A few weeks, Rob Go from Spark Capital approached me with his idea for writing a series of posts about Consumer Packaged Goods and the Internet.  In particular, he asked if I’d be willing to write a guest post to cap off the series providing my thoughts on what start-ups can learn from CPG Brand Marketers.  The following is that post, which first appeared on Rob’s Tumblr.

5 things every start-up can learn from CPG Brand Marketers

Increasingly when I get the question of what my job is, I tell people that I play the role of a “translator.”  After all, working in Corporate Marketing, I do not spend my time only focused on a single brand.  Instead, my role leads me to interact with a variety of brands, both inside and outside of the company.  One day that might be a fellow Brand Marketer at a consumer package goods (CPG) company.  Other times it will be a strategic partner, whether that is an agency or digital media company.  But increasingly, I am finding my interaction to be with more and more start-ups and the Venture Capitalists who invest in them.

It is in this last bucket where my role as a “translator” becomes the most evident.  After all, the numbers behind Consumer Packaged Goods are daunting when you consider comparisons such as this:

• Pampers has annual net sales of approximately $8 billion, which makes it larger than Yahoo ($6.5 billion in sales for 2009)
• In 2009, the advertising spending of the top 4 companies in the US was greater than the total fund-raising by US Venture Capital Funds ($14.5 billion vs $13 billion)

These numbers are not to say that bigger is better.  Instead, I would say that the worlds of Brand Marketers and Start-ups are just two distinct cultures.  Like all cultures, they have their differences, but also their similarities.  But more importantly, there are things that both cultures can learn from each other.

In his previous posts in this series, Rob has done a great job of providing the perspective from the start-up side of the table.   Now I wanted to provide my perspective on what start-ups can learn from the culture of CPG Brand Marketers.

#1 – The Consumer is Boss:

This is a mantra that was first coined by AG Lafley, former CEO of Procter & Gamble.  But you could say it is just an evolution of what David Ogilvy once said – “The consumer isn’t an idiot… she’s your wife.”   Consumer is Boss is a simple saying but it holds a universal truth for Brand Marketers who spend billions of dollars a year on market research.  Consumer is Boss is about letting the people using your brand / product guide your decisions.  This doesn’t mean that you follow a consumer blindly off a cliff.  But it also means you don’t add a feature just because it is a fun engineering challenge.

Now you might say that true innovators think the opposite of this.  After all, Henry Ford once said “If I had asked people what they wanted, they would have said faster horses.”  But that is taking the mantra of “Consumer is Boss” much too literally.  When Ford asked people what their problem was with transportation, they likely said that horses were too slow and that trains did not give them the freedom to go where they wanted, when the wanted. That understanding of the problems faced by consumers…the needs that they had in their lives…is what led Ford’s innovation.  Whether he realized it or not, he was one of the first people who practiced a Consumer is Boss mentality by understanding the motivations and desires of his potential consumers.  That conveniently leads to the second point…

#2 – Know Your “Who”:

Brand Marketers spend a tremendous amount of time focused on their brand’s “Who.”  Broadly defined, a Brand’s “Who” is their target consumer, the type of person with whom the brand has the greatest business potential…both in the short term and the long term.  The “Who” is a profile of a consumer and paints a picture for who that person is, what is important to them, and why they make the decisions they do.  If a brand has done a great job defining their “Who”, it makes other decisions that much easier.  Need to figure out if a product feature is worth investing the time / money to develop?  Check if your “Who” to see if that feature address a barrier your consumer has to using your product.  Need to create your marketing plan for your start-up?  Well then look at your “Who to determine where they can be most easily reached with a message about your product.  Your brand’s “Who” can be the foundation of just about every business decision your start-up makes.

I would argue that one the pillars for GroupOn’s success is that really understand their Who.  If you look at their About Us page, they list their company philosophy including this statement: “We sell stuff we want to buy.”  There is a lot of power in that short statement.  GroupOn makes their decisions about products to feature based on the things they would want to buy themselves.  They understand their Who, because they are their Who.   Not all start-ups will be lucky enough to launch a business where they are the consumer they are trying to reach.  It is a challenge constantly faced by CPG Brand Managers and a reason why we put so much focus on really understanding our brand’s Who.

