Is Facebook Building the 21st Century Procter & Gamble?

Back in 2008, I had the chance to lead P&G’s Joint Business Planning with Facebook (as well as the other big digital media players).  The intent of the Joint Business Plan wasn’t about just increasing advertising dollars.  It was about knowledge sharing between the two companies with the goal of having a strategic relationship where we both became better businesses as a result.  This cultural exchange was about P&G accelerating our digital knowledge, while Facebook learned how brand marketers thought. Following the announcement last night of their purchase of WhatsApp, it looks like Facebook didn’t just learn how to think like P&G but maybe how to become P&G as well.

What I mean is that Facebook appears to be using the Procter & Gamble playbook for building a “house of brands.”  This playbook is about building a portfolio of businesses that often will compete against each other but ultimately giving your company a larger market share.  For instance, P&G’s global laundry market share is around 31%. This includes brands like Tide, Gain and Ariel, each of which contributes above $1 billion in annual sales.  But they also have brands like Bounce, Downy, Era and others that all compete in the same space.  The same goes for Baby Care with both Pampers and Luvs, as well as Hair Care with Pantene, Head & Shoulders, Aussie, and Herbal Essences.

Facebook has a history of being active in the acquisition space, with WhatsApp being their 45th purchase.  But historically, all of their purchases were either acqui-hires for the talent or a foundation for a future Facebook feature.  For instance, Hot Potato became the basis for Facebook Places and Karma became Facebook Gifts.

But this might be changing.  The first indication was the purchase of Instagram in April 2012.  At the time, Instagram CEO Kevin Systrom wrote bluntly in a blog post that, “Instagram is not going away.”  As we near the two year anniversary of that deal, those words have held true and Instagram is an even stronger brand today than it was back then.  With the WhatsApp purchase, the key message track for Zuckerberg and company is that “WhatsApp is on a path to connect 1 billion people.”  The talk isn’t around how WhatsApp will fix Facebook Messenger but instead its all about the potential of the WhatsApp brand and service.

If you look at P&G’s Purpose, they say that they “will provide branded products and services of superior quality and value that improve the lives of the world’s consumers, now and for generations to come.”    Facebook on the other hand talks about their purpose being “to give people the power to share and make the world more open and connected”   With the addition of WhatsApp and Instragram, you could argue that these purposes are becoming more and more similar.  Facebook now has three “branded products and services of superior quality and value that improve the lives of the world’s consumers” to “share and make the world more open and connected.”

People were shocked at the price of Facebook’s purchase of Instragram in 2012.  And there is even greater disbelief as the WhatsApp acquisition goes down as one of the largest M&A deals in history.  But in many ways, both of these deals are similar to the moves P&G made to buy Gillette for $57 billion and Clairol for $5 billion.   With Gillette, P&G gained one of the strongest male grooming brands in the world, while Clairol was a foundation for the scale of P&G Beauty.   For Facebook, WhatsApp has the same role in Messaging, while Instagram offers it for Photos.

In the end, Facebook is following the same strategy of building a House of Brands that has built the great CPG companies like P&G, Unilever, and Nestle.  I’d say they clearly learned something about building brands during all those Joint Business Plan meetings years ago.

How to Build a Startup that Thrives – SXSW V2V 2013

At the inaugural SXSW V2V this August, I had the opportunity to deliver a 20/20 Vision talk on “How to Build a Startup that Thrives.” The talk answered the question of “can today’s startups become tomorrow’s General Mills or P&Gs?” In the startup world, overnight success stories make a big splash. But what happens when initial rounds of investment dry up, the press moves on and success relies on your business strategy as much as your creativity? The talk was meant to show you how to look beyond the first 5 years to build a foundation for the next 60.

The team at SXSW V2V just posted the talk in its entirety, which you can view by clicking the video link here.  I’d love to hear your thoughts.

Should your brand be focused on Social Currency?

SocialCurrency

Vivaldi Partners recently released a study entitled “Social Currency” that looks at why brands need to build and nurture social currency.  Social Currency is one of those sayings your hear tossed around, but no one ever really defines it.  That is one of things that makes the Vivaldi study so interesting.  In the words of Vivaldi’s founder, Erich Joachimsthaler,  Social Currency is:

“the extent to which people share the brand or information about the brand with others as part of their everyday social lives… Social currency is not  just about conversation, buzz or community.  It is all this and much more. It does not impact every brand equally and certain levers of social currency are more important than others in driving value for companies.”

The report is a great read but there are a couple of key takeaways and snippets that I have captured from the report below:

Social Currency consists of six core levers

  • Affiliation: What share of your users has a sense of community?
  • Conversation: What share of your brand users recognizes and stirs buzz?
  • Utility: How many of your users derive value from interacting with other users?
  • Advocacy: How many users act as disciples and stand up for your brand?
  • Information: How many of your users feel they exchange fruitful information with others?
  • Identity: How many of your users can identify other users?

Social currency represents a shared asset of consumers and company-owned brands

It originates from interaction between customers and consumers.  Companies can stimulate the creation of social currency through means that cultivate a sense of community, strengthen consumer interaction and provide value to the community.  When done credibly brands earn trust  and can grow into an integral, almost symbiotic role in customers’ lives.

What matters is “meaningful” social currency.

