The Truth of Selling to Brands vs Agencies

One of the constant questions that I see startups wrestle with is how to think about the selling process of brand marketers vs their agency partners.  Frankly it is a question that does not have clean cut answer.  But, it is a question that I think I am well positioned to at least help with since over my career I have spent two-thirds of my time on the brand side (P&G) and one-third on the agency side (Rockfish).  So how should startups handle the brand vs agency debate?  In my eyes, there is not a single answer but instead several questions that a startup should consider as they build their selling strategy:

Question #1:  Brand Tech? Ad Tech? Retail Tech?  Which budget would your service come out of?

Not all marketing budgets are created equal and not everyone on a brand has equal control on those budgets.  It is vital that a startup realize the type of spend that their company would fall under.  For instance, if you are a media buy or asking people to purchase based on CPMs than you are most likely AdTech.  And as such, you are not going to have much luck pitching to a Brand Manager.  In most cases, especially with the rise of programmatic buying, brands have empowered their media agency or internal media group to own all AdTech decisions.  For all but the largest strategic discussions, marketers turn over the decision on which sites to buy and do not even begin to get into the details of things like real-time bidding.   If you are a shopper marketing play (ie Retail Tech), then you need to be talking to the marketer (and their agency) that owns the relationships with their retail partners and customer teams.  Or if you are Brand Tech / Digital Marketing, then you are probably talking to the Brand Manager and their digital agency.  Startups can waste a lot of time and energy having meetings with people on the brand that really do not have a say on making the buy.  Figure out which budget you fit into and then map the right relationships based on that.

Question #2:  Who is impacted by your product? What work would take place to implement it?

While there is often a single decision maker that gives the go / no go decision on working with your startup, there is a good chance that decision will impact a multitude of folks on the brand and agency side.  Those people can become champions of your solution or there is an equal chance they can become a poison pill that kills the deal.  It is important to try and gain a 360 degree view of the landscape and how your solution might fit.  For instance, many brands are currently working on global templates to bring a common architecture to their websites globally.  If you are attempting to sell a social media content hub to the brand team in North America, you will have to realize the impact that would make on the global template work that another team might have been working on for over a year.  As the worlds of the CMO and CIO continue to blend together, the need to understand the impact of your solution is more important than ever.

Question #3:  Are you selling a “test & learn” to start or a broader implementation?

When a startup first sells to a brand marketer, they quickly learn the term “test & learn”.  Think of it essentially as a trial or foot in the door with the brand that lasts a set amount of time (and usually is under $50K at max).  Done right, it can lead to a bigger long term relationship.  Done poorly, it can mean you have shot yourself in the foot and ruined any opportunities in the future.  Some startups try to inherently avoid test & learns but that is a dangerous path.  Instead, you should focus on clearly defining the success metrics of the test & learn and what next steps would look like if those metrics are met.  Excuse the bad analogy, but you want to think of the test & learn as the engagement period that will hopefully lead to a marriage.  Even in those situations where you are pitching a much broader engagement (for instance switching to an entirely new Content Marketing Platform), the startup should look for a way to get a brand to dip their toe in the water.  If you have a great product that truly solves a problem that a brand faces, this trial can be what ultimately leads to you winning the business.

Question #4:  Have other brands or clients at the company / agency worked with you before?

Most startups learn about the concept of social signaling when first dealing with investors.  Well the same holds true with brand marketers and agencies as well.  If your startup has worked with another client at an agency, they are going to do the due diligence of finding out what worked and what did not.  And they will do the same if you have worked with another brand within a company.  You can use this to your advantage as well because marketers like to know that someone else has taken that first risk on your startup and worked out all of the kinks.  And frankly even more importantly, they know that someone else has the scars on their back from doing the hard work of getting your startup through legal and set up in their purchasing / payment system.  That seems like a small thing but it is actually a very big thing for most folks.  On the flip side, if this is the first time your startup has worked with a certain company, realize that you are asking that person on the other side of the table to not only say yes, but to also be a champion  for you internally.  You need to reward and recognize them for the extra work that in many times they will be doing on your behalf (this holds true if its on the brand or agency side).

Question #5:  What is the role and authority of the person you are talking to?