#3 – Design Matters:

Why can you recognize the Google logo even when they use different themed graphics on the home page each day?  And why has Method cleaning products been able to grow so fast in every category they enter?  It is because these brands have put a huge focus on Design, including incredible attention to their Brand Identity.  I am a huge believer in the design revolution that Jason Putori, Designer in Residence at Bessemer Ventures (formerly of Mint.com), is trying to bring to the start-up world.  Great design can be a major competitive advantage.   And this advantage is multiplied with a consistent use of the design in everything that your brand does.  You know an Apple product or message the second you see it.  With great design…and great consistency in that design… you can have the same for your start-up

#4 – Think about “Share”:

Share is everything to a Brand Marketer.  The career of a Brand Manager can be made or broken based on Dollar Share or Volume Share.  At retail, Brand Managers pay close attention to “Share of Shelf” or how many facings their brand has compared to competition.    In media, CPG Marketers look at “Share of Voice” to track the percentage of time consumers hear their brand message versus competition.  This constant, some would say obsessive, tracking of “share” is what keeps brand marketers focused.  Having viable and impactful measures for your start-up that you track consistently is something every business should do.  It helps you prioritize and keeps you focused on what moves those other important financial numbers (ie revenue, profit and cash flow)

#5 – Everything you do is part of Brand Building:

From day 1, your start-up is a brand whether you like it or not.  As Seth Godin once wrote,

“a brand is set of expectations, memories, stories, and relationships that, taken together, account for a consumer’s decision to choose one product or service over another.”

When a CPG brand thinks about Brand Building, they take that to mean much than just advertising.  In fact, often you will hear Brand Marketers talk about “Moments of Truth”.  The First Moment of Truth is often the experience in-store from merchandising to how the product looks on shelf.  The Second Moment of Truth is about the experience after the purchase when people use the product for the first time.  While he didn’t use the language of “Moments of Truth”,  Sean Ellis of 12 in 6 is talking about that very thing when he makes this point:

Starbuck’s process of building their brand is a great example for any startup.  There was no heavy spending on brand advertising.  At Starbucks it’s all about the brand experience.  They obsessed over everything – from the quality of the cups to the quality of the toilet paper.  The music, colors, furniture…  It’s all an orchestrated brand experience.

For a CPG Brand Marketers the process of building a brand involves every facet of the business from customer service to marketing to even your company letterhead.  While a start-up has many things they have to juggle, how your build your brand should always be near (if at) the top of the list.

Several weeks ago, I had the honor to write a guest post for the Google CPG Blog.  If you aren’t familiar with this blog, it is a highly recommended read for anyone on the brand or agency side working in CPG.  Below is a repost of my thoughts on Brands and Consumer Collaboration.

Brand Managers have historically been reliant on Consumer Research such as focus groups and surveys to be “in-touch” with consumers. But in this day of 24/7 access to consumer opinions from blogs, Twitter, and Facebook, Brand Managers need a new approach for understanding why people buy their brands. One of the most powerful ways to do so is through Consumer Collaboration. In its most simplistic form, Consumer Collaboration is about monitoring and participating in the conversations around our brands, listening to changing opinions in real-time. It is about tapping into what Google calls the “Database of Consumer Intentions” to gain a new sense of what our consumers are thinking each and every day. In fact, Google is a company making it easy for marketers to be in touch with the “database of intentions” every day through tools like Wonder Wheel, Insights for Search, Blog Search, and YouTube Insights for Video.

But true Consumer Collaboration is about going beyond that, giving marketers a chance to tap into the passion of consumers and collaborate with brand advocates. The world of digital gives CPG Marketers the chance to harness the energy of consumers to build remarkable brands.

In that regard, the need for moving towards a mindset of Consumer Collaboration is driven by three facts:

1. Consumers are sharing their opinions about the brand, with, or without, a Brand Manager’s blessing.
2. Consumers will be heard whether or not companies give them an outlet.
3. The amount of information about our brands (and access to that information) has never been greater.

Today’s Brand Managers must recognize a new approach to move beyond research and instead focus on collaborating with our consumers and your most passionate fans. This means we should invite consumers to collaborate with us to improve our brand. Scott Cook, founder of Intuit and Board Member of P&G, eBay and Amazon calls these “User Contribution Systems.” As Cook pointed out in the Harvard Business Review:

“Every day, millions of people make all kinds of voluntary contributions to companies — from informed opinions to computing resources — that create tremendous value for this firm’s customers and, consequently, for their shareholders.”

This fact has not been lost on CPG Brand Marketers. Whether it is Tide using the services of Get Satisfaction, or Hugo Boss Fragrance tapping into consumer creativity with HugoCreate.com, brands are starting to see the true value of Consumer Collaboration.

However, one of the best examples actually comes from a non-CPG company: Starbucks with their program, MyStarbucksIdea.com. Launched in March 2008, the site arrived one year after Howard Schultz famously wrote an internal memo that said “[we] desperately need to look into the mirror and realize it’s time to get back to the core and make the changes necessary to evoke the heritage, the tradition, and the passion that we all have for the true Starbucks experience.” MyStarbucksIdea was a way to regain that heritage and passion by inviting Starbucks loyalists to collaborative on reinvigorating the brand. As Starbucks describes the site:

What would make your Starbucks experience perfect? We know you’ve got ideas – big ideas, little ideas, maybe even totally revolutionary ideas – and we want to hear them all. That’s why we created My Starbucks Idea. So you can share the ideas that matter to you and you can find out how we’re putting those ideas to work. Together, we will shape the future of Starbucks.