Social media efforts should be evaluated in terms of the extent to which it contributes to a brand’s equity, the extent to which it drives category or industry attributes or connects with consumers. Example: successful viral efforts like Burger King’s subservient chicken digital efforts created a lot of buzz but did not really contribute to the strengthening of key components of its brand equity nor did the effort deliver on factors that drive purchase and consumption in the category.

Social Currency must be built and nurtured

Today’s digital technologies open up new and enormously exciting opportunities for building social currency. While there has been a plethora of experimentation over the years, it is clear that we have merely scratched the tip of the iceberg. As technologies evolve, new ways will emerge of how social currency can be built over time.  The big conundrum for marketers is that in an online world, brands are far more broadlyand proactively discussed than ever imagined.  As these conversations are often beyond the direct influence or control of a company, marketers must find innovative and creative ways to thoughtfully leverage these independent brand conversation and act credibly in the digital arena.

The full report does a great job of pulling out examples of Social Currency across different product categories.  Also, for more perspective on the topic, the May 2010 issue of Fast Company used the study for the article  “Five Steps for Consumer Brands to Earn Social Currency

Start-ups need to invest in building brands, not just products

One of the biggest opportunities I see in the world of start-ups and entrepreneurs is a greater focus on Brand Building.  I don’t mean a bigger focus on advertising or PR.  And I don’t even mean a bigger focus on the broader term “marketing.”  I mean a bigger focus on putting the time, money and sweat into taking a systematic approach to…

…treat your company like the brand it really is.

Now the entrepreneurs among you might scoff at this statement.  You might even be thinking that the guy writing this hasn’t lived the life of a start-up so what does he know.  After all, a career spent at the world’s largest Consumer Packaged Goods company means a world where there are plenty of resources available to “build the brand.”  Start-ups do not have time for this when they are trying to keep the lights on, just trying to survive and thrive.

I’m sorry to say, but if you are thinking that, you are missing the point all together.

Over the past two years, my work has thrown me head first into the world of Consumer Internet.  On any given day, my meetings are as likely to be with an entrepreneur or Venture Capitalist as they are to be with another Brand Manager or Advertising Agency.  Ironically my degree from college was in Marketing AND Entrepreneurship so these contrasting interactions are actually comforting.

And it is in these interactions that I have started to form my opinion about the need for start-ups to invest in building brands, not just products.

First a definition: what exactly do I mean by “building brands?”  Keep in mind that brands really came to prominence in the wake of the Industrial Revolution, where brands were a way for people to tell the consistency of a product.  So by one definition, a brand is…

a set of perceptions and images that represent a company, product or service. While many people refer to a brand as a logo, tag line or audio jingle, a brand is actually much larger. A brand is the essence or promise of what will be delivered or experienced.

Think about that for a second. You and a colleague have an amazing idea for a company.  You figured out the name and your co-founder created what you think is a pretty cool logo. And you even came up with a tagline that you just love the sound of.

But have you really thought about your start-up, your idea as if it was a brand?

Have you thought about how your “brand” will be a promise to consumers?  Have you crafted the Brand Visual Identity?  Have you outlined the Brand Equity that you want?  These things aren’t just buzzwords that keep Brand Managers and Agency Executives employed.  They are the tools that a great Brand Builder uses to create and sustain iconic brands like Nike, Coca-Cola and Tide.

With this in mind, I think there is a need in our industry for translators, people that can apply the principles and discipline of Brand Building to the world of entrepreneurship.  Examples are out there for sure.  Pete Blackshaw was one when he left P&G to start Planet Feedback.  And Bessemer Ventures just hired a translator (whether they realize it or not) as they bring Jason Putorti on-board to be a Designer in Residence and help portfolio companies build “simple, intuitive, and engaging web sites.”  And Dave McClure was calling for the need for translators in his self-proclaimed rant that “More than half of all startups, and easily 9 out of 10 investors have no clue regarding .) user experience or 2) internet marketing.”

Brand Marketers realize that a brand is more than a name, fancy logo or marketing plan. A brand is about the product AND the user experience AND the marketing AND many, many other things.

Simply put, when Brand Building really works the way it is suppose to, the sum is greater than the parts.

So if you are a start-up, I would encourage you to start thinking about your brand today, not tomorrow.  If you are VC, I would push you to sit down with your portfolio and ask how they are thinking about their brand.  The opportunity is ripe for the leaders out there to embrace brand building in the start-up world.

And in full admission, traditional Brand Builders can learn plenty from start-ups as well.  We need our own set of Translators to help us in the journey.  But that is a subject for another post all together.

Brands I Love: Knob Creek tells the world “Thanks for Nothing”

Knob Creek Thanks for Nothing

I have to admit,this is one of my favorite print ads out there.  But then again, I seem to have a soft spot for great liquor advertising.

In the world of Consumer Packaged Goods, Knob Creek is going through what we call “allocation.”  And allocation is usually a bad thing for a brand… a really bad thing.  But the marketers at Knob Creek have taken the high road and used the shortage to reinforce their equity of “uncompromising quality.”  It would have been easy for them to start using some product that hadn’t aged the “full 9 years”.  But they did what is right in the long run for both their fans and for the brand.  That type of commitment to a brand is admirable and should be a role model for all Brand Managers.

BTW – Special thanks to Jason Falls for helping me get a digital copy of the above ad.