One of the biggest mistakes that a startup makes is not understanding the person they are selling to.  In general, they make two types of mistakes in this regard.  The first is they assume the more senior the person is, the better for them to sell to.  For instance, just last week a startup sent a LinkedIn message to the President of a large CPG that I know.  This President has overall Profit & Loss responsibility for his division yet this startup was trying to get him to meet to talk about a small digital activation of less than $100K (a rounding error in his budget).  The second mistake is that they don’t understand the role the person has within the organization.  There is a big difference between a Brand Manager that has budget responsibility and an Innovation Manager that is responsibility for exploring new areas.  Its not that one is better than the other but instead their internal reward structures are different.  For instance, the Brand Manager is going to be measured on growing their top and bottom line of the business – not on creating a new innovative marketing campaign necessarily.  Likewise on the agency side, the Account Director might not “own” the budget for the client, but they likely have one of the closest relationships and ability to convince them why it is worth taking a risk on a new idea.

If a startup goes in understanding these questions about their business and the company they are talking with, it will help them figure out the right path to explore.  There are amazing opportunities for brands and startups to more closely collaborate but it will take both sides working to make the most of the relationship.

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.

Quora: “What will it take to build the next Procter & Gamble?”

Over on Quora, Tristan Walker asked me to answer the question of “What will it take to build the next Procter & Gamble?”  It is a fun question when you think about what it will take to turn one of today’s technology darlings into a company that can last over 100 years.  Given the positive response I received on the post, I thought I’d repost my answer as a blog post here:

 What will it take to build the next Procter & Gamble?

Of course there are many ways to interpret this question but I’m going to take the stance that building the next P&G refers to building a company with the following characteristics:
– Market leadership in multiple product categories
– A global footprint
– A reputation as a top company for business leadership
– Ability to be over 100 years old and still thriving

I think there a few core things that have helped P&G to become such a company:

Innovation Based On Expertise:  Today P&G competes in categories as far reaching as diapers, laundry care and cosmetics.  But one thing most people don’t realize is that P&G’s history is based on 1 Degree Innovation.  There is even a diagram at headquarters in Cincinnati that shows this principle.  P&G started in soap and candles, which were based fat based products.  Each product was innovation that was one degree away from a technical or scientific ability that P&G had from an existing product.  For instance, P&G’s entry into Oral Care (Crest, etc) in the 1950’s was driven by experience in Laundry Detergent.  And that holds true today where Swiffer was launched based on technology from Pampers (Swiffer Wet is basically a diaper on a stick).

A Talent Development Pipeline:  While P&G’s promote from within culture has been questioned, there is not denying the ability of P&G to develop world-class business leaders.   In recent years, 15% of Fortune 500 companies were led by a CEO who had started at P&G (a few examples include Steve Ballmer of Microsoft, Meg Whitman of eBay / HP, & Steve Cook of Intuit).  P&G invests a tremendous amount of resources in training and developing their people and they prefer to start with a clean slate with 90% of people joining P&G at entry level.  This approach creates a consistent culture of leadership that provides stability in even in difficult times.  It also provides loyalty that is rarely seen in today’s business environment.  People will stay at P&G for decades because of the opportunities, something that isnt exactly a hallmark of Silicon Valley.

A Consumer Is Boss Mindset:  P&G has always put the consumer first and basically invented market research in order to drive many of their product decisions.  The mindset of understanding the consumer is also a reason P&G has always called Cincinnati home because it gives their employees a front row view at the lives of their consumer.  Its also why they opened office in New York City to understand the Prestige Beauty consumer and why their Skin Care and Baby Care divisions are establishing major presences in Asia.

Competing With Itself:  P&G is an expert at tiered marketing, launching brands in the same category in order to meet diverse consumer needs (back to the Consumer Is Boss mindset).  In Baby Care, they have both Pampers on the premium side and Luvs on the value side.  In Laundry, they have Tide, Era, Cheer, and Gain all in the same market.  These Brand Managers might only sit 20 feet apart at the office but they are competing fiercely with each other instead of letting a competitor beat them.  This is part of the reason that P&G has been able to develop over 25 Billion Dollar brands.

BlogWell is coming to Cincinnati to talk “How Big Brands Use Social Media”

BlogWell is going to be making a stop in Cincinnati on April 7, 2010 and Cincinnati Social Media will be partnering for the festivities.  If you aren’t familiar with BlogWell, it is a great event put on across the country by GasPedal and the Social Media Business Council.    As they describe it:

Duke Energy, AT&T, Hilton Worldwide, Tyson, Dell, Procter & Gamble, General Mills, and Rogers Communications share case studies in corporate social media. You’ll learn how to get started, get past roadblocks, and make your social media program phenomenal.Get practical, how-to advice on creating great content, getting management buy-in, educating employees, keeping lawyers and regulators happy, simple and ethical disclosure, and engaging fans. You’ll ask questions, discover new ideas, and get answers from people who have been there, done that — all in four hours for $250.

