Categorizing Categories

Based on the table below, we can categories our categories into three groups.

• Givers.
• Neutral.
• Takers.

You want Givers/Neutral categories. You want to de-emphasize Takers.

Here's the table.

There are ten obvious Giver categories.

• 2 / 3 / 6 / 7 / 8 / 9 / 12 / 13 / 14 / 17.

There are a handful of Neutral categories.

• 0 / 4 / 10 / 14.

There are a few Taker categories.

• 1 / 5 / 11 / 16 with 11 being an egregious Taker!

The email marketer tells stories about anything not in the Taker category.

The social marketer can do "something" with Taker categories, but not much. If you have to promote Taker categories, do so with channels that have essentially no variable cost ... like oraganic social.

The search marketer adjusts spend based on Giver / Neutral / Taker ... spending more on Giver categories, spending less on Taker categories.

The catalog marketer? You won't do this, but you cannot put Neutral / Taker categories in your catalog. Maybe just the winning items in those categories, that's enough. Those pages are TOO DARN EXPENSIVE to cause harm to your existing customer base. If you disagree (and you will disagree), talk to the paper / printing / postage / boutique agency folks and demand they align the expense structure of the discipline back to 2006 levels.

Alright, I'm off the soapbox.

Next week, we'll put all of this category stuff into perspective.

A Taker

We've all met takers in our personal lives. It's a horrifying experience. A narcissistic politician, an angry mother-in-law, a friend who always wants everything his way. All of it exhausting.

It isn't much different in ecommerce.

You undoubtedly have a merchandise category that is a TAKER. It takes away from other categories. It doesn't develop other categories, instead it borrows customers who then spend less in other categories and more in the TAKER category.

Here's our table. Take a look at category xx.

Read across the category labeled M11.

What a train wreck.

The category only adds value to categories 8/11/12.

The category TAKES value away from a whopping ten (10) categories next year.

This is a category that you shouldn't advertise. You can offer the category if it is profitable, sure (though that is questionable given this table), but your ROAS-obsessed analytics folks are making rampant mistakes giving this category equal treatment in any marketing channel. Catalog marketers should not feature this category anywhere ... bury it in the back of the catalog! Only feature winners here. Email marketers needs to not feature these items ... make it easy for the customer to "get" to the items online but most certainly don't feature this stuff ... those items are TAKERS harming your business long-term.

If you are going to advertise TAKER categories, do so on Organic Social. It costs you nothing. Do not waste precious marketing dollars on categories that don't play well with other categories.

A Giver

What you really want is to offer merchandise that causes customers to want to buy EVERYTHING you sell. That's how you know you're doing a good job.

Remember our table from yesterday? This brand has seventeen (17) merchandise categories. Reading across the rows, we see how much money a customer will spend next year in each category (columns) based on $1 spent in the category (row) previously. I weight historical dollars (100% past year, 60% 1-2 years ago, 35% 2-3 years ago, 20% 3-4 years ago) to add a "recency" component to historical purchases.

Here's the table.

Read across the row labeled "M09". This is Merchandise Category 9. This category is a GIVER. When a customer buys from this category, the customer spends more money next year EVERYWHERE!.

• $0.05 in Category 1.
• $0.21 in Category 2.
• $0.37 in Category 3.
• $0.23 in Category 4.
• $0.20 in Category 5.
• $0.22 in Category 6.
• $0.24 in Category 7.
• $0.11 in Category 8.
• $0.20 in Category 9.
• $0.29 in Category 10.
• $0.48 in Category 11.
• $0.33 in Category 12.
• $0.18 in Category 13.
• $0.33 in Category 14.
• $0.10 in Category 15.
• $0.26 in Category 16.
• $0.22 in Category 17.

This category is a GIVER. It delivers added value to every category. It either causes customers to "need" what is offered in other categories (i.e. an iPhone buyer purchasing an Apple Watch) or adds a halo to the brand experience.

This is the category that gets extra attention on your home page, in your email marketing campaigns, in social. You pay extra in Google Ads for items in this category. Terms like ROAS have no real meaning, because ROAS is what average marketers use to judge success ... you have a category that adds value to every category in the future ... you're willing to pay more to have more success.

