I realize there has not been an essay or a briefing in a while. I am trying hard not to let this newsletter distract me from writing comedy. It’s coming along nicely, but at some point I will pivot back to writing more here. In the meantime, I hope you continue to enjoy these short conversations I am having with Peter and we are hitting the more interesting marketing news in any given week or two.In other news, my 1960s comic book podcast is re-branding. “Super Serious 616” is becoming “WHAT IF… MARVEL was real?”. I wrote a little about why we are making the change here. The big impedes was a big advertising push we are doing later this week that should (if all goes well) blast us to the top of the Apple Podcast charts. The hope is that after an artificial boost or two to the top of the charts, we can use the momentum to maintain that position naturally. It will be an interesting experiment. In the meantime I think the quality of those podcasts have gotten better and better. If you are at all interested, now may be a good time to jump onboard. In the latest episode we discuss just how fast Thor would have to fly in order to cross the Atlantic Ocean in three minutes, and what that means for situations like saving someone from a speeding truck.Now onto this newsletter’s podcast:Full TranscriptEdward: Peter, when was the last time you saw a movie in the theater?Peter: Oh, we go every couple of weeks. Every now and again, it's a very different experience now with, the big crazy seats and having to pick your seats in advance. And it's just, it's not like it used to be, but still it's a nice getaway.Edward: Nice. So you paused during covid, but then you're back at it the same frequency there before.Peter: Actually, even during Covid we'd go a couple of times. There was one time we went to tenant. Only people in the theater .Edward: My crazy tenant story is, for a buddy of mine's birthday, I rented the entire theater so the two of us could go see it.Peter: There you go. Well, we didn't have to rent the theater, we just bought regular tickets and you still got it. Don't think or so, but during Covid when no one was going to theaters, it was like the safest place you could be cuz no one else was there. So fair it out. So we'll still do it, every now and again. But it is funny how the industry has changed and maybe not funny, maybe sad how it's changed so much.Edward: Yeah, I think it's interesting how little theaters have changed over the years, and it feels like they're changing quite a bit now. As you said they've made changes in terms of the seats are fancier and more comfortable and they're serving better food and so on. But in terms of like things like pricing, pricing has been, Hey, pay one price. Everyone pays the price to walk in and sees the theater. When you're dealing with a product that has an expiration date, like after 8:00 PM on Thursday, anyone who's not bought the ticket, those empty seats in the theater are going unsold. It's very much like an airplane, but theaters have never been priced like an airplane.Peter: I have never understood that. Yeah, they should definitely be using different kinds of dynamic pricing. And of course it's not just them. It's gonna be the same thing with sports venues and concerts and yeah. It's funny in those domains, you keep hearing a lot about it. Sometimes controversial, but movie theaters seem to be just clinging to their kind of dinosaur ways. Although I guess just now starting to change.Edward: And then even things like. Not just dynamic pricing, but even pricing by title. If you go and buy books, books vary in price. Every book you buy, I don't know what the price of the book is gonna be until I look at the price on it. And they're all over the map. Whereas when you go to see a movie, whether you're gonna see a 500 million avatar sequel, or are you gonna go see a nice little small new indie. They're all the same price.Peter: That, and that's why it's so interesting. So there's that new, 80 for Brady movie just came out and there's all this headline news about it's going to have a different price as if this is a radical. Even in the articles, it's saying this bold move just cuz they're charging a different price for movie. Yeah, they're absolutely right. That should be the way it always works. Not, this kind of one time weird.Edward: And apparently it has been done in Europe, so in Europe they have priced blockbusters at different prices than like smaller indie, lower budget movies. But in the US there's been a tendency not to do that. And I think the logic is like right or wrong, the logic has been if we price a movie at a lower amount, it will signal that the movie is flawed in some way and therefore it'll drive, even though it's almost like the idea of a luxury good. If I go and start discounting a luxury good, then maybe. Price elasticity is a negative elasticity. It might drive people away because it's considered bad because it's a lower price and it seems like that was the fear in the US if we reduce the price of the movie, people are gonna think it's a bad movie and no one's gonna go.Peter: And that's why we shouldn't teach economics courses cause people jump to these ridiculous conclusions, you know? You know, it was the same thing with professional sports a lot of major League baseball teams were saying, oh, no, no, no, no. We can't change the prices. Same issue that we don't want to devalue the product. And now they're doing it all the time, not only charging different amounts for different games. But changing the pricing as the game gets closer and even based on weather and who's pitching and so on, that's just become the rule. Now. It's just a matter of how you do it. It's just weird that some sectors, like movies have just stayed behind and just haven't gotten with the times.Edward: I went and saw, David Chappelle and Chris Rock were in town here in Seattle in December, and we went to get tickets. They like most of the seats in the house were at set prices now. Like the better seats were, better prices and so on. But the best seats in the house, it said this on the website, our top seats are dynamic pricing changing on a day by day basis based on demand.Peter: That's kind of interesting cause like go to a restaurant where they have fixed prices for everything, but then there's that, special steak or fish market price, which implies that everything else charged isn't at. Prices, everything should be in a market price and people get used to it. That's The Thing a lot of these venues hesitate to do it because of some sense of fairness or something. It's like, oh no, we don't wanna go down the same path as the airlines, but people get used to it. People understand that, as long as they're not being gouged, the fact that they bought the tickets later or they're buying better seats they should be willing to pay a little bit more.Edward: That's right. And, I think, maybe the airlines get us used to it, to a point where now it's not a big deal when it happens in the movie theaters. I remember it was probably 2003, 2004 was the first time I went to movie theater where I bought my ticket, like I bought my seat of where I was going to sit. Prior to that, I think every time I went to the movie theater you'd buy a ticket and then it was first come, first serve for where you were gonna be in the theater, of course. And it was around that time, 15 years ago or so where they said, Hey, no, you can actually buy your seat and now you can buy in advance. And now you can show. Just before the theater, just before the movie starts. And I think the concern at the time, at least what I heard prior to that was we don't want to do that because we want people to get to the theater early so we can serve them the ads. And if we start letting them buy their seat, they can show up at the last minute and they won't be able to advertise to them.Peter: Wow, that's such bad logic given how much of a premium they can make for those better seats. It's a whole lot more than putting a couple of eyeballs in front of ads. And in some way the psychological weirdness of having to choose the seat, I think is actually less painful, less cognitively taxing than the idea of paying a little bit more money because, you're closest to the showtime. It's a different kind of process and people adapt to it and become second nature just as dozen these other domains.Edward: And what's fascinating too, I think is who controls this pricing. When I was at Proctor and Gamble, we could go to the retailer and say, Hey, we want Swiffer to sell for nine 90 but we couldn't tell them that Walmart would, whatever price we told them, Walmart would put it lower and we'd be like, please don't put it lower. We're like, we want this be higher. We want this be high margin product. We want everyone else to charge more money for it. But they could do whatever they wanted. We couldn't force 'em to do anything. Now, we could rent ads on television saying, go to your local retailer and pick up your Swiffer for 9 99. But at the end of the day, the retailer decided, and it's that it's the same way with theaters. And so Paramount, you mentioned 80 for Brady. They can't set the price.But what they did is they went and spent a whole ton of market research and then put together a research pack. Basically it was a sales pitch. So they went all the big theater change and said, we did some research and it shows that the price sensitivity for 80 for Brady is really, really high. And if you reduce your price, you can fill seats with older people who otherwise wouldn't even go to the theater at all. And they had to make a pitch. And apparently, I guess that pitch. .Peter: That's great. And that's the way it should be, to get, whether it's the theater owners or again, any kind of venue, to run experiments that take chances, I think there's a real opportunity, whether it's the studio itself or some third party to come on in and start offering that, that kind of pricing expertise. Now, the next thing you gotta wonder about is will there start being a secondary market? For movie tickets. You know it's the idea is ludicrous right now, but anything's possible.Edward: Yeah. It just, it feels like, at least right now, the supply of seats is so much higher than the demand for seats. And also you have a zero marginal cost electronic product that you can just put more showings, right? So if you don't go and see it at a certain time, they can run another showing at another time. Like unlike live shows like a Beyonce show or Taylor Swift show, like Beyonce can only be in so many places at once. It can only be so many shows. They can keep showing avatar forever and ever and ever. And you're gonna get this almo, if not the same experience. Pretty close to the identical experience. No, no matter when you. .Peter: No, that's a good point. That there's not as much of a necessity for a secondary market as there is for sports or concerts. But on the other hand, there's a lot of people who are becoming accustomed to buying their tickets through the secondary market. You know, they'll start by going to StubHub or SeatGeek, and to see what's available. They, don't want to go to the primary market. Maybe it's cuz they don't trust the venues who are selling the tickets, or maybe they have a good experience with the secondary market. So I think it will emerge even if it's not quite as vital.Edward: So we've talked about this, these companies that have been very reluctant to move into this direction. Right. So Airlines did this decades ago. Hotels did it decades ago. Cruise ships have done it decades ago, like movie theaters took a long time to do it, like athletic venues like baseball and stuff took a long time to move in this direction. Is there any example of a company that started moving this direction or an industry that started moving this direction where it was a mistake? We keep talking about, everyone's like afraid to do this. They're like, oh, I'm afraid to put them, buy their seats in advance cuz they'll will miss the ads. Or we're afraid to do this cause our customers will hate us. But is there an example where they were right, where like they should have moved more slowly or not moved?Peter: Well, in terms of the overall movement, I don't think it's ever a mistake, but there's no doubt there's specific times, you know, specific games, specific sections of seats that are either gonna be priced too high or low. That's just the chance that these organizations take. I mean, let's face it, every game or movie or concert, they're never gonna get the pricing exactly right for every seat. So you just have to hope on average that works out in their favor. But, it's not an exact science, but it's a hell of an interesting science, no doubt about it.Edward: But is there an example of where dynamic pricing wasn't the right choice? That like, Hey, we had fixed prices. Oh, everyone wants us to move to dynamic pricing. We think it's a bad idea. Every example that we're talking about. It was actually a really good idea. Theaters are slow. They should have done it earlier, but is there an example where someone moved too fast and they shouldn't have donePeter: Oh, yeah. I'll tell you where the third rail is. Personalized pricing. Yeah. A lot of people mix that up with dynamic pricing. Of course, with dynamic pricing, as we get closer to the date or if it's a better seat or whatever, anybody would, would pay that higher price but personalized pricing to say, based on, given your characteristics, we're gonna charge you differently than me, even though we're coming in to buy tickets at the same time. Back around, right around the turn of the century Amazon experimented with that little bit and they got caught. They were charging two different people at the same time, different prices. And they, boy, oh boy, did they back down on that? They apologized, never again. It was just a little experiment. So yeah, that's a real danger zone. Not, to say it can never happen, but given our kind of how naive we are, even with just regular dynamic pricing. That's a step too far.Edward: Well, it's interesting you say it's funny, I remember that when that happened at the time, I didn't make the connection, but you're right, they did that. Where they got nailed, I think, was personalized pricing where some people were paying higher prices than others. We do personalized pricing where some people pay lower prices than others all the time, and no one gets upset about it. Like if rather than charging $8 for this CD for most people, but $10, if you, we knew you're like a high level, like a adamant CD buyer and you're priced in sensitive. They could have just priced it at $10 and offered $2 off coupons to a whole bunch of people. Instead of pricing at $8 for everybody and 20% of people paid 10, they could just price it at 10 for everybody and 80% of people got $2 off, and everyone would've been fine with that.Peter: That's a great point. As long as you separate out the list price from that discount from the coupon or whatever, then it's okay as long as people have to do something. But when it's just offered. And then when the face value is different for different people at the same time. And you're right, it might sound a little, hypocritical, but, that's the reality that we, haven't yet come to grips with.Edward: One thing I see on Amazon all the time now, not all the time, but fairly consistently, is I'll go to buy a product and on the main pages listed at one price, after I click through and go onto the product page, there'll be a little box and it says, Hey, click 5% off coupon, click here. Yeah. And I see that regularly. I wonder. If I imagine that's probably personalized that I'm getting, I'm seeing that coupon and other people aren'tPeter: that's right. And that again that's fine. That's totally kosher and people are good with that. It'll be interesting to see it. At what point though, do we graduate from that to just showing different prices and calling a spade a spade? I still think we're a long ways away from that.Edward: Fair enough. This has been fascinating, so think we're agreed that theaters are smart to do this. They should have done it a long time ago. The consumer backlash is going to be negligible. Theaters are just coming up with excuse, that's the word I'm looking for. It's an excuse rather than a reason.Peter: That's right. They're not willing to do the hard work. They're not willing to figure it out. And given the state that they're in economically, man, they better do some homework. They better find these kinds of revenue opportunities if they're gonna stay afloat. Cuz the old rules do not apply anymore and they get a adapt or die. This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit marketingbs.substack.com/subscribe