With this great event coming to town, Cincinnati Social Media is hosting a Tweet Up the night before Blogwell Cincinnati. We’ll have details soon, but all speakers and attendees are invited to attend and get a jump start on the networking.   And equally exciting, members of Cincinnati Social Media are going to get a special offer for 20 percent discount off admission to BlogWell Cincinnati. If you’re not a member of #CincySM, head over to our LinkedIn Group to sign up. You’ll find the discount code in the Discussions section of the group.

College Students should start on their 10,000 hours of practice to get ahead

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I am a big believer that all of us need to need to help the generation of professionals that is following us.  For me, that means giving back in any way that I can to our country’s colleges and universities.  This spring has been a busy one on that front as I have had the chance to speak to local classes at both the University of Cincinnati and Northern Kentucky University, present at Pi Sigma Epsilon’s National Convention, and attend the Board meeting of the VCU BrandCenter.  In every single one of these sessions, a common question was asked by students:

“What should I be doing in order to get a job in marketing  and / or brand management?”

Of course this is a question that is always going to be on the minds of college students as they near graduation.  But with competition for jobs even higher this year because of the economy, it is a question that is more important than ever.

And with the importance of the question, I have thought hard about the answer and what I would do if I was in the shoes of students today.  At then end, the answer is a relatively  simple one:

College Students need to start going the extra mile today in order to get their 10,000 hours of practice in marketing.

I have written before about Malcolm Gladwell’s theory that being great at something takes around 10,000 hours of practice.  The same holds true for anyone that hopes to get a job in marketing or brand management.  They should be viewing college as the first few hundred (or even first few thousand) hours of practice in their marketing careers.

But I am not talking about just the classes.  Those are extremely important of course, but the best and the brightest go beyond that.  After all, everyone has to take roughly the same classes to graduate so just doing that workload won’t set you apart from the other 1.5 million students graduating in the US this year.

So how do you set yourself apart?  As I told students at those recent classroom visits, setting yourself apart starts with three simple steps:

  1. Join a professional organization to start gaining real world experience: My good friend Anthony Portuesi recently wrote on his blog Driven Leaders on the topic that “College Students: Professional Organizations Can Separate You From the Pack.”  Anthony and I were both fortunate enough to be members of Pi Sigma Epsilon during college.  In this marketing fraternity, we had the chance to work for dozen of real marketing clients including Procter & Gamble and Ford Motor Company…all while going to school.  The best way to start your career early is to start getting work experience early.  Professional organizations like PSE are the perfect way to do just that.  And it gives you real things to talk about in an interview instead of just this great group project that you did in a marketing class.
  2. Choose an internship over that study abroad program: This might not be a popular choice, but I think every student should be thinking about an internship instead of studying abroad for a summer.  Sure that summer in Europe or Asia will be a great time and you will get exposure to another culture.  But skipping that internship will put you 3 months behind the person that choose a paycheck over a fun trip.  And more importantly, you never know when that internship could turn into a real job…which means your senior year will be much less stressful when you have an offer in hand before the year even begins.
  3. Use social media for real networking instead of posting photos from last night’s party: This is Google’s world and we are just living it.  That means that anything you put up on Facebook, MySpace or Twitter will be there for any recruiter or HR manager to see (whether you mark that profile private or not).  So instead of using Social Media to just be social, start putting those networking skills to use by marketing yourself.  Step one is to embrace LinkedIn.  Fill out your profile to 100% completeness and make sure it has all the buzz words important to your career choice.  Step two is to start becoming involved in industry chatter online.  This does not mean finding everyone that works for a company in your field and asking them for a job.  Instead, start interacting with people in your industry early in your college career.  Follow them on Twitter and ask them questions.  Read their blogs and leave insightful comments (not on every post… you dont want to be a stalker).  Social Media is for participating and it gives everyone an equal chance to talk with the smartest people in their industry.  Embrace that level playing field.

Now that does not sound all that tough, does it?  Just remember that the key is not waiting until your senior year to start thinking about your career.  Start practicing your marketing skills early on and you will get those 10,000 hours of practice in sooner than your colleagues.

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