June 07, 2015

Burger King Dude and Renting/Tolls/Advertising

Money and power align with social media and engagement. Take a look:




I know, I know, you're saying, "wait, you mean people still watch television?"


And this also happens:
The entire omnichannel movement is about renting. Rent a name from Google. Rent a name from a Co-Op. Rent a name from a popular retargeting/remarketing brand. Rent 30 seconds on television. Rent the owner's box at a horse race in collaboration with television. Rent the name on Facebook. Rent intelligence from Axciom or Experian or Epsilon. Rent space "in the cloud". 

When times change, something is gained, and something is lost. In the omnichannel movement, you gain the promise of access to a customer across a near infinite number of channels. Google calls these "micro-moments" (click here). The gains, of course, are balanced by all that you lose. Your business is controlled by those who own access to the micro-moments. Burger King pays NBC for a modern version of "product placement", but they lose control of the interaction between product placement and social media. You rent the name from the Co-Op, but you lose control over "who" the Co-Op sends you (which is increasingly a 62 year old non-urban customer who greatly influences the future of your merchandising assortment, rendering it unshoppable to the 36 year old).

Ten years ago, you couldn't spend five minutes online without bumping into an article promoting the independence of the internet. You were told that you owned your own future, you controlled what happened next. Pundits gloated about the demise of large brands that controlled the message ... the "TV is dead, Comcast is dead, you don't need the gatekeeper when you own your own media platform" kind of narrative dominated ... until Comcast bought up your access to the internet. Ooops.

Commerce evolved as it always seems to evolve ... with gatekeepers selling rental opportunities, today labeled under an "omnichannel" umbrella that benefits those who sell rental opportunities.

Take a look at your profit and loss statement. What percentage of net sales do you spend on rental opportunities? Do you mail catalogs? Then you are essentially renting paper and printing services every single month, aren't you? Do you love Google or Facebook? Then you are renting digital names, no different than renting names via the Co-Ops. If more than 20% of your net sales are consumed by rental tolls, then you are fully at the mercy of the gatekeepers ... in that situation, the gatekeepers own the future of your business.

There is an opportunity to figure out how to own your own message. A Nordstrom (customer service) or Patagonia (environmental mission via creative) or Costco (low prices via exclusivity) all own their marketing message. I recall being stunned when I worked at Nordstrom and realized that their marketing budget (ten years ago, might be different today) was around 2.5% of net sales. Let that one sink in. Compare that to Macy's, both then and now. Is it any wonder that Nordstrom prints money while Macy's prints stories about omnichannel brilliance?

When you own your message, you don't have to pay as many omnichannel rental tolls, do you? When you pay fewer tolls, you have access to cash that you can invest in other opportunities. You get to a point where you don't have to pay rental tolls to put a clown in the owner's box at a sporting event.