I realize there has not been an essay or a briefing in a while. I am trying hard not to let this newsletter distract me from writing comedy. It’s coming along nicely, but at some point I will pivot back to writing more here. In the meantime, I hope you continue to enjoy these short conversations I am having with Peter and we are hitting the more interesting marketing news in any given week or two.In other news, my 1960s comic book podcast is re-branding. “Super Serious 616” is becoming “WHAT IF… MARVEL was real?”. I wrote a little about why we are making the change here. The big impedes was a big advertising push we are doing later this week that should (if all goes well) blast us to the top of the Apple Podcast charts. The hope is that after an artificial boost or two to the top of the charts, we can use the momentum to maintain that position naturally. It will be an interesting experiment. In the meantime I think the quality of those podcasts have gotten better and better. If you are at all interested, now may be a good time to jump onboard. In the latest episode we discuss just how fast Thor would have to fly in order to cross the Atlantic Ocean in three minutes, and what that means for situations like saving someone from a speeding truck.Now onto this newsletter’s podcast:Full TranscriptEdward: Peter, when was the last time you saw a movie in the theater?Peter: Oh, we go every couple of weeks. Every now and again, it's a very different experience now with, the big crazy seats and having to pick your seats in advance. And it's just, it's not like it used to be, but still it's a nice getaway.Edward: Nice. So you paused during covid, but then you're back at it the same frequency there before.Peter: Actually, even during Covid we'd go a couple of times. There was one time we went to tenant. Only people in the theater .Edward: My crazy tenant story is, for a buddy of mine's birthday, I rented the entire theater so the two of us could go see it.Peter: There you go. Well, we didn't have to rent the theater, we just bought regular tickets and you still got it. Don't think or so, but during Covid when no one was going to theaters, it was like the safest place you could be cuz no one else was there. So fair it out. So we'll still do it, every now and again. But it is funny how the industry has changed and maybe not funny, maybe sad how it's changed so much.Edward: Yeah, I think it's interesting how little theaters have changed over the years, and it feels like they're changing quite a bit now. As you said they've made changes in terms of the seats are fancier and more comfortable and they're serving better food and so on. But in terms of like things like pricing, pricing has been, Hey, pay one price. Everyone pays the price to walk in and sees the theater. When you're dealing with a product that has an expiration date, like after 8:00 PM on Thursday, anyone who's not bought the ticket, those empty seats in the theater are going unsold. It's very much like an airplane, but theaters have never been priced like an airplane.Peter: I have never understood that. Yeah, they should definitely be using different kinds of dynamic pricing. And of course it's not just them. It's gonna be the same thing with sports venues and concerts and yeah. It's funny in those domains, you keep hearing a lot about it. Sometimes controversial, but movie theaters seem to be just clinging to their kind of dinosaur ways. Although I guess just now starting to change.Edward: And then even things like. Not just dynamic pricing, but even pricing by title. If you go and buy books, books vary in price. Every book you buy, I don't know what the price of the book is gonna be until I look at the price on it. And they're all over the map. Whereas when you go to see a movie, whether you're gonna see a 500 million avatar sequel, or are you gonna go see a nice little small new indie. They're all the same price.Peter: That, and that's why it's so interesting. So there's that new, 80 for Brady movie just came out and there's all this headline news about it's going to have a different price as if this is a radical. Even in the articles, it's saying this bold move just cuz they're charging a different price for movie. Yeah, they're absolutely right. That should be the way it always works. Not, this kind of one time weird.Edward: And apparently it has been done in Europe, so in Europe they have priced blockbusters at different prices than like smaller indie, lower budget movies. But in the US there's been a tendency not to do that. And I think the logic is like right or wrong, the logic has been if we price a movie at a lower amount, it will signal that the movie is flawed in some way and therefore it'll drive, even though it's almost like the idea of a luxury good. If I go and start discounting a luxury good, then maybe. Price elasticity is a negative elasticity. It might drive people away because it's considered bad because it's a lower price and it seems like that was the fear in the US if we reduce the price of the movie, people are gonna think it's a bad movie and no one's gonna go.Peter: And that's why we shouldn't teach economics courses cause people jump to these ridiculous conclusions, you know? You know, it was the same thing with professional sports a lot of major League baseball teams were saying, oh, no, no, no, no. We can't change the prices. Same issue that we don't want to devalue the product. And now they're doing it all the time, not only charging different amounts for different games. But changing the pricing as the game gets closer and even based on weather and who's pitching and so on, that's just become the rule. Now. It's just a matter of how you do it. It's just weird that some sectors, like movies have just stayed behind and just haven't gotten with the times.Edward: I went and saw, David Chappelle and Chris Rock were in town here in Seattle in December, and we went to get tickets. They like most of the seats in the house were at set prices now. Like the better seats were, better prices and so on. But the best seats in the house, it said this on the website, our top seats are dynamic pricing changing on a day by day basis based on demand.Peter: That's kind of interesting cause like go to a restaurant where they have fixed prices for everything, but then there's that, special steak or fish market price, which implies that everything else charged isn't at. Prices, everything should be in a market price and people get used to it. That's The Thing a lot of these venues hesitate to do it because of some sense of fairness or something. It's like, oh no, we don't wanna go down the same path as the airlines, but people get used to it. People understand that, as long as they're not being gouged, the fact that they bought the tickets later or they're buying better seats they should be willing to pay a little bit more.Edward: That's right. And, I think, maybe the airlines get us used to it, to a point where now it's not a big deal when it happens in the movie theaters. I remember it was probably 2003, 2004 was the first time I went to movie theater where I bought my ticket, like I bought my seat of where I was going to sit. Prior to that, I think every time I went to the movie theater you'd buy a ticket and then it was first come, first serve for where you were gonna be in the theater, of course. And it was around that time, 15 years ago or so where they said, Hey, no, you can actually buy your seat and now you can buy in advance. And now you can show. Just before the theater, just before the movie starts. And I think the concern at the time, at least what I heard prior to that was we don't want to do that because we want people to get to the theater early so we can serve them the ads. And if we start letting them buy their seat, they can show up at the last minute and they won't be able to advertise to them.Peter: Wow, that's such bad logic given how much of a premium they can make for those better seats. It's a whole lot more than putting a couple of eyeballs in front of ads. And in some way the psychological weirdness of having to choose the seat, I think is actually less painful, less cognitively taxing than the idea of paying a little bit more money because, you're closest to the showtime. It's a different kind of process and people adapt to it and become second nature just as dozen these other domains.Edward: And what's fascinating too, I think is who controls this pricing. When I was at Proctor and Gamble, we could go to the retailer and say, Hey, we want Swiffer to sell for nine 90 but we couldn't tell them that Walmart would, whatever price we told them, Walmart would put it lower and we'd be like, please don't put it lower. We're like, we want this be higher. We want this be high margin product. We want everyone else to charge more money for it. But they could do whatever they wanted. We couldn't force 'em to do anything. Now, we could rent ads on television saying, go to your local retailer and pick up your Swiffer for 9 99. But at the end of the day, the retailer decided, and it's that it's the same way with theaters. And so Paramount, you mentioned 80 for Brady. They can't set the price.But what they did is they went and spent a whole ton of market research and then put together a research pack. Basically it was a sales pitch. So they went all the big theater change and said, we did some research and it shows that the price sensitivity for 80 for Brady is really, really high. And if you reduce your price, you can fill seats with older people who otherwise wouldn't even go to the theater at all. And they had to make a pitch. And apparently, I guess that pitch. .Peter: That's great. And that's the way it should be, to get, whether it's the theater owners or again, any kind of venue, to run experiments that take chances, I think there's a real opportunity, whether it's the studio itself or some third party to come on in and start offering that, that kind of pricing expertise. Now, the next thing you gotta wonder about is will there start being a secondary market? For movie tickets. You know it's the idea is ludicrous right now, but anything's possible.Edward: Yeah. It just, it feels like, at least right now, the supply of seats is so much higher than the demand for seats. And also you have a zero marginal cost electronic product that you can just put more showings, right? So if you don't go and see it at a certain time, they can run another showing at another time. Like unlike live shows like a Beyonce show or Taylor Swift show, like Beyonce can only be in so many places at once. It can only be so many shows. They can keep showing avatar forever and ever and ever. And you're gonna get this almo, if not the same experience. Pretty close to the identical experience. No, no matter when you. .Peter: No, that's a good point. That there's not as much of a necessity for a secondary market as there is for sports or concerts. But on the other hand, there's a lot of people who are becoming accustomed to buying their tickets through the secondary market. You know, they'll start by going to StubHub or SeatGeek, and to see what's available. They, don't want to go to the primary market. Maybe it's cuz they don't trust the venues who are selling the tickets, or maybe they have a good experience with the secondary market. So I think it will emerge even if it's not quite as vital.Edward: So we've talked about this, these companies that have been very reluctant to move into this direction. Right. So Airlines did this decades ago. Hotels did it decades ago. Cruise ships have done it decades ago, like movie theaters took a long time to do it, like athletic venues like baseball and stuff took a long time to move in this direction. Is there any example of a company that started moving this direction or an industry that started moving this direction where it was a mistake? We keep talking about, everyone's like afraid to do this. They're like, oh, I'm afraid to put them, buy their seats in advance cuz they'll will miss the ads. Or we're afraid to do this cause our customers will hate us. But is there an example where they were right, where like they should have moved more slowly or not moved?Peter: Well, in terms of the overall movement, I don't think it's ever a mistake, but there's no doubt there's specific times, you know, specific games, specific sections of seats that are either gonna be priced too high or low. That's just the chance that these organizations take. I mean, let's face it, every game or movie or concert, they're never gonna get the pricing exactly right for every seat. So you just have to hope on average that works out in their favor. But, it's not an exact science, but it's a hell of an interesting science, no doubt about it.Edward: But is there an example of where dynamic pricing wasn't the right choice? That like, Hey, we had fixed prices. Oh, everyone wants us to move to dynamic pricing. We think it's a bad idea. Every example that we're talking about. It was actually a really good idea. Theaters are slow. They should have done it earlier, but is there an example where someone moved too fast and they shouldn't have donePeter: Oh, yeah. I'll tell you where the third rail is. Personalized pricing. Yeah. A lot of people mix that up with dynamic pricing. Of course, with dynamic pricing, as we get closer to the date or if it's a better seat or whatever, anybody would, would pay that higher price but personalized pricing to say, based on, given your characteristics, we're gonna charge you differently than me, even though we're coming in to buy tickets at the same time. Back around, right around the turn of the century Amazon experimented with that little bit and they got caught. They were charging two different people at the same time, different prices. And they, boy, oh boy, did they back down on that? They apologized, never again. It was just a little experiment. So yeah, that's a real danger zone. Not, to say it can never happen, but given our kind of how naive we are, even with just regular dynamic pricing. That's a step too far.Edward: Well, it's interesting you say it's funny, I remember that when that happened at the time, I didn't make the connection, but you're right, they did that. Where they got nailed, I think, was personalized pricing where some people were paying higher prices than others. We do personalized pricing where some people pay lower prices than others all the time, and no one gets upset about it. Like if rather than charging $8 for this CD for most people, but $10, if you, we knew you're like a high level, like a adamant CD buyer and you're priced in sensitive. They could have just priced it at $10 and offered $2 off coupons to a whole bunch of people. Instead of pricing at $8 for everybody and 20% of people paid 10, they could just price it at 10 for everybody and 80% of people got $2 off, and everyone would've been fine with that.Peter: That's a great point. As long as you separate out the list price from that discount from the coupon or whatever, then it's okay as long as people have to do something. But when it's just offered. And then when the face value is different for different people at the same time. And you're right, it might sound a little, hypocritical, but, that's the reality that we, haven't yet come to grips with.Edward: One thing I see on Amazon all the time now, not all the time, but fairly consistently, is I'll go to buy a product and on the main pages listed at one price, after I click through and go onto the product page, there'll be a little box and it says, Hey, click 5% off coupon, click here. Yeah. And I see that regularly. I wonder. If I imagine that's probably personalized that I'm getting, I'm seeing that coupon and other people aren'tPeter: that's right. And that again that's fine. That's totally kosher and people are good with that. It'll be interesting to see it. At what point though, do we graduate from that to just showing different prices and calling a spade a spade? I still think we're a long ways away from that.Edward: Fair enough. This has been fascinating, so think we're agreed that theaters are smart to do this. They should have done it a long time ago. The consumer backlash is going to be negligible. Theaters are just coming up with excuse, that's the word I'm looking for. It's an excuse rather than a reason.Peter: That's right. They're not willing to do the hard work. They're not willing to figure it out. And given the state that they're in economically, man, they better do some homework. They better find these kinds of revenue opportunities if they're gonna stay afloat. Cuz the old rules do not apply anymore and they get a adapt or die. This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit <a href="https://marketingbs.substack.com/subscribe?utm_medium=podcast&amp;utm_campaign=CTA_2" rel="nofollow" target="_blank">marketingbs.substack.com/subscribe</a>

Marketing BS Podcast: Theatrical Dynamic Pricing

Some quick updates:* I have an essay in progress. Will hopefully get it to you in the next couple of weeks* Stand up comedy is coming along. My first “big show” is on Tuesday. If you are in Seattle feel free to stop by at Club Comedy.* If anyone is interested in learning how to edit these podcasts and is willing and able to do fast turn-arounds, just reply to the email and let me know. It’s not hard and it’s kind of fun with the software I am using, but it is something I am ready to get off my plate.Quick Take aways:* Here is the article we talk about in the podcast (free link): With New EVs Arriving, Brand Loyalty Goes Out the Window* Here is the book Peter mentions: How Brands Grow* Too long/didn’t listen: EVs have not changed the rules of loyaltyFull TranscriptEdward: Peter, now that electric vehicles are around brand loyalty doesn't matter anymore. It's all the Wild West. That's what the Wall Street Journal is selling.Peter: Oh man, I've heard this song before . It's the same old tuned men whether it was gonna be the internet, oh, that's gonna change everything. Or social media or covid. It's gonna totally upset the rules of loyalty. Yeah, those rules are pretty locked in and I'm willing to say same story here.Edward: So what are those rules of loyalty? What are the rules that the Wall Street Journals claiming are garbage now? Or are they just missing the entire.Peter: It all depends on how we define the rules. Where I'm coming from it coming forward it is from the top down. If we just look at actual behavior and just look at the choices that people make over time and how often they switch around and what they switch around from in two, there's some very regular patterns to that.And we could talk about it, but all if you go a level deeper and say, what are they thinking? How are they making these decisions? Sure. Maybe the psychology's a little bit different, but from a business standpoint, that's all cheap talk. All we really care about is what are people doing?And in that regard it's no different than people rolling a dye to say, which, which of these different items am we gonna buy?Edward: What they're, so let me quote from the actual article. It says that basically in the past, whenever someone bought a Ford vehicle, 58% of the time it was a Ford vehicle. Now, when they're buying the Ford Electric vehicle, 66% of the time, it's not a Ford vehicle. So there's significantly more people switching to Ford to buy the electric vehicle than we're switching to Ford to buy the non Ford vehicle.Peter: Yeah. First of all, we don't even know if it's significant or not, but second of all, it's cuz the set itself is changing. The number of electric vehicles out there is really different. It, no that's just nonsense. It's cherry picked, rubbish.Yeah. The way it's interesting that we talk about cars cuz the people who first set out these rules that I'm referring to and I know you know it well. There was a guy in London called Andrew Berg and his heir Byron Sharp at the University of South Australia.They basically say that it's you have your die. I have my die. And what drives our choices is, It's just as if random, and it's remarkable how well that story works. The do sleigh model as we call it. And there's no reason to believe it'll be any different here. Do you think So?Edward: You say it's random, but that's not entirely true. It's weighted random, right? Because if I have, if I bought, if my last car was like a Subaru Forester I think when I go buy to buy my next car, I'm more likely to buy a Subaru Forester than amped. Whatever the average of all the other market shares are. I assumePeter: you are so right about that.It's, yeah. It's not that we're all rolling a six-sided equally way to die. In fact, it's not like we're all rolling the same dye that, that there's gonna be this distribution of dice and even that is gonna be well described by again, a. Jewish lay