to wake up. There’s a rough road ahead. Buckle your seat belt and grab the wheel.

Brand Equity–Measuring the Gap between CMO and CFO

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Over 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.

Content Strategy Webinar Tuesday

Google’s Dance Party a Miner Miracle

WHIM: Interview with Rene Bonvanie

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I’m still producing periodic “What’s Happening in Marketing” videos, in partnership with Miner Productions. I was inspired this time by the buzz that Serena Software has been generating with their viral videos and social media programs. When you dig below the surface, the story is even more surprising. Serena isn’t some new startup born on the Web 2.0 front line. In fact, they’ve were around before many of the geeks programming Web 2.0 applications were even born. So how does an old-line software company reinvent itself as a social media innovator, and what do they see in social media that compells such a transformation? I sat down with Rene Bonvanie, the CMO behind Serena’s new marketing efforts to find out.

As always, this video was filmed and produced by the great people at Miner Productions.

I’m Only Getting Out if it’s a Bear

The Changing Face of Management

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As often as possible I try to spend time with smart people who make me think differently and deeply about what I’m doing in business. This week I had the fortune of having dinner in the city with some CEOs who actively challenge the management status quo. Aaron Ross put the dinner together. He heads up CEOFlow and works with CEOs on the intersection of sales, management and productivity. We got together with John Girard, CEO of Clickability, and David Gehring, CEO of Famplosion, to talk about some of the challenges of running a business in an age of huge transformation.

We talked a lot about the challenges and imperatives of transparency, communication, business direction, oh, and managing the competing expectations of employees, investors, customers and family. Light stuff.

What struck me about the conversation was the realization that we spend a lot of time talking about the technical aspects of change, largely because the manifestation of those changes is so visceral. Because of technology, you can start a business today for a fraction of what it cost 10 years ago. Because of technology, the ways in which you communicate with a company’s stakeholders has changed dramatically, and it’s hard to keep up with the pace of change. But we talk far less about the ripples these changes have caused in the day to day management of a business.

I think the key change, and one that’s tangible enough to quantify, is the speed of change in markets that we all have to adapt to. When I started my first business, oh geez, 15 years ago, people talked about 5 year business plans without a hint of irony. Today, as I’m closing in on funding for SocialRep, no one takes too seriously anything you project beyond 18 months, if that.

Despite these changes, the typical structures for managing ~management~ haven’t changed all that much, although there’s a growing emphasis on short-term productivity (Getting Things Done, Inbox Zero), which is really just about dealing with the overwhelming flood of stuff that comes with the increasing pace and volume of a fully wired life. When things speed up, we focus more and more on the short term so we can just keep running. But how much sense does that make? As if the faster you run, the more you should look at your feet.

So we got to talking about how we’re adapting the age old wisdom of Values, Mission, Goals, to the realities of today’s business. A general consensus formed around the need for agility and flexibility, informed by long term objectives, and we discovered that we were co-evolving similar methods–methods not all that dissimilar from the strategies engineers evolve to deal with the pace of technology change. The formula that works for me is major six-month objectives broken down into quarterly or monthly initiatives depending on the area and complexity of business. For example, sales and marketing generally have shorter cycles while engineering’s are somewhat longer.

I could go into excrutiating detail on this, but I’ll leave that to the management gurus. I’m still figuring it out for myself. But a couple of aspects that I find particularly interesting. First, while some of the old concepts still apply–it’s important to have values and vision because they set the general direction of travel–the hyper formulation of detailed goal sets aren’t as practical in a world of rapid change. You need skill sets for a strong sense of direction and rapid course correction rather than a detailed chart, because the landscape is always changing.

The other dynamic that fascinates me is how much of our organizational methodologies we draw from engineering and technology. A century ago, our concepts of psychology and organizational management were driven by metaphors of steam engines, and then telephone switchboards. Then we adapted those metaphors to computers and networks. Today our metaphors for management are starting to look like cloud computing and mashups. It’s as if the physical technologies we create push the boundary forward on how we can think in the abstract about how we operate and manage organizations.