When the site first launched, the critics classified it as nothing more than a “glorified comment card.” But over the past year, Starbucks has shown that they are truly committed to making the site much more than that. In the spirit of Consumer Collaboration, Starbucks enrolls people throughout the lifetime of an idea. At the heart of the process is a team of Idea Partners – Starbucks employees who are experts in their respective field. These Idea partners read all ideas and comments on the site, but also guide ideas through the Starbucks organization. And just as important, they keep consumers up to date via the Ideas in action blog where Starbucks writes about the ideas that are recommended for implementation and details where they are in the process (Under Review, Reviewed, Coming Soon or Launched).

This is consumer collaboration at its finest. Starbucks isn’t inviting consumers to a two hour focus group where they give ideas and never talk to the company again. Instead they are inviting people to give their opinions and providing an outlet to do so. The result is that consumers are acting like part-owners of the company because their ideas are being heard. More brands need to follow the lead of Starbucks in this area, leveraging the power of digital to practice true Consumer Collaboration.

Lots happening in the world of digital and I have been negligent in sharing the news / posts that really caught my eye lately.  So with that, here’s my latest weekly (better called monthly) update:

Breathing New Life Into Virtual Worlds – PR 2.0:  Virtual World membership grew by 39% in the second quarter of 2009 to an estimated 579 million with Youth driving most of that growth.

Four Questions for Successful CPG Social Media Marketing:  Great post from the Google CPG Blog, which is a must read if you don’t subscribe to it.

Why Teens Don’t Tweet:  Only 16 percent of Twitter users are under 25.  More specifically, 45-54 year olds are 36 percent more likely than average to visit Twitter, making them the highest indexing age group, followed by 25-34 year olds, who are 30 percent more likely.

Why We Need Marketing General Contractors – The Toad Stool:  Another great post by Alan Wolk.  I frequently use his term “NASCAR Blindness” and now I think I might be using “Marketing General Contractors” as well.

Best Buy’s CrowdSourced Job Posting is Live:  I’ve said it before, but this is one reason Barry Judge is a CMO that just plain gets where marketing is headed.

6 Lessons from the Best Marketing Campaign Ever – Rohit Bhargava:  At the Cannes Ad Festival this year, a single marketing campaign took home a Grand Prix award in three categories simultaneously–direct, cyber and PR– something that had never happened before in the 50+ year history of the show.  And the campaign was from a Tourism Board…not a Fortune 100 company or brand.

If Twitter had 100 People…:  5% of the people create 75% of the Tweets

Lately there has been some good discussions about other companies acting like Venture Capitalists, especially ad agencies.  Personally I have major concerns if an agency starts acting like a VC, especially if they are investing in New Media companies.  The potential for conflicts of interest are huge.  First, theses agencies need to be media-neutral.  I need to trust my agency is making a recommendation that is best for my brand…not because their agency stands to profit through my support of a business they have invested in.  Second, they are funding those investments based on fees I paid them and then potentially profiting off media buys I make.  That makes me really uneasy.

However, I do think the future of the agency model could be in Shared IP and equity.  I have no problem with an agency working with a new/small brand and taking an equity stake instead of normal fees.  I think this is a great win/win since the brand saves money and the agency gets tremendous upside based on their work.   But if this new brand is a media property that the agency can then pitch to other clients, I get concerned,  My agency’s neutrality goes out the window and I end up feeling like my agency pimped me out.  Not a good place to be.

Now the people I do think have the right be investing in new media companies are the brands themselves.  A media buy from an established company like P&G can end up making a company.  I think back to the small buy I did with Secret on MySpace.com back in 2004.  My counterpart at MySpace said that because of that deal and the media coverage we generated from it, he ended up getting over 50 calls from major brands who before wouldnt even return his call.  Think if instead of a media buy, P&G had made an equity investment in MySpace?  We would have ended up with a major return on our money when MySpace sold out to News Corp.  Plus, many start-ups could benefit tremendously from the brand building knowledge that a major CPG could bring to the table.  Plus it has an employee benefit because marketers could take a “broadening assignment” to go work at the start-up for a year or two.  They would get a chance to scratch their entreprenuerial itch without leaving the CPG company.  That is a major HR win to keep top talent happy.

Now obviously there are drawbacks here.  First, CPG companies aren’t experts in the world of VC investing but that could be solved by partnering with a leading VC.  Second, a company like P&G investing in a company could potentially keep competitors from buying media on that site.    Third, almost all major CPG’s are publicly traded companies and VC is a hit or miss industry.  But then again, technology companies like Dell are publicly traded but they have been investing in start-ups for years now (though Dell Ventures did close after a few years).

The way I see it, there is tremendous upside for a major CPG company to partner with VC’s in the start-up game….but tons of downside if our agencies are acting as the VC’s instead.