distribution. Look that word up. And yeah, you, but you have your die.And the important point is that your die doesn't change very much over time. So whether it is covid or internet or EVs, you're rolling pretty much the same die. And there's just so much randomness around the choices that you make that it appears that there are some patterns, but there's really.Much to it. The only thing that could be going on here is that we might sometimes. what these like guys like to call a structured submarket. So it could be that though that that just as gasoline split off into leaded and unleaded, then people would move into one corner of it. Maybe we'll see something like that.But it's not some kind of fundamental change in the way that people make decisions.Edward: So again, I go back to. We're talking about, there's no, like the brand loyalty is not a thing, but brand loyalty in that example is right. There's something to, even if it's not oh, I love my Subaru Forester.It's the fact that. That I had a Subaru Forester before, I'm more comfortable. I'm the type of person who would buy a Subaru Forester the first time, which means I'm probably still the type of person who's gonna buy it a second time. Plus the fact that now that I'm used to using it, right? So I'm the, and I know it works and I know it.Presumably it operated the way I wanted it to operate. And so when I go to buy my next car, my default choice is the same car I had before. Now it could change, but the default choice is there, and that's a form of brand loyalty.Peter: But, so there, there's two pieces to brand loyalty and you described them really well.One is just that you just have this natural propensity for whatever reason, to buy some things more than others. That part Absolutely. Positively. And that's why your die might be, a little bit weighted more towards the Subaru Forester. And mine might be weighed a little bit more towards, I don't know, a Tesla or something.Edward: And is that the selection effect? The fact that I bought a Subaru Forester means that, I'm probably the type of person who buys Subaru forests.Peter: Exactly. Yeah. Cuz then the second piece to it, which is the part I take issue with is this idea of lock in this idea that my propensities get shaped by my behavior over time.There's not much evidence to that. Again, if you're a supervisor person Yeah. Then you're gonna lean towards it more than most people would. But your propensity to do it isn't gonna get higher over time. It's pretty. Maybe, but it's gonna pretty much stay at that same level no matter how many times you, you roll that die or buy a car, that's the big piece of it.We don't see that kind of lock in. We don't see that kind of learning. We don't see all of that romantic stuff that we like to talk about where the customers learn to love us and we learn to serve them better. There's not much to thatEdward: really. But I feel like. Say I'm doing, let's switch to a new category.Let's say I'm doing laundry. Let's say I moved to a new country, so now I have no brand loyalty at all. The first time I go in I, I look at the shelf and I pick one effectively at random, and I take that home and it works. I feel like the next time I go to the store to buy laundry, I'm gonna go and buy that same one.Just cause I know No, it works. Rather than trying to gamble on something that I don't know that.Peter: First of all, what you said effectively at random, there's gonna be a lot of influences on it. It could be the brand name. It could be where it's located on the shelf. It could be the colors, it could be stuff that you heard about, but you haven't even thought about, seeing ads for it on the subway or hearing people talk about it.So there's a lot of influences there that. Things look random, but they're not. And those messages, one way or another got through to you. So it might be less about the actual experience you had with the product and more about the, some of that implicit prior exposure you had to it, that's gonna drive those choices that you make.That's, that, that's the real important point.Edward: Sure. And so I, so you say, Hey, the, whatever those influences were the first. They're gonna influence me the second time, but doesn't, the fact that I used it and it worked influenced me like I feel like it does. I feel like. Once I have a chocolate bar that I like, I'm more likely to buy that chocolate bar again.Even if it was, let's say it was gifted to me. Let's say someone gave it to me rather than me choosing it. Once I have something that I know works, it feels like why wouldn't I stick with what worksPeter: well? Because of all, you might, you just might have a propensity to, to stay with that chocolate bar, but there's all kinds of reasons why it might be just variety seeking, that let's just try something different.I like this thing, but, ,Edward: that may, maybe that makes sense for chocolate bars, but I. For cleaning my clothes. You know what, let's just .Peter: But, but it could be a situational thing that, oh, my mother-in-law is staying with us this week. And, and she only likes certain kinds of things.And so there could be things that, that might be perfectly rational. Why you're switching around. But to, to me, as an outside observer, I'm just looking at that sequence of choices. And man, oh man, it looks an awful lot. , rolls of the dice. Now to be fair I mentioned all this work by Aaron Bergen Sharp, and they basically said, you have your dye, and it never changes.Now, I myself have written a bunch of papers that show that, that model's a pretty good first pass. But every now and again, people. Do throw the old die away and do start with a new one. So I don't rule out the idea of changes, what we technically call non-stationary. But the times that you do that tend to be relatively infrequent and they tend to be dare I say, random.It's not like necessary because of a pandemic or a or change in the macro economy. It's just, there's just something in your life that. Be related to anything anyone else is doing that just causes you to shift your preferences. And it doesn't happen that often.Edward: What about sampling? So say I'm a I'm a loyal, I don't know, strawberry jam eater, and I'm doing it all the time. Not because I'm loyal, but because I have a propensity to eat Strawberry Jam. And then I go into the grocery store and they give me a sample of, I don't know, grape. , does that have no influence on the chance of me eating crypto jelly?Peter: I did say that in, in fact, I'd say it's stuff like that. It's sampling, it's word of mouth. It's seeing a Super Bowl ad that sometimes we'll have people switch around a bit. It could be just a change in which things are on which shelf in this store. And and that's why to, again, to me as an outside observer, I see some switching around again there.Perfectly good reason. It's cuz someone, forced that grape jelly on me. But it makes it seem like that you are rolling a die. And so yeah, a lot of these influences will will have some impact on it. But to the outside observers, it looks pretty random and it looks relatively steady over time.Edward: But if, again, if I outside observer, if I'm the marketer who's running the sampling program, , I r I go and start sampling a bunch of these jams stuff. Can I expect that my jam sales are gonna increase and that the people who switch over to start buying that grape jelly are more likely to buy grape gel in the future? Like the impact is more than just the next purchase, but it might be like a series of purchases after that.Peter: This starts where it gets really interesting. So again, a lot of this. Great. Work by Aaron Berg and Sharp. And Byron Sharp has this book that I'm sure some of your listeners would know called How Brands Grow. And they talk about a thing called Double Jeopardy, which again, I know you know Ed, which basically says if you can get more people to buy it, if you could increase the penetration, the footprint, just the overall number of people who tried The Thing at least once. That in and of itself is gonna be associated with higher degrees of loyalty. So yeah, your point is pretty good. You get more people to buy it, they're gonna tend to buy it more often. They're gonna appear to be slightly more locked in having a slightly higher propensity to buy it. It's really counterintuitive, this idea of. Double jeopardy. But it's really powerful. It's pretty much universal. And it's something you should expect to see instead of it being the exception.Edward: Yeah. So then looping back to the wall Street Journal Electric car article sounds like they're doing the right thing by introducing the electric cars, they're getting people, so Ford introduces an electric car and it's getting people who didn't buy Ford before to be more likely to buy them now.So it's a customer acquisition play it brings and it brings 'em into the Ford fold. And then once they're in there, Ford's market share increases because they now have more customers they acquired with a electric vehicle. And then once that happens, the double jeopardy kicks in and they should. Those people who have bought those four vehicles the first time, more likely to keep buying them in the future.Peter: So you will see some of that. Absolutely. The big key is how to get that wonderful cycle going. And in other words, how do you do the acquisition? And again, going back to the great work of Aaron Bergen Sharp and others, you can't just lean on one attribute. You can't say, this is the coolest, newest electric vehicle. You gotta. Broadly appealing. You gotta really punch up a number of different attributes that, yeah, it's gonna save the environment. But you know what? It's all, it's also fun to drive and it's very safe and and your friends will like you better. So you don't lean too heavily. Don't nichey yourself.You want to make yourself broadly appealing and that's gonna bring in more people and just, implicitly get them to do to. Or to roll your side of the die a little bit more often. It, it really is amazing how counterintuitive that he did. Double jeopardy is, but you just see it it's funny to see a lot of companies stumbling upon it as if it's something new and unexpected, it's been there all the time.Edward: And what's neat about this is it does hint at that, the next paragraph in the article talks about how these people buying these $70,000 new electric vehicles it what says they're, I dunno if this is actually true, but this is what the journalist is saying. They're as likely to own a $30,000 Subaru Outback as they are to buy, as they are to have previously owned a $100,000 Porsche 9 1 1 sports car. And whether that's true or not, the idea that we should make these vehicles to appeal. Everyone rather than just some sub-segment. Sounds like a step in the right direction for the marketers anyway.Peter: Yeah, it, and it goes against the grain of so much of what we've taught and learned in the marketing 1 0 1 s. We just figure out what your distinctive attribute is and hammer that and find people who care about that instead. We're trying to say, not so much be all things to all people, but a step more in that direction.Edward: Great. Anything else to add, Peter?Peter: We just want people to appreciate that this is the way the world works, whether it's electric vehicles, whether it's soup, whether it's hotels we expect to see these kinds of patterns. This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit marketingbs.substack.com/subscribe

Some quick updates:* I have an essay in progress. Will hopefully get it to you in the next couple of weeks* Stand up comedy is coming along. My first “big show” is on Tuesday. If you are in Seattle feel free to stop by at Club Comedy.* If anyone is interested in learning how to edit these podcasts and is willing and able to do fast turn-arounds, just reply to the email and let me know. It’s not hard and it’s kind of fun with the software I am using, but it is something I am ready to get off my plate.Quick Take aways:* Here is the article we talk about in the podcast (free link): With New EVs Arriving, Brand Loyalty Goes Out the Window* Here is the book Peter mentions: How Brands Grow* Too long/didn’t listen: EVs have not changed the rules of loyaltyFull TranscriptEdward: Peter, now that electric vehicles are around brand loyalty doesn't matter anymore. It's all the Wild West. That's what the Wall Street Journal is selling.Peter: Oh man, I've heard this song before . It's the same old tuned men whether it was gonna be the internet, oh, that's gonna change everything. Or social media or covid. It's gonna totally upset the rules of loyalty. Yeah, those rules are pretty locked in and I'm willing to say same story here.Edward: So what are those rules of loyalty? What are the rules that the Wall Street Journals claiming are garbage now? Or are they just missing the entire.Peter: It all depends on how we define the rules. Where I'm coming from it coming forward it is from the top down. If we just look at actual behavior and just look at the choices that people make over time and how often they switch around and what they switch around from in two, there's some very regular patterns to that.And we could talk about it, but all if you go a level deeper and say, what are they thinking? How are they making these decisions? Sure. Maybe the psychology's a little bit different, but from a business standpoint, that's all cheap talk. All we really care about is what are people doing?And in that regard it's no different than people rolling a dye to say, which, which of these different items am we gonna buy?Edward: What they're, so let me quote from the actual article. It says that basically in the past, whenever someone bought a Ford vehicle, 58% of the time it was a Ford vehicle. Now, when they're buying the Ford Electric vehicle, 66% of the time, it's not a Ford vehicle. So there's significantly more people switching to Ford to buy the electric vehicle than we're switching to Ford to buy the non Ford vehicle.Peter: Yeah. First of all, we don't even know if it's significant or not, but second of all, it's cuz the set itself is changing. The number of electric vehicles out there is really different. It, no that's just nonsense. It's cherry picked, rubbish.Yeah. The way it's interesting that we talk about cars cuz the people who first set out these rules that I'm referring to and I know you know it well. There was a guy in London called Andrew Berg and his heir Byron Sharp at the University of South Australia.They basically say that it's you have your die. I have my die. And what drives our choices is, It's just as if random, and it's remarkable how well that story works. The do sleigh model as we call it. And there's no reason to believe it'll be any different here. Do you think So?Edward: You say it's random, but that's not entirely true. It's weighted random, right? Because if I have, if I bought, if my last car was like a Subaru Forester I think when I go buy to buy my next car, I'm more likely to buy a Subaru Forester than amped. Whatever the average of all the other market shares are. I assumePeter: you are so right about that.It's, yeah. It's not that we're all rolling a six-sided equally way to die. In fact, it's not like we're all rolling the same dye that, that there's gonna be this distribution of dice and even that is gonna be well described by again, a. Jewish lay distribution. Look that word up. And yeah, you, but you have your die.And the important point is that your die doesn't change very much over time. So whether it is covid or internet or EVs, you're rolling pretty much the same die. And there's just so much randomness around the choices that you make that it appears that there are some patterns, but there's really.Much to it. The only thing that could be going on here is that we might sometimes. what these like guys like to call a structured submarket. So it could be that though that that just as gasoline split off into leaded and unleaded, then people would move into one corner of it. Maybe we'll see something like that.But it's not some kind of fundamental change in the way that people make decisions.Edward: So again, I go back to. We're talking about, there's no, like the brand loyalty is not a thing, but brand loyalty in that example is right. There's something to, even if it's not oh, I love my Subaru Forester.It's the fact that. That I had a Subaru Forester before, I'm more comfortable. I'm the type of person who would buy a Subaru Forester the first time, which means I'm probably still the type of person who's gonna buy it a second time. Plus the fact that now that I'm used to using it, right? So I'm the, and I know it works and I know it.Presumably it operated the way I wanted it to operate. And so when I go to buy my next car, my default choice is the same car I had before. Now it could change, but the default choice is there, and that's a form of brand loyalty.Peter: But, so there, there's two pieces to brand loyalty and you described them really well.One is just that you just have this natural propensity for whatever reason, to buy some things more than others. That part Absolutely. Positively. And that's why your die might be, a little bit weighted more towards the Subaru Forester. And mine might be weighed a little bit more towards, I don't know, a Tesla or something.Edward: And is that the selection effect? The fact that I bought a Subaru Forester means that, I'm probably the type of person who buys Subaru forests.Peter: Exactly. Yeah. Cuz then the second piece to it, which is the part I take issue with is this idea of lock in this idea that my propensities get shaped by my behavior over time.There's not much evidence to that. Again, if you're a supervisor person Yeah. Then you're gonna lean towards it more than most people would. But your propensity to do it isn't gonna get higher over time. It's pretty. Maybe, but it's gonna pretty much stay at that same level no matter how many times you, you roll that die or buy a car, that's the big piece of it.We don't see that kind of lock in. We don't see that kind of learning. We don't see all of that romantic stuff that we like to talk about where the customers learn to love us and we learn to serve them better. There's not much to thatEdward: really. But I feel like. Say I'm doing, let's switch to a new category.Let's say I'm doing laundry. Let's say I moved to a new country, so now I have no brand loyalty at all. The first time I go in I, I look at the shelf and I pick one effectively at random, and I take that home and it works. I feel like the next time I go to the store to buy laundry, I'm gonna go and buy that same one.Just cause I know No, it works. Rather than trying to gamble on something that I don't know that.Peter: First of all, what you said effectively at random, there's gonna