And for the catalog marketers in the audience? Your catalog pages are too expensive now, you can't afford to feature stuff like you used to. Feature the categories that cause customers to buy everything in the future. Use your catalog dollars in a smart manner, ok? (and yes, I realize that won't happen but it should happen).

Givers and Takers

It's unlikely you look at your business this way.

It's time for you to look at your business this way.

You have categories that "give" ... when a customer buys from the category the customer immediately becomes more valuable to most/all categories.

You have categories that "take" ... when a customer buys from the category the customer aligns with the category and spends less elsewhere because of the purchase within the category. It would be like buying a Quarter Pounder with Cheese at McDonalds ... only for the customer to switch to a Filet o' Fish and not go back to the Quarter Pounder with Cheese. If your job is to sell Quarter Pounders with Cheese, you become protective of "your" customer.

This is the table we'll start noodling tomorrow.

National Griddle Week

Watching soccer and a halftime commercial comes on ... it's Blackstone ... and they're promoting NATIONAL GRIDDLE WEEK. Whaaa?

I visit their website ... sure enough.

AI knows all about it.

It's apparently an event they made up out of thin air.

I gave a presentation back in 2016, talking about how "brands" (as the pundits say) would ultimately have events that they can promote everywhere ... that "brands" would become similar to sporting leagues in that a sporting league might have the Final Four or the FA Cup or Opening Day (baseball) or the NFL Draft ... events that build excitement and lead to free advertising (even if paid advertising is used to create free advertising ... remember, Glenn Glieber once said "I love free advertising").

I gave variants of that talk at conferences from 2016 - 2019. Attendees HATED IT! The idea of having to use your brain to create events that might not work was not embraced. The idea of doing virtually no work and paying Facebook for names ... that idea, dear readers, was embraced.

It's 2026 (I realize you already know that). My inbox is filled with feedback and commentary about doing the absolute easiest tasks that involve a bare minimum of work ... paired with comments like "show me a best practice that you see working across your client base". That sentence is the essence of empty, vapid nonsense.

We all have to take risks, creating reasons for customers to do something. If you're not willing to make up your own "National Griddle Week", you're not willing to go to bat for your "brand".

What is your version of "National Griddle Week"?

Difference: Old vs. New

On Friday, severe storms were developing in the Midwest. A storm chaser was broadcasting live to his followers ... he was at one of those speedy oil change places. When it was time to pay the $49 or whatever, the employee told the storm chaser that the oil change was free. One of the viewers recognized the establishment, called the Store Manager, and paid the bill.

That is one way that the modern economy works for those exploring new business models.

Then you have old school brands working with YouTube, as shown below.

First of all, there's the brain dead marketing approach used by Michaels. Does anybody at Michaels think that my stream of Podcasts, Headphone information, Weather, and Pickleball videos aligns with their brand?

But secondly, YouTube knows everything about me. They know what I watch. They know what I subscribe to. On what planet does their algorithm (#AI) believe that THIS is the ad I need to see?

Either Michaels is dumb, YouTube is dumb, or both of 'em are dumb.

We've had the wombats telling us for nearly three decades that they can serve the right ad at the right time to the right person.

They cannot do that.

When you step back and watch what modern marketers are doing vs. old school marketers, you see a gulf that is difficult to bridge.

It Won't Impact Me

It depends.

One professional emailed me to suggest his company is using AI to generate 9% increases in reactivation rates. Another professional told me he's using RFM ... a 35-50 year old technology, to decide which customers are worthy of being reactivated.

Which professional is looking to the future?

Neither.

Or both are.

We don't know. We don't know how either individual thinks about the future.

Am I future-proofing myself by creating cartoon images via AI? Noooooooo.

You might think carefully about what happens if the return on investment on AI does not materialize fast enough? Remember 1996 - 2001? The adoption of the internet and monetization of the internet did not keep up with the Goobers who overspent. I worked for a company that went from $78 a share to $1 a share within six months. You might want to think about what it means for your company and your job if the market "corrects" because AI doesn't monetize itself fast enough.

There is going to be a generation of Leaders who navigate companies through the current political environment and the adoption of AI, avoiding bubbles and controversies. Pay attention to these people, because they're the ones who own the future.