Is that a good thing? Or are we simply imagining ourselves in the reflection of our shiny objects?

Putting the Social Media Pieces Together

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Penolope Trunk from the Boston Globe posted a very incisive piece on the proliferation and fragmentation of social media tools, and the implications for developing a consistent brand–especially a personal brand.

It’s clear to me that blogging is best for expressing big ideas. If you can’t convey new ideas on your blog, then you probably won’t get a lot of traffic. And most blogs that do well have a single theme and the audience can depend on the theme dictating the content of the blog. But Twitter is not good for fleshed-out ideas. I see people using Twitter for a lot of stuff, but not for fleshed-out ideas. And Flickr is good for expressing passion. Way better than, say, Twitter.

So it strikes me as really lame that we have such a wide range of media at our disposal yet people are using that range to convey the same aspect of themselves: the personal brand they are creating for social media.

What I love about her post–other than the fact that she’s not a “social media guru” but a working journalist who’s sharing her experience working with Web 2.0 tools–is that she highlights an aspect of social media marketing that I haven’t thought deeply about, despite coming from a branding background. Like many marketers, I’ve been so focused on figuring out the tactical aspects of knitting together all these disparate tools, I haven’t thought too much about the modulation of voice or message to match the medium, even though it’s obvious.

Over the past few months, I’ve been working on the interplay of Twitter, LinkedIn, Facebook, YouTube and my own blog and business sites. In a nutshell I’m working to create original content in places like YouTube and my business sites, write commentary about the content on my blog, and drive traffic to the content through Twitter, FriendFeed, and SEO traffic. LinkedIn, Facebook and Twitter help me build networks of people who have a general and hopefully growing interest in the content I’m creating.

It’s a lot like the integrated marketing programs my agency used to produce where we’d use direct mail to drive web traffic to move a product. Except today, the tools are proliferating and evolving so rapidly, it takes some time to figure out what tool works best for what purpose.

But Penelope sheds another light on this complex fabric. Who you connect with, and the inherent mode of communication facilitated by, say, the 140 character haiku of Twitter, has not only a practical impact on what you say, but a strategic one as well. Instead of having a monolithic “social media” voice that you shove into each new medium however well it fits, explore different aspects of your voice that fit different mediums.

So I am playing with Twitter right now, seeing what part of me feels most natural to be in Twitter. This is the same thing we do as we make a new friend. We figure out what combination of the things that make up our personality will be best with this person. That’s why we’re a little different with each person we know.

Maybe this is a little too down in the weeds for many marketers, but i think it’s bringing us full circle with much of the depth of understanding marketers have gained about communication over the past 30 years, and applying it rather succinctly to the tools we’re building in social media. Discussions like this are proof to me that social media is not a passing phenomena. Again, this isn’t a marketer or social media guru pushing a new methodology, it’s a journalist speaking about her own exploration with the modern tools of communication and how she understands the evolution of her craft. That’s powerful stuff.

Marketonomy Migration

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Okay, this took way too long. But it’s done. Marketonomy–and my reliance on TypePad–is dead. If you’re reading this by RSS, come and check out the new WordPress site. I’m excited and relieved, but don’t get me started on the rant about the migration. Let’s just say I got far too familiar with .htaccess modrewrites and redirects.

After three years writing under the Marketonomy banner, I’m retiring the name and using my own. It was just too confusing when I’m also associated with SocialRep and MotiveLab–and I’m tired of spelling the URL out all the time. (It sounded like such a great idea at the start…) So now it’s just chriskenton.com, but I’ll continue to write about marketing and technology and my perceptions on how they interact and impact society.

The image in the header was photographed by French photographer Philippe Dollo a few years ago. He was playing around at the time with some kind of mechanical panoramic camera–the lens actually panned from side to side and exposed a long sheet of film. I was drawing a blank over what to build the design of the blog around when I remembered these photos, and the whole process suddenly changed direction and became a blast.

Let me know what you think of the new design.

ChrisKenton.com

Marketing AND Technology AND Society