be a lot of influences on it. It could be the brand name. It could be where it's located on the shelf. It could be the colors, it could be stuff that you heard about, but you haven't even thought about, seeing ads for it on the subway or hearing people talk about it.So there's a lot of influences there that. Things look random, but they're not. And those messages, one way or another got through to you. So it might be less about the actual experience you had with the product and more about the, some of that implicit prior exposure you had to it, that's gonna drive those choices that you make.That's, that, that's the real important point.Edward: Sure. And so I, so you say, Hey, the, whatever those influences were the first. They're gonna influence me the second time, but doesn't, the fact that I used it and it worked influenced me like I feel like it does. I feel like. Once I have a chocolate bar that I like, I'm more likely to buy that chocolate bar again.Even if it was, let's say it was gifted to me. Let's say someone gave it to me rather than me choosing it. Once I have something that I know works, it feels like why wouldn't I stick with what worksPeter: well? Because of all, you might, you just might have a propensity to, to stay with that chocolate bar, but there's all kinds of reasons why it might be just variety seeking, that let's just try something different.I like this thing, but, ,Edward: that may, maybe that makes sense for chocolate bars, but I. For cleaning my clothes. You know what, let's just .Peter: But, but it could be a situational thing that, oh, my mother-in-law is staying with us this week. And, and she only likes certain kinds of things.And so there could be things that, that might be perfectly rational. Why you're switching around. But to, to me, as an outside observer, I'm just looking at that sequence of choices. And man, oh man, it looks an awful lot. , rolls of the dice. Now to be fair I mentioned all this work by Aaron Bergen Sharp, and they basically said, you have your dye, and it never changes.Now, I myself have written a bunch of papers that show that, that model's a pretty good first pass. But every now and again, people. Do throw the old die away and do start with a new one. So I don't rule out the idea of changes, what we technically call non-stationary. But the times that you do that tend to be relatively infrequent and they tend to be dare I say, random.It's not like necessary because of a pandemic or a or change in the macro economy. It's just, there's just something in your life that. Be related to anything anyone else is doing that just causes you to shift your preferences. And it doesn't happen that often.Edward: What about sampling? So say I'm a I'm a loyal, I don't know, strawberry jam eater, and I'm doing it all the time. Not because I'm loyal, but because I have a propensity to eat Strawberry Jam. And then I go into the grocery store and they give me a sample of, I don't know, grape. , does that have no influence on the chance of me eating crypto jelly?Peter: I did say that in, in fact, I'd say it's stuff like that. It's sampling, it's word of mouth. It's seeing a Super Bowl ad that sometimes we'll have people switch around a bit. It could be just a change in which things are on which shelf in this store. And and that's why to, again, to me as an outside observer, I see some switching around again there.Perfectly good reason. It's cuz someone, forced that grape jelly on me. But it makes it seem like that you are rolling a die. And so yeah, a lot of these influences will will have some impact on it. But to the outside observers, it looks pretty random and it looks relatively steady over time.Edward: But if, again, if I outside observer, if I'm the marketer who's running the sampling program, , I r I go and start sampling a bunch of these jams stuff. Can I expect that my jam sales are gonna increase and that the people who switch over to start buying that grape jelly are more likely to buy grape gel in the future? Like the impact is more than just the next purchase, but it might be like a series of purchases after that.Peter: This starts where it gets really interesting. So again, a lot of this. Great. Work by Aaron Berg and Sharp. And Byron Sharp has this book that I'm sure some of your listeners would know called How Brands Grow. And they talk about a thing called Double Jeopardy, which again, I know you know Ed, which basically says if you can get more people to buy it, if you could increase the penetration, the footprint, just the overall number of people who tried The Thing at least once. That in and of itself is gonna be associated with higher degrees of loyalty. So yeah, your point is pretty good. You get more people to buy it, they're gonna tend to buy it more often. They're gonna appear to be slightly more locked in having a slightly higher propensity to buy it. It's really counterintuitive, this idea of. Double jeopardy. But it's really powerful. It's pretty much universal. And it's something you should expect to see instead of it being the exception.Edward: Yeah. So then looping back to the wall Street Journal Electric car article sounds like they're doing the right thing by introducing the electric cars, they're getting people, so Ford introduces an electric car and it's getting people who didn't buy Ford before to be more likely to buy them now.So it's a customer acquisition play it brings and it brings 'em into the Ford fold. And then once they're in there, Ford's market share increases because they now have more customers they acquired with a electric vehicle. And then once that happens, the double jeopardy kicks in and they should. Those people who have bought those four vehicles the first time, more likely to keep buying them in the future.Peter: So you will see some of that. Absolutely. The big key is how to get that wonderful cycle going. And in other words, how do you do the acquisition? And again, going back to the great work of Aaron Bergen Sharp and others, you can't just lean on one attribute. You can't say, this is the coolest, newest electric vehicle. You gotta. Broadly appealing. You gotta really punch up a number of different attributes that, yeah, it's gonna save the environment. But you know what? It's all, it's also fun to drive and it's very safe and and your friends will like you better. So you don't lean too heavily. Don't nichey yourself.You want to make yourself broadly appealing and that's gonna bring in more people and just, implicitly get them to do to. Or to roll your side of the die a little bit more often. It, it really is amazing how counterintuitive that he did. Double jeopardy is, but you just see it it's funny to see a lot of companies stumbling upon it as if it's something new and unexpected, it's been there all the time.Edward: And what's neat about this is it does hint at that, the next paragraph in the article talks about how these people buying these $70,000 new electric vehicles it what says they're, I dunno if this is actually true, but this is what the journalist is saying. They're as likely to own a $30,000 Subaru Outback as they are to buy, as they are to have previously owned a $100,000 Porsche 9 1 1 sports car. And whether that's true or not, the idea that we should make these vehicles to appeal. Everyone rather than just some sub-segment. Sounds like a step in the right direction for the marketers anyway.Peter: Yeah, it, and it goes against the grain of so much of what we've taught and learned in the marketing 1 0 1 s. We just figure out what your distinctive attribute is and hammer that and find people who care about that instead. We're trying to say, not so much be all things to all people, but a step more in that direction.Edward: Great. Anything else to add, Peter?Peter: We just want people to appreciate that this is the way the world works, whether it's electric vehicles, whether it's soup, whether it's hotels we expect to see these kinds of patterns. This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit <a href="https://marketingbs.substack.com/subscribe?utm_medium=podcast&amp;utm_campaign=CTA_2" rel="nofollow" target="_blank">marketingbs.substack.com/subscribe</a>

Marketing BS Podcast: Have Electric Vehicles Changed the Rules of Loyalty?

Happy new year! Expect fewer posts this year. I will keep going with this podcast, but I am shifting my time commitment to (1) get the book over the line. No more excuses; and (2) Work on developing “business comedy”. I will write more about #2 at some point, but for now enjoy the podcast, and be happy if you weren’t flying Southwest the last few weeks!Full TranscriptEdward: Peter, how were the holidays?Peter: Wow. It seems like a million years ago, doesn't it? It's amazing. We had that kind of one day after New Year's adjusting and then boom. But it was great. I went down to Antarctica and it was amazing. Super fun, super interesting. What about yourself?Edward: We tortured ourselves by taking our four little children to Guatemala and Belize.Peter: Wow, that's bold. That's bold.Edward: But I think the nice thing is both of us missed the travel meltdown that happened. I think we both got out before everything started falling apart across America.Peter: It was amazing actually being down in Antarctica. where it's kind of warmer and more pleasant than it was in most parts of the us. What a mess that wasEdward: Go to Antarctica for the heat .Peter: Well, it was summer and, I think unfortunately the repercussions of that are still rippling through and it's gonna be a while before that all settles down.Edward: It's interesting. We were flying on Alaska and there's now a direct flight between Seattle and Belize City. and there were three flights before ours, and they're a limited number of flights now that go back and forth. Like they're only every couple of days. And the three flights before ours were all canceled, so we're on the edge of our seats and whether we were gonna get back on time.Peter: And between all the cancellations that were happening earlier in the summer for different kinds of reasons, staffing, and now all of the kind of Southwest mess, which is more kind of operational issues, we have a very different feeling in the stomach when we pull up to the airport these days.Edward: One of the news this week, southwest Airlines had a big, big mess up where every, all the airlines kind of had trouble, but I think Southwest had the most at one point, I think they'd canceled half their flights. It was like a huge, huge, huge.Peter: Yeah. And I guess, if you read, some of the, articles and blogs about it, it seems like it was, it was inevitable, right? That they've been on a bit of a downward spiral in recent years and letting go of some of the operational aspects that would've never happened back in the old days. But, it's a shame it had to hit. Abruptly, and it's such an inconvenient time.Edward: Well, that's what's gonna happen, right? When you run really lean, if everything's going well, it's not a problem. It's when things start to go wrong, all of a sudden they can go really, really wrong because that's when things break.Peter: Exactly. And of course, the lessons to be learned are, How not to let them break, but also how to, how to recover from it. And I still think there's a lot of lingering questions about that.Edward: I think the Wall Street Journal was just publishing earlier this week about how Southwest is now saying, sorry. They're admitting their failures. They're offering, they said 25,000 frequent flyer points so that passengers hit by the travel meltdown. What do you think of that? Like, what is the value. The passengers who are getting that treatment to get them to come back? Or is it the signaling to non passengers that, Hey, we really.Peter: It's very interesting. My, initial reactions be really, really fun to, to talk through, was not a positive one. About that move. Couple of reasons. Number one, devalues the point. It's like, we're just gonna throw some stuff at you. You spent all this time trying to get people to value points and earn and get status and all the great things you can do. But just to use it as a way just throwing stuff at you, it kind of makes you wonder about the value of that currency and what it really means to Southwest. So there's one reaction. What, do you think about that?Edward: I think they claimed in that same article they said, those 25,000 points is worth $300, which would, which you put each point at worth more than a penny, maybe it's $300 if you do it absolutely perfectly in how you use it. But I think most people value these points at less than a penny. But you're saying that the fact they're giving points at all rather than giving people the $300, in either future travel or $300 in cash, the fact they're doing it in points, what degrades the value of the point .Peter: I think it does, maybe less from a fungibility standpoint, but from a psychological one, we try to associate these points with good things and aspirations and bonuses and like, wow, look at all things we can do with it. But here we're framing it or they're framing it as, this is a way that we're covering our ass and, and making up for a problem. And, I think it taints the idea of, of what these points are all about.Edward: I'm just thinking, when I was traveling, I stayed at,, back before Marriott bought them. I was staying at Starwood Hotels and they offered points for all sorts of things, but that was their go-to for both good things for, Hey, do these things we want you to do and we'll give you bonus points., get our credit card, we'll give you bonus points, stay in our hotels, get more points. But they would also use them for when things went wrong. And I remember times where like, Hey, they messed up my hotel room. Or there was really loud noise at night. Or they had, the pool wasn't working. And in those cases when you said, Hey, you guys made a mistake, their go-to thing was, well, here's some points. And I don't think I felt bad about that. I felt, I think I felt good about that.Peter: = I think it's different. I think it's a very different situation because, I've of course been in many of those situations myself, but, when it happens on an ad hoc basis like that, it's like, look at me, you know, I was a good negotiator. Look at what I got out of them. So at that point, it seems like a bonus. , I got something that other people might not have gotten. Whereas in this case it's a blanket offer, so it's not so no one's gonna feel like that they got something that they earned it, they're being treated all the same, and it's just sort of being thrown at them. It's not the outcome of some kind of, negotiation or something like that. So I think it's the points are framed very differently.Edward: Should they have done it below the line? . So instead of announcing that the Wall Street Journal they were doing it, should they have just approached each individual independently and said, Hey, we felt really bad. What happened to you specifically? Here's 25,000 points to make up for.Peter: And maybe vary the amount of points based on what people paid for the ticket or just how much inconvenience they were. Something like that. I think if they tried to make it a little bit more personal instead of just, again, sweeping it under the rug. Here you go, people, here's your points. Now shut up and let's keep going. I think that it might have just felt a little different.Edward: Who's to say they're not doing that? Maybe, they led out with the top line saying, Hey, it's 25,000 points to everybody. Here's the Wall Street Journal article. But maybe below the line they're saying, Hey, we're giving 25,000 points to everybody. But for you, We're gonna give you 30 or we're gonna give you 40 because of what happened to you and we wanna make so special.Peter: Or maybe it opens up that negotiation where people will go back to 'em and say, 25 isn't enough. I deserve more. In which case they would feel a little better about those incremental points that they were able to negotiate for. One of the other things that I find interesting about it, and this just kinda shows our age over here a little bit, is that Southwest, unlike the other airlines, hasn't been as, Has dependent on the loyalty program. They haven't called attention to it quite as much, and for years and years and years, they actively resisted having one. They always said that, look, we're just giving you a good deal. We're gonna treat you really well. We don't need to sweeten it in the way that some of these other big evil and personal airlines do. I kind of admired that about them, but then eventually they caved in. Everyone has to have it, butEdward: now they're so much money and a credit card.Peter: They have to do it, and that's fine. It's inevitable they would, but now they're calling even more attention to the program. And again, they're doing it in a way that has nothing to do with loyalty, that has nothing to do with that good feeling. It's just another currency. And it, takes, something special out of it and makes you start thinking about Southwest in a slightly more, I don't know, commoditized way .Edward: Have you looked at cohorts like this? So, like either an airline or something similar where something really bad happens. The people who experience that really bad thing, do you see what happens to their lifetime value? Does it drop significantly?Peter: I love that. I I love that. I can't believe that you raised that before I did. We do that all the time. In fact, the most obvious example being covid. But plenty of others, you know, we'll, we'll find cases where there's some kind of either competitive entry or the company engaging in some kind of other big strategic change. Not so much the first thing to do, but maybe the most telling thing to do is to say, , what's the nature of those customers, of the customers acquired during that time and how do they compare, you know, better or worse to, to others? I think that's a really great analysis to do and ends up being, I think, much more telling about the impact of that intervention than just a lot of the kind of day-to-day moment to moment. Nonsense on social media. So it's a great analysis. Now let's press pause on that and pick it up, a year from now and it would be great if Southwest would divulge some of that data.Edward: To me there's, three effects. There's one which is Southwest did this big mess up. It's in the news. How is that gonna affect my future travel with Southwest? Like how many times was I going to travel with Southwest? I wasn't affected by it, but I heard about it. Is that gonna drive down my future likelihood to fly Southwest then? Then number two is the people who were actually affected by it. They were traveling on Southwest, they released somewhat loyal to Southwest and that they bought one ticket. How is that going to affect their future travel with Southwest and is it gonna be more so than how my, I'm affected? You can even break that down even further by. People who, people who that was their first flight with Southwest. That's their only experiences with those Southwest. Versus a frequent traveler. And then number three is what effect did the intervention have? And I think the problem with this is that, Number two and number three, we can't separate because they're giving it to everybody. Now, if they've done it below the line, they could have just given it to like 90% of the people and 10%, 10% get nothing. You're screwed, buddy. Just so they can measure the effect of whether their intervention paid out.Peter: I love that. I love that. Or at least to communicate it differently to different people. Some people it could be a more positive message like, Hey, you get a free vacation on us. Or with other people it might be a, oops, we screwed up. You know, we feel bad. So that there still could be ways that they could try to get some insight from it. I suspect they're not, I suspect they're gonna try to make it as blanket and generic and, just get it out there and forget about this thing, which of course raises another problem which is they, giving points away isn't addressing the problem. all the operational issues that have been creeping up on them. The last thing they want is to throw a bunch of points at people and to see issues like this keep recurring, even if it's not quite as severe and public as what happened a couple of weeks ago. They're gonna still have operational concerns. And this whole points thing, the fact that weren't even talking about it, might call even more attention to future problems they have.Edward: Have you seen any examples like that? Like what should Southwest expect? What should it do to propensity to fly for people like me that weren't, didn't experience it? What should it do to the propensity to fly to the, for the people who got hit?Peter: Maybe The Thing to do, you gotta give some points or money or do something. But maybe it should be more communications around here's what we're doing to fix the problems. You know, here are the new people we're gonna hire and the new systems we're gonna integrate, and the new processes that we're gonna have to try to keep people alert. Again, I haven't stayed that close attention to this, but, I'd rather hear about the issues and how they're addressing them, rather than trying to just, throw points at people and pretend it's all better.Edward: I imagine this what the investors would care about more than anything else.Peter: Sure. And ultimately that might be what matters most, cuz there's no doubt they took a big hit here and I think people are gonna be looking at 'em skeptically for a while now. They need to earn people's trust back and again, it's not clear that 25 k points, closes the chapter here.Edward: They need a new, what's their tagline? Like, flying the Friendly Skies. Is that Southwest?Peter: No, that's, United.Edward: Oh my gosh. What's Southwest tagline?Peter: Oh, geez. , we should know our airlines better here. You're look, looking it up.Edward: Lofas. Nothing to hides. That's transparency. That's their, oh my gosh. That's terrible. .Peter: Yes, exactly. And, and here they're, they're trying to hide a lot, . And again, it's not very evil. It's not a conspiracy, but they're not being transparent. They're not addressing the issues. At least through this one tactic,Edward: they can do the new tagline. We will try harder. We'll do better.Peter: and we'll throw some points at you if it doesn't work. This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit marketingbs.substack.com/subscribe

Happy new year! Expect fewer posts this year. I will keep going with this podcast, but I am shifting my time commitment to (1) get the book over the line. No more excuses; and (2) Work on developing “business comedy”. I will write more about #2 at some point, but for now enjoy the podcast, and be happy if you weren’t flying Southwest the last few weeks!Full TranscriptEdward: Peter, how were the holidays?Peter: Wow. It seems like a million years ago, doesn't it? It's amazing. We had that kind of one day after New Year's adjusting and then boom. But it was great. I went down to Antarctica and it was amazing. Super fun, super interesting. What about yourself?Edward: We tortured ourselves by taking our four little children to Guatemala and Belize.Peter: Wow, that's bold. That's bold.Edward: But I think the nice thing is both of us missed the travel meltdown that happened. I think we both got out before everything started falling apart across America.Peter: It was amazing actually being down in Antarctica. where it's kind of warmer and more pleasant than it was in most parts of the us. What a mess that wasEdward: Go to Antarctica for the heat .Peter: Well, it was summer and, I think unfortunately the repercussions of that are still rippling through and it's gonna be a while before that all settles down.Edward: It's interesting. We were flying on Alaska and there's now a direct flight between Seattle and Belize City. and there were three flights before ours, and they're a limited number of flights now that go back and forth. Like they're only every couple of days. And the three flights before ours were all canceled, so we're on the edge of our seats and whether we were gonna get back on time.Peter: And between all the cancellations that were happening earlier in the summer for different kinds of reasons, staffing, and now all of the kind of Southwest mess, which is more kind of operational issues, we have a very different feeling in the stomach when we pull up to the airport these days.Edward: One of the news this week, southwest Airlines had a big, big mess up where every, all the airlines kind of had trouble, but I think Southwest had the most at one point, I think they'd canceled half their flights. It was like a huge, huge, huge.Peter: Yeah. And I guess, if you read, some of the, articles and blogs about it, it seems like it was, it was inevitable, right? That they've been on a bit of a downward spiral in recent years and letting go of some of the operational aspects that would've never happened back in the old days. But, it's a shame it had to hit. Abruptly, and it's such an inconvenient time.Edward: Well, that's what's gonna happen, right? When you run really lean, if everything's going well, it's not a problem. It's when things start to go wrong, all of a sudden they can go really, really wrong because that's when things break.Peter: Exactly. And of course, the lessons to be learned are, How not to let them break, but also how to, how to recover from it. And I still think there's a lot of lingering questions about that.Edward: I think the Wall Street Journal was just publishing earlier this week about how Southwest is now saying, sorry. They're admitting their failures. They're offering, they said 25,000 frequent flyer points so that passengers hit by the travel meltdown. What do you think of that? Like, what is the value. The passengers who are getting that treatment to get them to come back? Or is it the signaling to non passengers that, Hey, we really.Peter: It's very interesting. My, initial reactions be really, really fun to, to talk through, was not a positive one. About that move. Couple of reasons. Number one, devalues the point. It's like, we're just gonna throw some stuff at you. You spent all this time trying to get people to value points and earn and get status and all the great things you can do. But just to use it as a way just throwing stuff at you, it kind of makes you wonder about the value of that currency and what it really means to Southwest. So there's one reaction. What, do you think about that?Edward: I think they claimed in that same article they said, those 25,000 points is worth $300, which would, which you put each point at worth more than a penny, maybe it's $300 if you do it absolutely perfectly in how you use it. But I think most people value these points at less than a penny. But you're saying that the fact they're giving points at all rather than giving people the $300, in either future travel or $300 in cash, the fact they're doing it in points, what degrades the value of the point .Peter: I think it does, maybe less from a fungibility standpoint, but from a psychological one, we try to associate these points with good things and aspirations and bonuses and like, wow, look at all things we can do with it. But here we're framing it or they're framing it as, this is a way that we're covering our ass and, and making up for a problem. And, I think it taints the idea of, of what these points are all about.Edward: I'm just thinking, when I was traveling, I stayed at,, back before Marriott bought them. I was staying at Starwood Hotels and they offered points for all sorts of things, but that was their go-to for both good things for, Hey, do these things we want you to do and we'll give you bonus points., get our credit card, we'll give you bonus points, stay in our hotels, get more points. But they would also use them for when things went wrong. And I remember times where like, Hey, they messed up my hotel room. Or there was really loud noise at night. Or they had, the pool wasn't working. And in those cases when you said, Hey, you guys made a mistake, their go-to thing was, well, here's some points. And I don't think I felt bad about that. I felt, I think I felt good about that.Peter: = I think it's different. I think it's a very different situation because, I've of course been in many of those situations myself, but, when it happens on an ad hoc basis like that, it's like, look at me, you know, I was a good negotiator. Look at what I got out of them. So at that point, it seems like a bonus. , I got something that other people might not have gotten. Whereas in this case it's a blanket offer, so it's not so no one's gonna feel like that they got something that they earned it, they're being treated all the same, and it's just sort of being thrown at them. It's not the outcome of some kind of, negotiation or something like that. So I think it's the points are framed very differently.Edward: Should they have done it below the line? . So instead of announcing that the Wall Street Journal they were doing it, should they have just approached each individual independently and said, Hey, we felt really bad. What happened to you specifically? Here's 25,000 points to make up for.Peter: And maybe vary the amount of points based on what people paid for the ticket or just how much inconvenience they were. Something like that. I think if they tried to make it a little bit more personal instead of just, again, sweeping it under the rug. Here you go, people, here's your points. Now shut up and let's keep going. I think that it might have just felt a little different.Edward: Who's to say they're not doing that? Maybe, they led out with the top line saying, Hey, it's 25,000 points to everybody. Here's the Wall Street Journal article. But maybe below the line they're saying, Hey, we're giving 25,000 points to everybody. But for you, We're gonna give you 30 or we're gonna give you 40 because of what happened to you and we wanna make so special.Peter: Or maybe it opens up that negotiation where people will go back to 'em and say, 25 isn't enough. I deserve more. In which case they would feel a little better about those incremental points that they were able to negotiate for. One of the other things that I find interesting about it, and this just kinda shows our age over here a little bit, is that Southwest, unlike the other airlines, hasn't been as, Has dependent on the loyalty program. They haven't called attention to it quite as much, and for years and years and years, they actively resisted having one. They always said that, look, we're just giving you a good deal. We're gonna treat you really well. We don't need to sweeten it in the way that some of these other big evil and personal airlines do. I kind of admired that about them, but then eventually they caved in. Everyone has to have it, butEdward: now they're so much money and a credit card.Peter: They have to do it, and that's fine. It's inevitable they would, but now they're calling even more attention to the program. And again, they're doing it in a way that has nothing to do with loyalty, that has nothing to do with that good feeling. It's just another currency. And it, takes, something special out of it and makes you start thinking about Southwest in a slightly more, I don't know, commoditized way .Edward: Have you looked at cohorts like this? So, like either an airline or something similar where something really bad happens. The people who experience that really bad thing, do you see what happens to their lifetime value? Does it drop significantly?Peter: I love that. I I love that. I can't believe that you raised that before I did. We do that all the time. In fact, the most obvious example being covid. But plenty of others, you know, we'll, we'll find cases where there's some kind of either competitive entry or the company engaging in some kind of other big strategic change. Not so much the first thing to do, but maybe the most telling thing to do is to say, , what's the nature of those customers, of the customers acquired during that time and how do they compare, you know, better or worse to, to others? I think that's a really great analysis to do and ends up being, I think, much more telling about the impact of that intervention than just a lot of the kind of day-to-day moment to moment. Nonsense on social media. So it's a great analysis. Now let's press pause on that and pick it up, a year from now and it would be great if Southwest would divulge some of that data.Edward: To me there's, three effects. There's one which is Southwest did this big mess up. It's in the news. How is that gonna affect my future travel with Southwest? Like how many times was I going to travel with Southwest? I wasn't affected by it, but I heard about it. Is that gonna drive down my future likelihood to fly Southwest then? Then number two is the people who were actually affected by it. They were traveling on Southwest, they released somewhat loyal to Southwest and that they bought one ticket. How is that going to affect their future travel with Southwest and is it gonna be more so than how my, I'm affected? You can even break that down even further by. People who, people who that was their first flight with Southwest. That's their only experiences with those Southwest. Versus a frequent traveler. And then number three is what effect did the intervention have? And I think the problem with this is that, Number two and number three, we can't separate because they're giving it to everybody. Now, if they've done it below the line, they could have just given it to like 90% of the people and 10%, 10% get nothing. You're screwed, buddy. Just so they can measure the effect of whether their intervention paid out.Peter: I love that. I love that. Or at least to communicate it differently to different people. Some people it could be a more positive message like, Hey, you get a free vacation on us. Or with other people it might be a, oops, we screwed up. You know, we feel bad. So that there still could be ways that they could try to get some insight from it. I suspect they're not, I suspect they're gonna try to make it as blanket and generic and, just get it out there and forget about this thing, which of course raises another problem which is they, giving points away isn't addressing the problem. all the operational issues that have been creeping up on them. The last thing they want is to throw a bunch of points at people and to see issues like this keep recurring, even if it's not quite as severe and public as what happened a couple of weeks ago. They're gonna still have operational concerns. And this whole points thing, the fact that weren't even talking about it, might call even more attention to future problems they have.Edward: Have you seen any examples like that? Like what should Southwest expect? What should it do to propensity to fly for people like me that weren't, didn't experience it? What should it do to the propensity to fly to the, for the people who got hit?Peter: Maybe The Thing to do, you gotta give some points or money or do something. But maybe it should be more communications around here's what we're doing to fix the problems. You know, here are the new people we're gonna hire and the new systems we're gonna integrate, and the new processes that we're gonna have to try to keep people alert. Again, I haven't stayed that close attention to this, but, I'd rather hear about the issues and how they're addressing them, rather than trying to just, throw points at people and pretend it's all better.Edward: I imagine this what the investors would care about more than anything else.Peter: Sure. And ultimately that might be what matters most, cuz there's no doubt they took a big hit here and I think people are gonna be looking at 'em skeptically for a while now. They need to earn people's trust back and again, it's not clear that 25 k points, closes the chapter here.Edward: They need a new, what's their tagline? Like, flying the Friendly Skies. Is that Southwest?Peter: No, that's, United.Edward: Oh my gosh. What's Southwest tagline?Peter: Oh, geez. , we should know our airlines better here. You're look, looking it up.Edward: Lofas. Nothing to hides. That's transparency. That's their, oh my gosh. That's terrible. .Peter: Yes, exactly. And, and here they're, they're trying to hide a lot, . And again, it's not very evil. It's not a conspiracy, but they're not being transparent. They're not addressing the issues. At least through this one tactic,Edward: they can do the new tagline. We will try harder. We'll do better.Peter: and we'll throw some points at you if it doesn't work. This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit <a href="https://marketingbs.substack.com/subscribe?utm_medium=podcast&amp;utm_campaign=CTA_2" rel="nofollow" target="_blank">marketingbs.substack.com/subscribe</a>

Marketing BS Podcast: Southwest Loyalty and some announcements

Essay and Briefing production has been low the last few weeks as I have been spending more time on building a GPT-3 powered comedy writing tool (and writing “business comedy” with the tool). If you have not checked out ChatGPT in the last two weeks, you should really do so. It is much slower now than when it launched, but still mind blowing. If it is too slow you can just use the GPT Playground, which is powered by the same back-end. GPT itself moved from 3.0 to 3.5 right around when chat launched. 3.5 is very impressive (it can rhyme now!). Spend some time playing around! It’s not often that the most interesting, most advanced cutting edge technology can be in your hands this early (and practically free).Marketing BS is on vacation the next two weeks. In early January I will be back with another podcast episode (moving to Fridays), and hopefully some more text. Have a great holiday!Full TranscriptEdward: Were you a Westworld fan, Pete?Peter: That first episode in the first season was one of the most awesome pieces of television I ever saw. I was hooked with the first season and maybe watched one or two more episodes. That was it. How about you?Edward: One or two of the first season, or finished the first season and then one or two of the season?Peter: Finished the first season, that was, must watch tv. And then in my view, it jumped the shark very quickly after that. In fact, when I saw that news that H B O is gonna give up on it I thought they were just killing the program, but I didn't realize they were actually killing the, getting rid of the catalog too. That, that's crazy.Edward: Is this the first example of hbo? So HBO has pulled stuff from their catalog before, like they, they pulled some Sesame Street episodes people were upset with, but is this the first time they're pulling their own content from...Peter: It's the first I know of and indeed, the Sesame Street thing is different because that's not their content, but for them to have stuff that, that should be uniquely associated with them and still does, and on catalog basis, we'll have some value for them to say, nah, we don't need this anymore. It does have me scratch in my head.Edward: So there's no actual cost for them, whether they put it on the platform or not. There's no cost. But what there is an opportunity cost, and I think that opportunity cost has really been ignored in the past. And now they're saying, Hey, we can take this product that we have and instead of using it on our own platform, we can turn around and sell to some, sell to Netflix, sell to Amazon, have someone else owed it exclusively instead of...Peter: But it does make you wonder, like sometimes you'll sell content outright and say, here, it's yours now. Or sometimes you'll just license content. Or access. You think about lots of examples where, I don't know where Verizon will let Comcast use Verizon's phone services as a private label kind of play. So they're not giving up on it, but they're saying, Hey, we can have other access points to it as well. I just wonder if, maybe providing broader access rather than giving up on their own access makes sense.Edward: HBO has done that before, they kept Sopranos on their system, but they offered Sopranos to Amazon as well. So you can go on Amazon Prime and watch Old Seasons of the Sopranos. But what was happening there is it was non-exclusive. It was still available at hbo, but also available at Amazon. I think what's happening here is that there is a higher value in a piece of content that's exclusively available someplace else, and HBO's gonna try to realize that with Westworld.Peter: So you think it's an opportunity play for them that they'll make more money by auctioning it off to the highest bid. you don't think a kind of a cost cutting moveEdward: No, I don't think there's any cost. The cost to have more video on your platform is as close to zero as it comes. The storage cost is you're storing it anyway. And I think this and the streaming cost, if they're not streaming, that they're streaming something else, or they're streaming a competitor and you don't want your customers to do that. That's how you churn your customers. And so there's no actual cost for them to have it on there. There's an opportunity cost where they can go to Amazon Prime and Amazon Prime may pay, I don't know, 10 million to stream Westworld or 30 million if they get the exclusive rights to it.Peter: It's all about exclusivity. But again it's interesting how sometimes, people do put a premium on it and other times they say, nah, come on we don't care what door you come through.Edward: I think what's interesting is that all these streaming services are effectively competing with each other, but they're finding ways that they need to cooperate at the same time. And so you can go on Amazon. Amazon Prime is competing against HBO and Disney Plus and so on, but you can also buy HBO and buy Disney Plus when you're on the Amazon Prime platform. If you go on Hulu that's owned by Disney, you can buy HBO on through Hulu and so they're both, what's that word? Where you're competing and your friends at the same time?Peter: Frenemies.Edward: Frenemies. They're frenemies.Peter: Yeah. And that whole thing about the these kind of affiliate acquisition things that are going on just as you described that the companies getting some kickback from the content providers for selling subscriptions to it, that's something that we as consumers don't really understand a lot of money, a lot. Here it is company like, I dunno, Comcast will pay a bunch of money to get access to the HBO content, so get paid every time they bring subscribers in. It's weird how it goes both ways.Edward: I've tried to dig into that and I don't know what they actually pay. So when you buy HBO through Amazon, you pay your $15 a month, Amazon gets paid for that. I don't know if Amazon's getting a lump sum for getting the new subscriber, or they're getting like $5 a month for one subscriber. As far as I can tell, that data has not been shared publicly anywhere.Peter: The data's not shared. And again, I think very few consumers are aware that these things go on. So when a company starts calling attention to it, like Verizon is now doing, you want, maybe you want to elaborate on that a little.Edward: So Verizon, that is they offered a new deal yesterday. I believe that if you go and use their marketplace, I didn't even know Verizon had a marketplace. Like it never would've occurred to me to go and buy my HBO through Verizon. I have a Verizon phone, but that's not how, if I wanted to buy hbo, I'd probably do it through. Go to hbo.com or maybe I'd pull up my Amazon fire television and buy it. I don't think I'd open my Verizon app on my Verizon phone to go and buy hbo, but that's what they want me to do. And if I go buy HBO through my Verizon app, the. Verizon's gonna give me Netflix for free for a year. So they must be making something from that .Peter: Oh, clearly they are. And you gotta wonder what the play is there that maybe if they can be your gateway to more and more services, then you'll consider adding others and see them as a bonafide, app store in a way, even though we're, blissfully unaware of it. Maybe that's what they're thinking.Edward: I assume that once I subscribe to HBO through the Verizon store, I'm not, I'm still using the HBO app to watch my shows. I'm not going through the Verizon app to get the HBO stuff, which I think is what happens on Hulu. I can buy HBO through Hulu and now all of my HBO stuff is available right inside my Hulu app.Peter: So in a way they're trying to build a walled garden of sorts. But it's not so much financial considerations or even exclusive access, it's just that one, once you're seeing it through gateway, you're just not gonna switch. And then while you are using that gateway, you might access other things through it. Very different than, the traditional approach that apple's taking.Edward: It's customer acquisition, right? So if Verizon can get me to go buy my HBO through the Verizon app, and now all of a sudden I'm getting Netflix through the Verizon app, I've, they've now acquired me as a customer and getting that second, the second or third purchase, when I decided to go buy Paramount, maybe instead of going to paramount.com. My natural inclination, at least my on the margin, I'm more likely to go buy that through the Verizon app now as well.Peter: That's the bet they're placing. It'll be interesting to see if people feel any kind of loyalty to one Gateway or another. And what would drive that? Is it the brand? Is it the the interface that lets you access it? It's funny that we always talk about content being king, but now it's at least the presumption is that being the gateway to content might be the king. Not a lot of evidence for.Edward: It feels like in the real world, we see this all the time, clearly, like I don't buy my tide from Proctor and Gamble. P and g might have a direct to consumer tide business, but it would never occur to me to go to p and g or tide.com to go buy Tide. Instead, I either buy it through Amazon or I. Go to my local grocery store, my local Walmart, and pick up the tide. And it feels like in the digital world, the competition is like a drive away versus in the digital world, competition is a click away and it seems a lot easier switch from one storefront to another.Peter: Exactly. And what's interesting about it I don't know about you, but I have zero loyalty to any of them. I don't look at any of the, these interfaces and say, that's a good one. If anything, especially when you're doing it through the television, you're trying to spell out names of programs by using arrow buttons. Just horrible. So it's I don't think they've done a good job of, the customer experience of being content retailers in that regard.Edward: But I think there's something to be... there is a friction for leaving somewhere. So if you are on your Amazon Prime TV or on your Roku tv and you decide, I wanna watch deadwood on hbo. One way you could do it is go to your phone or your computer, sign up for hbo and then go and link it to your Amazon Fire television. Or the other way is you go on Amazon Fire Television and say, hbo, click here, sign up. I'll bet there's a lot of people who do that ladder rather than the former.Peter: And in the case of Verizon is that a presumption that people would be consuming the content on their mobile device because it's not clear that the Verizon gateway would help you with your home television?Edward: No. I'm a bit of a loss for the Verizon model, although, yeah if the Verizon, if presumably Verizon has, I didn't even know Verizon had a store, but they had a store and you could buy other things through that store. You could imagine a lot of these guys have these discount stores. You can imagine that you go on Verizon and buy your, I dunno, your AirPods through Apple at a $10 discount if you buy it through the Verizon store. And so if you get, if you start getting used to doing that, the reason to go, the reason to buy through the Amazon Fire television is because it's convenient and it's right in front of you and you're already using it. The reason to buy through the Verizon store is there has to be something else. There has to be the convenience is not there, so they better compete on price or something else.Peter: I think it's Apple envy I think that folks just have this feeling if we build it, they will come. That we can build the same kind of walled garden that Apple has. If they could do it, why can't we? And just makes you wonder a, is it is it that easy to do? And b well, you look at what some of the pressures apple's facing, is that even the right way to go? If you can.Edward: That's the other big news we've had this week is that, the EU is now gonna force Apple to have competing app stores. So up until now they've had a monopoly. If you wanna buy something through your phone, you have to buy it through. Apple. Now there's gonna be an, in theory, there can be other stores, but again, we're gonna have that same problem of why would you, as a consumer, why would you go to one of these other stores? Unless they're competing on price or they're not gonna, it's unlikely this other stores gonna have as better a better experience than Apple. So they better just offer things at lower prices.Peter: It's another example where regulators are stepping in trying to do things that, in theory is in the consumer's best interest. But you go back to G D P R, the whole data protection thing. There, it's, great idea in theory, but now every time you're dealing with the European firm, just all the accept this, click on that. It's, it ends up being a worse experience. You know what just take my data, but leave me. And I think it's the same thing here that they'll have a million stores. You won't know which one is which, and in the end, you're just gonna end up just choosing to go to the regular Apple one and, and paying more and getting less. But it's the one you know and you're comfortable with.Edward: The one thing the law is doing so I think that this, again, I'm with you, especially eu, they've made so many poor choices and there's some pretty terrible stuff in this recent law. But one thing that I think it's doing right is it's. Companies to basically circumvent Apple payment rules. So right now, like I can't buy a book through my Kindle app because Apple is gonna require 30% payment from Amazon. Amazon's not making 30% margin when they sell the book. And so the result is it's just lock out completely and I need to go. Into my browser, go into app Amazon, buy the book, and then push it to Kindle. And not only can I not buy through the Kindle app, Amazon can't even tell me in the Kindle app how to buy a book and use this new law is going to fix that. It's going to allow people to go and make in-app pur purchases by clicking off their app. They can tell people that they can go to their website to buy. They, it's still not gonna be a seamless solution, but at least the customer communication's gonna be a lot.Peter: Here's one thing I'm curious to get your take on it. Where I think where the EU stepping in is gonna be a tremendous benefit for consumers, and that's the cables connections to your Apple devices. Pushing people to, u s, BBC or some kind of standard instead of having their own proprietary thing. I don't see any downsides to that. Curious to get your take.Edward: Oh, really? So I think this is a huge mistake. We've come to, we've come to our point of disagreement. So USB cables have improved dramatically over the last 20 years. What EU is going to do is say, Hey, going forward, you have to use this technology this way. They're basically saying that we have now mastered the USB cable and there's no further technological advancements possible until we as bureaucrats decide to change the law.Peter: Oh, I wasn't aware of that. I was just thinking of them telling Apple that they gotta get in line with everyone else, but they're telling everyone, everybody has to get in line.Edward: This is the new, this is the new standard, and the new standard for USB cables is this, and it's not changing.Peter: Oh, ah yeah. Okay. Yeah, that's that's thrown out the baby with the bathwater. That's a shame. . Yeah, because you can imagine if governments had stepped in, just how bad the technology would be today. If technology didn't decide that in a market-based way. Wow. Yeah.Edward: All right. Hey. I think we've been all over the map today. I think just I think to wrap it up, to talk a little bit about traditional retail and how, if not just these, all these streaming stores, but actual physical retailer, they've always been in this place. The stores are selling Tide, whereas, HBO is selling movies. But you also have private label stuff that you're selling on your own. And so you are in constant competition with the person supplying all of your product. 90% of your products are being supplied somewhere and you're competing with all of them while you're selling them at the same time. And I think what we're seeing. The streaming world is as it's getting more developed, it's becoming more and more similar. To what we've seen in retail for the last a hundred years.Peter: And it's great. It's great as long as we can let you know, market forces determine winners and losers. And you we're seeing quite a bit of that happening in the streaming space. It'll look different a year from now, but hopefully better both from a consumer standpoint and from a ability to make money standpoint. This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit marketingbs.substack.com/subscribe

Essay and Briefing production has been low the last few weeks as I have been spending more time on building a GPT-3 powered comedy writing tool (and writing “business comedy” with the tool). If you have not checked out ChatGPT in the last two weeks, you should really do so. It is much slower now than when it launched, but still mind blowing. If it is too slow you can just use the GPT Playground, which is powered by the same back-end. GPT itself moved from 3.0 to 3.5 right around when chat launched. 3.5 is very impressive (it can rhyme now!). Spend some time playing around! It’s not often that the most interesting, most advanced cutting edge technology can be in your hands this early (and practically free).Marketing BS is on vacation the next two weeks. In early January I will be back with another podcast episode (moving to Fridays), and hopefully some more text. Have a great holiday!Full TranscriptEdward: Were you a Westworld fan, Pete?Peter: That first episode in the first season was one of the most awesome pieces of television I ever saw. I was hooked with the first season and maybe watched one or two more episodes. That was it. How about you?Edward: One or two of the first season, or finished the first season and then one or two of the season?Peter: Finished the first season, that was, must watch tv. And then in my view, it jumped the shark very quickly after that. In fact, when I saw that news that H B O is gonna give up on it I thought they were just killing the program, but I didn't realize they were actually killing the, getting rid of the catalog too. That, that's crazy.Edward: Is this the first example of hbo? So HBO has pulled stuff from their catalog before, like they, they pulled some Sesame Street episodes people were upset with, but is this the first time they're pulling their own content from...Peter: It's the first I know of and indeed, the Sesame Street thing is different because that's not their content, but for them to have stuff that, that should be uniquely associated with them and still does, and on catalog basis, we'll have some value for them to say, nah, we don't need this anymore. It does have me scratch in my head.Edward: So there's no actual cost for them, whether they put it on the platform or not. There's no cost. But what there is an opportunity cost, and I think that opportunity cost has really been ignored in the past. And now they're saying, Hey, we can take this product that we have and instead of using it on our own platform, we can turn around and sell to some, sell to Netflix, sell to Amazon, have someone else owed it exclusively instead of...Peter: But it does make you wonder, like sometimes you'll sell content outright and say, here, it's yours now. Or sometimes you'll just license content. Or access. You think about lots of examples where, I don't know where Verizon will let Comcast use Verizon's phone services as a private label kind of play. So they're not giving up on it, but they're saying, Hey, we can have other access points to it as well. I just wonder if, maybe providing broader access rather than giving up on their own access makes sense.Edward: HBO has done that before, they kept Sopranos on their system, but they offered Sopranos to Amazon as well. So you can go on Amazon Prime and watch Old Seasons of the Sopranos. But what was happening there is it was non-exclusive. It was still available at hbo, but also available at Amazon. I think what's happening here is that there is a higher value in a piece of content that's exclusively available someplace else, and HBO's gonna try to realize that with Westworld.Peter: So you think it's an opportunity play for them that they'll make more money by auctioning it off to the highest bid. you don't think a kind of a cost cutting moveEdward: No, I don't think there's any cost. The cost to have more video on your platform is as close to zero as it comes. The storage cost is you're storing it anyway. And I think this and the streaming cost, if they're not streaming, that they're streaming something else, or they're streaming a competitor and you don't want your customers to do that. That's how you churn your customers. And so there's no actual cost for them to have it on there. There's an opportunity cost where they can go to Amazon Prime and Amazon Prime may pay, I don't know, 10 million to stream Westworld or 30 million if they get the exclusive rights to it.Peter: It's all about exclusivity. But again it's interesting how sometimes, people do put a premium on it and other times they say, nah, come on we don't care what door you come through.Edward: I think what's interesting is that all these streaming services are effectively competing with each other, but they're finding ways that they need to cooperate at the same time. And so you can go on Amazon. Amazon Prime is competing against HBO and Disney Plus and so on, but you can also buy HBO and buy Disney Plus when you're on the Amazon Prime platform. If you go on Hulu that's owned by Disney, you can buy HBO on through Hulu and so they're both, what's that word? Where you're competing and your friends at the same time?Peter: Frenemies.Edward: Frenemies. They're frenemies.Peter: Yeah. And that whole thing about the these kind of affiliate acquisition things that are going on just as you described that the companies getting some kickback from the content providers for selling subscriptions to it, that's something that we as consumers don't really understand a lot of money, a lot. Here it is company like, I dunno, Comcast will pay a bunch of money to get access to the HBO content, so get paid every time they bring subscribers in. It's weird how it goes both ways.Edward: I've tried to dig into that and I don't know what they actually pay. So when you buy HBO through Amazon, you pay your $15 a month, Amazon gets paid for that. I don't know if Amazon's getting a lump sum for getting the new subscriber, or they're getting like $5 a month for one subscriber. As far as I can tell, that data has not been shared publicly anywhere.Peter: The data's not shared. And again, I think very few consumers are aware that these things go on. So when a company starts calling attention to it, like Verizon is now doing, you want, maybe you want to elaborate on that a little.Edward: So Verizon, that is they offered a new deal yesterday. I believe that if you go and use their marketplace, I didn't even know Verizon had a marketplace. Like it never would've occurred to me to go and buy my HBO through Verizon. I have a Verizon phone, but that's not how, if I wanted to buy hbo, I'd probably do it through. Go to <a href="http://hbo.com" rel="nofollow" target="_blank">hbo.com</a> or maybe I'd pull up my Amazon fire television and buy it. I don't think I'd open my Verizon app on my Verizon phone to go and buy hbo, but that's what they want me to do. And if I go buy HBO through my Verizon app, the. Verizon's gonna give me Netflix for free for a year. So they must be making something from that .Peter: Oh, clearly they are. And you gotta wonder what the play is there that maybe if they can be your gateway to more and more services, then you'll consider adding others and see them as a bonafide, app store in a way, even though we're, blissfully unaware of it. Maybe that's what they're thinking.Edward: I assume that once I subscribe to HBO through the Verizon store, I'm not, I'm still using the HBO app to watch my shows. I'm not going through the Verizon app to get the HBO stuff, which I think is what happens on Hulu. I can buy HBO through Hulu and now all of my HBO stuff is available right inside my Hulu app.Peter: So in a way they're trying to build a walled garden of sorts. But it's not so much financial considerations or even exclusive access, it's just that one, once you're seeing it through gateway, you're just not gonna switch. And then while you are using that gateway, you might access other things through it. Very different than, the traditional approach that apple's taking.Edward: It's customer acquisition, right? So if Verizon can get me to go buy my HBO through the Verizon app, and now all of a sudden I'm getting Netflix through the Verizon app, I've, they've now acquired me as a customer and getting that second, the second or third purchase, when I decided to go buy Paramount, maybe instead of going to <a href="http://paramount.com" rel="nofollow" target="_blank">paramount.com</a>. My natural inclination, at least my on the margin, I'm more likely to go buy that through the Verizon app now as well.Peter: That's the bet they're placing. It'll be interesting to see if people feel any kind of loyalty to one Gateway or another. And what would drive that? Is it the brand? Is it the the interface that lets you access it? It's funny that we always talk about content being king, but now it's at least the presumption is that being the gateway to content might be the king. Not a lot of evidence for.Edward: It feels like in the real world, we see this all the time, clearly, like I don't buy my tide from Proctor and Gamble. P and g might have a direct to consumer tide business, but it would never occur to me to go to p and g or <a href="http://tide.com" rel="nofollow" target="_blank">tide.com</a> to go buy Tide. Instead, I either buy it through Amazon or I. Go to my local grocery store, my local Walmart, and pick up the tide. And it feels like in the digital world, the competition is like a drive away versus in the digital world, competition is a click away and it seems a lot easier switch from one storefront to another.Peter: Exactly. And what's interesting about it I don't know about you, but I have zero loyalty to any of them. I don't look at any of the, these interfaces and say, that's a good one. If anything, especially when you're doing it through the television, you're trying to spell out names of programs by using arrow buttons. Just horrible. So it's I don't think they've done a good job of, the customer experience of being content retailers in that regard.Edward: But I think there's something to be... there is a friction for leaving somewhere. So if you are on your Amazon Prime TV or on your Roku tv and you decide, I wanna watch deadwood on hbo. One way you could do it is go to your phone or your computer, sign up for hbo and then go and link it to your Amazon Fire television. Or the other way is you go on Amazon Fire Television and say, hbo, click here, sign up. I'll bet there's a lot of people who do that ladder rather than the former.Peter: And in the case of Verizon is that a presumption that people would be consuming the content on their mobile device because it's not clear that the Verizon gateway would help you with your home television?Edward: No. I'm a bit of a loss for the Verizon model, although, yeah if the Verizon, if presumably Verizon has, I didn't even know Verizon had a store, but they had a store and you could buy other things through that store. You could imagine a lot of these guys have these discount stores. You can imagine that you go on Verizon and buy your, I dunno, your AirPods through Apple at a $10 discount if you buy it through the Verizon store. And so if you get, if you start getting used to doing that, the reason to go, the reason to buy through the Amazon Fire television is because it's convenient and it's right in front of you and you're already using it. The reason to buy through the Verizon store is there has to be something else. There has to be the convenience is not there, so they better compete on price or something else.Peter: I think it's Apple envy I think that folks just have this feeling if we build it, they will come. That we can build the same kind of walled garden that Apple has. If they could do it, why can't we? And just makes you wonder a, is it is it that easy to do? And b well, you look at what some of the pressures apple's facing, is that even the right way to go? If you can.Edward: That's the other big news we've had this week is that, the EU is now gonna force Apple to have competing app stores. So up until now they've had a monopoly. If you wanna buy something through your phone, you have to buy it through. Apple. Now there's gonna be an, in theory, there can be other stores, but again, we're gonna have that same problem of why would you, as a consumer, why would you go to one of these other stores? Unless they're competing on price or they're not gonna, it's unlikely this other stores gonna have as better a better experience than Apple. So they better just offer things at lower prices.Peter: It's another example where regulators are stepping in trying to do things that, in theory is in the consumer's best interest. But you go back to G D P R, the whole data protection thing. There, it's, great idea in theory, but now every time you're dealing with the European firm, just all the accept this, click on that. It's, it ends up being a worse experience. You know what just take my data, but leave me. And I think it's the same thing here that they'll have a million stores. You won't know which one is which, and in the end, you're just gonna end up just choosing to go to the regular Apple one and, and paying more and getting less. But it's the one you know and you're comfortable with.Edward: The one thing the law is doing so I think that this, again, I'm with you, especially eu, they've made so many poor choices and there's some pretty terrible stuff in this recent law. But one thing that I think it's doing right is it's. Companies to basically circumvent Apple payment rules. So right now, like I can't buy a book through my Kindle app because Apple is gonna require 30% payment from Amazon. Amazon's not making 30% margin when they sell the book. And so the result is it's just lock out completely and I need to go. Into my browser, go into app Amazon, buy the book, and then push it to Kindle. And not only can I not buy through the Kindle app, Amazon can't even tell me in the Kindle app how to buy a book and use this new law is going to fix that. It's going to allow people to go and make in-app pur purchases by clicking off their app. They can tell people that they can go to their website to buy. They, it's still not gonna be a seamless solution, but at least the customer communication's gonna be a lot.Peter: Here's one thing I'm curious to get your take on it. Where I think where the EU stepping in is gonna be a tremendous benefit for consumers, and that's the cables connections to your Apple devices. Pushing people to, u s, BBC or some kind of standard instead of having their own proprietary thing. I don't see any downsides to that. Curious to get your take.Edward: Oh, really? So I think this is a huge mistake. We've come to, we've come to our point of disagreement. So USB cables have improved dramatically over the last 20 years. What EU is going to do is say, Hey, going forward, you have to use this technology this way. They're basically saying that we have now mastered the USB cable and there's no further technological advancements possible until we as bureaucrats decide to change the law.Peter: Oh, I wasn't aware of that. I was just thinking of them telling Apple that they gotta get in line with everyone else, but they're telling everyone, everybody has to get in line.Edward: This is the new, this is the new standard, and the new standard for USB cables is this, and it's not changing.Peter: Oh, ah yeah. Okay. Yeah, that's that's thrown out the baby with the bathwater. That's a shame. . Yeah, because you can imagine if governments had stepped in, just how bad the technology would be today. If technology didn't decide that in a market-based way. Wow. Yeah.Edward: All right. Hey. I think we've been all over the map today. I think just I think to wrap it up, to talk a little bit about traditional retail and how, if not just these, all these streaming stores, but actual physical retailer, they've always been in this place. The stores are selling Tide, whereas, HBO is selling movies. But you also have private label stuff that you're selling on your own. And so you are in constant competition with the person supplying all of your product. 90% of your products are being supplied somewhere and you're competing with all of them while you're selling them at the same time. And I think what we're seeing. The streaming world is as it's getting more developed, it's becoming more and more similar. To what we've seen in retail for the last a hundred years.Peter: And it's great. It's great as long as we can let you know, market forces determine winners and losers. And you we're seeing quite a bit of that happening in the streaming space. It'll look different a year from now, but hopefully better both from a consumer standpoint and from a ability to make money standpoint. This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit <a href="https://marketingbs.substack.com/subscribe?utm_medium=podcast&amp;utm_campaign=CTA_2" rel="nofollow" target="_blank">marketingbs.substack.com/subscribe</a>

Marketing BS Podcast: Streaming Grab Bag

Marketing BS Podcast: Fader's Books

Today’s episode further explores topics discussed in this week’s essay. In the preamble to that essay I said that there would be no content next week. I am going to reverse that. Next week will be an excerpt from Peter Fader’s new book. Stay tuned!Full Transcript:Peter: Ed, I love your piece on strategy versus tactics at Disney, Twitter and Dominion Cards. I love the way that you're weaving together a narrative that's taking three of the super hot, interesting topics and a fourth one that most people don't know about.Edward: It's funny, the whole Dominion Cards thing. I've been, I started playing this card game back in 2011. I went to the national Championships in 2012. And I just really enjoy it. It's like the only game I can think of where you actually need to figure out a strategy at the beginning of every game. I've been sitting on this idea of dominion cards as a way to talk about strategy versus tactics for many, many years now. And I've never felt really found the right kind of hook to put it in. And then when this thing happened at Disney on Sunday, I was like, aha, the hook is here. It's time to pull this out of the filing cabinet.Peter: Love it. Well, as a, reader of the column and as someone who thinks about these issues, there's kind of two natural questions that just has to be asked. I wanna get your take on it. So, first. How do you define or where do you draw the line between strategy and tactics?Edward: I think strategy is figuring out what you should be doing and it's trying to figure out what the end point is of where you're going for, and tactics is all the stuff that gets you there. Strategy can be done a bit in isolation. You can go back into your ivory tower and think about what the dynamics are coming out with your strategy and then tactics are going to be very much based on what's happening on the ground. What's happening at any given moment, how the competition is reacting, how economics is changing what type of people you have on your team and any given moment. Those are all tactical decisions like that a consultant is not going to be able to help you with unless he's actually there on the ground.Peter: So I always have a hard time with it, to be honest. Maybe this is just me being narrow minded or something. It's not just the next move is it the next three or four moves. Be specific about strategy versus tactics in chess, and then let's branch out to these other real world stories.Edward: I'm not an expert in chess. I'm actually teaching my kids how to play now, I'm learning along with them. But I think in chess there is a correct strategy. I think strategy in chess is things like control the center of the board would be a strategy. Be willing to sacrifice your piece in order to gain position in the board, or, move your pieces in such a way that you're able to castle fairly early in the game. Those would all be strategies, things that you're working towards over a longer period of time. Tactics are, given what my opponent has just done, what should I do next? And tactics can, you can look far into the future for tactics. There's nothing that stops you from looking nine moves ahead to the right tactic would be in that particular situation. But I think strategy stays in chess at least. I think strategy stays the same. There are correct strategies into chess and there are incorrect strategies in chess. Whereas tactics are gonna change every given game depending on what your opponent does.Peter: So let's take that, and again, it's still little fuzzy. I mean, you're being more specific, but still, and I'm not gonna press you on exactly where one begins and ends, but Disney. Disney. Disney. Disney. It seems like the narrative as you said is Iger had the strategy. Chapek's job is to come in and execute on it. Few missteps here and there. Expand on that beyond what you've said in the piece about that trade offering strategy and tactics.Edward: I think most people are agreed, even the disgruntled shareholders, is that Iger's strategy was the correct one or is the correct one, which is that the cable bundle is getting hammered and Disney in the past basically had a huge amount of leverage over the cable providers and was able to extract large amounts of money from the cable providers by the fact that they had this differentiated content both the traditional Disney content, but also the sports they had with ESPN. And that was a great place for Disney to be and it still is, frankly, they still extract a huge amount of money from the cable providers, but that is not the future. Clearly we see more and more people, especially young people cutting the cord, not going with cable television and moving into streaming. And it was really a question of when did Disney need to move in that direction and how long could they keep their pound of flesh from the cable companies and hold onto that as long as possible? So the strategy then becomes let's move on. Let's go direct to consumer and scale up our Disney Plus product. There's tactical problems in doing that because, Disney bought Fox, which came with 20th Century Fox, which allowed them to add a whole ton of more content to get like the breadth required to win in a streaming war. They got control over Hulu, but they didn't get full ownership of Hulu. And so Comcast still owns a chunk of Hulu in the US which makes all sorts of challenges for Disney on a tactical level on how to actually get to the place where they wanna be. But I think the strategy is clear. It's we wanna get to the point where we are owning that direct to consumer relationship. We are monetizing through a subscription product. We are monetizing through additional add-ons that people can do on top of that. And we are monetizing through our vast aray of merchandising, theme parks, cruise ships, and everything else to allow people to spend more and more and more with us. That strategy is still where they're going the last two big things Iger did before he left, were launching Disney Plus and buying Fox,Peter: LEt's be clear that Chappek isn't against any of those things. Strategically as you've pointed it out, he's on the same page. It's all just tactics not being quite the same as what Iger might have done or might now do.Edward: And even on tactics, I'm not sure, if you look at the things that have hurt the stock price and where Chap has taken ahead, like first of all, Disney Plus has grown faster than they ever thought they would. He over delivered on that. Whether that was his doing or the, the fact is the metric is much better than anyone expected, but there were mistakes along the way. He has fought. There's been lots of fights with the creative side of the organization. Chapek comes from the theme park side. He came into the CEO role and then immediately Covid hit and the theme parks all went to zero. So he was forced to figure out how to do Disney plus where all their revenues coming from for the foreseeable future. Now things have flipped and the theme parks are just minting money. They're doing really, really, really well. But he's pissed off a lot of people by raising prices dramatically. But again, I'm not sure what Iger would've done differently in that case because the demand for the theme parks has has gone way, way, way up. So in the short term, you can't go and build more theme parks. So supplies is what it is. And so you're left with two choices. Either you are raising prices or you are giving a poor consumer experience, either because the parks are just packed full, and they're just unpleasant, or you're turning away people at the door who have booked a vacation. And so none of those options seem great, and of those options, it feels like raising prices was probably the one that Iger would've done as well.Peter: Exactly. So here's the big question. I agree completely with that. It might be that how things play out now tactically and strategically would be the same regardless of which Bob is at the helm, but just having Iger just seems to have this warm glow that will just make the same tactics, not only more palatable but downright genius because they're coming from Iger instead of Chapek. What do you think?Edward: I think that's absolutely right. They're in such a tough spot right now. There's so much going on and it's super, super, super risky what they're trying to do. I think everyone knows that there's really no choice but to go down this path. But also everyone knows that it's a really hard path to go down. And so not only do you need to have the right strategy, which I think people think that is true. You need to have the right tactics, which frankly I don't think Chapek, if he messed up on tactics, it was on a marginal basis. But where there was a bigger mess up was a bunch of execution of those tactics. And so things like the Black Widow movie early on in the pandemic, they decided to take that out of the theaters and put it onto Disney plus. And I think that was a very rational tactical thing to do given the situation they're in. But in execution, Chapek got into a big fight with Scarlette Johansen, who really came down hard, sued Disney. They hurt their relationship with her. Now. Disney ends up hurting their reputation as a good place to go and work if you're a top tier creative. In the short term, maybe they make a little bit more money on the movie, but in the long run they damage the relationship with the very people that are creating the product that they need to excel with.Peter: Fair point. All right, let's pivot from DS to SBF and FTX. There you say that, or at least you're quoting SBF saying strategy was fine. The tactics were at fault. You don't really mean that, you're just saying that's what he said, but you think otherwise.Edward: I'm no financial expert, but I've been following it as closely as I can and it sure looks to me like there was all sorts of... So Fbf owned two companies. He had ftx, but he also had the trading arm, Alameda Research. And there was money traded back and forth between those two organizations. And what I understand is. So imagine if FTX had, I'm making up a number, 10 million tokens and they're sitting on them and those things are worth whatever someone's willing to pay for them and Alameda comes on and says, Hey, I'll buy one of your tokens for a thousand dollars. So now all of a sudden the stock value of those tokens is a thousand dollars times 10 million, which is a huge amount of money they're sitting on. And then they basically end up using that valuation as collateral to do all sorts of loans and leverage to go and do other things with their money. FTX then takes in a bunch of customer deposits and then loans those customer deposits over to Alameda. Alameda then is then sitting on a bunch of these tokens that they're using as collateral against the borrowing of that real money that people put into ftx. Alameda then loses a bunch of that money and it all comes tumbling down when they realize that their collateral is not worth anything. It's all made up collateral. That's my understanding of what happened. Nothing like that has happened exactly before, but things like that have happened before. It's effectively fraud. It's fraud and theft. SBF, however, went on and interviewed Kelsey Piper over at Vox, and his argument was hey, we were doing was great. We were doing all sorts of awesome things, but our record keeping was terrible. We just made a bunch of like rookie terrible, incompetent mistakes. The new CEO who came in to run the company, Is backing SPF up in that yeah, this whole thing is a mess. That everything here is. What was his quote? I quote, I quoted him on my piece. He said, never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. And this is from the guy who also oversaw the bankruptcy of Enron.So it was a mess. They clearly, clearly, clearly were tactically incompetent and SBF is claiming that they didn't know they were stealing all these funds. It's entirely possible that he's right because they seemed like they didn't really know anything that was going on. And there was no financial backups and no guardrails for anything. But generally the overall strategy was built on a house of cards to begin with. So whether their tactics were correct or not maybe it wouldn't have collapsed as badly if they had great tactics, but it was gonna collapse one way or other.Peter: In this case, it's not strategy versus tactics, as you say in the title of the piece, it's and. They're doing bad and both, and it's hard to, pin the blame on one type of decision or another.Edward: The hard part of writing this piece was that given the fact that their strategy was so unethical and terrible and their tactics were so incompetent, how did they manage to get as big as they did so that they caused this disaster to happen.Peter: It's crazy. But but then speaking of which, it takes us to our third character of the week, Elon Musk. Now, you and I had a conversation a couple weeks back. We were saying generally positive things about verification, badges and just the possibilities of getting the business model right. And of course it's too early to tell for sure. But, these couple of weeks since that conversation, well, things have gone differently.Edward: Specifically the thing that we talked about, which was the Twitter blue, $8 a month to get certified.Peter: Verified.Edward: Verified. Verified. And what happened was that the verification process was effectively just having a credit card. So it wasn't like they matched. Your name that you put on Twitter with the name on your credit card or check the address, or had you send a a driver's license with the verification, it was a matter of pay the $8 and you can name yourself whatever you want. In terms of. Strategic idea, allowing people to pay $8 to get certified seems like a very valid idea and a very, I don't know if it's, it is the right strategy, but arguably, at least we argued a couple of podcasts ago, is that it was a good strategy. In execution what that allowed them to do because they didn't create any of those guardrails, they didn't have any verification process beyond paying the $8 is people impersonated all sorts of companies. They impersonated Elon Musk, they impersonated giant companies and had them say ridiculous things with a certification check next to them, and it became a big joke. And so an example of potentially a good strategy with very weak tactical execution.Peter: And what about the broader issues? The way he's running the company, day to day tactics, strategy, whatever it is, it's not good, but what, which basket would you put it in?Edward: I think there's an overlap. First of all, part of it seems like he's kind of changing his strategy on the fly. He's going back and forth and changing what his strategy is, but I think in general, his thesis going into the company was that this company was mismanaged. We need to eliminate a large number of people at the company and replace them with other people. We need to change the culture of this place from one of working from 10:00 AM until 3:00 PM to one where you're working from 7:00 AM until midnight and coming in on the weekends and turning into a hard driving startup type culture with a much smaller team that's much more dedicated and highly compensated. And it feels like that's his strategy. And he wants to go to create a company that ships product really quickly, makes mistakes, fixes them, and keeps going. That is something that I think most owners of most businesses would want for their companies. The challenge becomes how do you get there from here? And that's where there's been lots of flailing and failing. That doesn't mean the whole process is gonna fail, but there's been lots of mistakes made in that process of getting from A to B. In a situation we're getting from A to A to B is gonna be hard no matter what, even if you did it perfect.Peter: So what's your longer term prognosis? Do you think that he'll get this strategy right and line up the tactics appropriately?Edward: I don't know. It's so hard to know. I think the strategy is right. The question is whether the company will survive the process of getting them there. They're burning through cash. As an example, they laid off a bunch of people via email that work in Europe, and you can't actually do that. It's illegal to do that in Europe, so all those people that they fired in Europe actually aren't fired, they turned off their salaries. They're not making any money anymore, but all those people have a class action lawsuit that's going to go against Twitter and there's going to be a huge fine. That type of stuff matters in a situation where it, if they succeed, it's gonna be by the skin of their teeth. They're the Amazon in 2001 where we need to keep doing everything right and working our butts off to keep this plane flying over the treetops so that we can take off and circle the planet. But before we can circle the planet, we need to get over these trees. If they get over the trees, I think there's a good argument. Twitter's a fantastic, unique product that can do all sorts of incredible things and far more than the old team was doing. But he still has to get over the trees and that's where it's a lot unclear.Peter: Yeah. So it takes us to kind of the bottom line, as you say, and I don't think anyone would disagree. Strategy becomes far more urgent in rapidly changing environments. Who could argue with that yet at the same time, in rapidly changing environments. We start rearranging deck chairs, which is far more tactical.Edward: I think when things are going smoothly, when things are not changing, strategy frankly doesn't matter very much. Tactics matter a little bit, and execution matters a lot. When you're in a place where things are changing rapidly and you need to get to someplace new, all of a sudden strategy matters a lot. But that doesn't mean that tactics and execution matter less. They still matter a lot too. It just becomes like everything matters. It's becomes so easy to fail. You only need one chin in the chain to break and you're not gonna get there.Peter: And I think all three of these cases show that interplay. So again, it's not strategy versus tactics, but focusing on the and, getting to sync up properly and, easier said than done. This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit marketingbs.substack.com/subscribe

Today’s episode further explores topics discussed in this week’s essay. In the preamble to that essay I said that there would be no content next week. I am going to reverse that. Next week will be an excerpt from Peter Fader’s new book. Stay tuned!Full Transcript:Peter: Ed, I love your piece on strategy versus tactics at Disney, Twitter and Dominion Cards. I love the way that you're weaving together a narrative that's taking three of the super hot, interesting topics and a fourth one that most people don't know about.Edward: It's funny, the whole Dominion Cards thing. I've been, I started playing this card game back in 2011. I went to the national Championships in 2012. And I just really enjoy it. It's like the only game I can think of where you actually need to figure out a strategy at the beginning of every game. I've been sitting on this idea of dominion cards as a way to talk about strategy versus tactics for many, many years now. And I've never felt really found the right kind of hook to put it in. And then when this thing happened at Disney on Sunday, I was like, aha, the hook is here. It's time to pull this out of the filing cabinet.Peter: Love it. Well, as a, reader of the column and as someone who thinks about these issues, there's kind of two natural questions that just has to be asked. I wanna get your take on it. So, first. How do you define or where do you draw the line between strategy and tactics?Edward: I think strategy is figuring out what you should be doing and it's trying to figure out what the end point is of where you're going for, and tactics is all the stuff that gets you there. Strategy can be done a bit in isolation. You can go back into your ivory tower and think about what the dynamics are coming out with your strategy and then tactics are going to be very much based on what's happening on the ground. What's happening at any given moment, how the competition is reacting, how economics is changing what type of people you have on your team and any given moment. Those are all tactical decisions like that a consultant is not going to be able to help you with unless he's actually there on the ground.Peter: So I always have a hard time with it, to be honest. Maybe this is just me being narrow minded or something. It's not just the next move is it the next three or four moves. Be specific about strategy versus tactics in chess, and then let's branch out to these other real world stories.Edward: I'm not an expert in chess. I'm actually teaching my kids how to play now, I'm learning along with them. But I think in chess there is a correct strategy. I think strategy in chess is things like control the center of the board would be a strategy. Be willing to sacrifice your piece in order to gain position in the board, or, move your pieces in such a way that you're able to castle fairly early in the game. Those would all be strategies, things that you're working towards over a longer period of time. Tactics are, given what my opponent has just done, what should I do next? And tactics can, you can look far into the future for tactics. There's nothing that stops you from looking nine moves ahead to the right tactic would be in that particular situation. But I think strategy stays in chess at least. I think strategy stays the same. There are correct strategies into chess and there are incorrect strategies in chess. Whereas tactics are gonna change every given game depending on what your opponent does.Peter: So let's take that, and again, it's still little fuzzy. I mean, you're being more specific, but still, and I'm not gonna press you on exactly where one begins and ends, but Disney. Disney. Disney. Disney. It seems like the narrative as you said is Iger had the strategy. Chapek's job is to come in and execute on it. Few missteps here and there. Expand on that beyond what you've said in the piece about that trade offering strategy and tactics.Edward: I think most people are agreed, even the disgruntled shareholders, is that Iger's strategy was the correct one or is the correct one, which is that the cable bundle is getting hammered and Disney in the past basically had a huge amount of leverage over the cable providers and was able to extract large amounts of money from the cable providers by the fact that they had this differentiated content both the traditional Disney content, but also the sports they had with ESPN. And that was a great place for Disney to be and it still is, frankly, they still extract a huge amount of money from the cable providers, but that is not the future. Clearly we see more and more people, especially young people cutting the cord, not going with cable television and moving into streaming. And it was really a question of when did Disney need to move in that direction and how long could they keep their pound of flesh from the cable companies and hold onto that as long as possible? So the strategy then becomes let's move on. Let's go direct to consumer and scale up our Disney Plus product. There's tactical problems in doing that because, Disney bought Fox, which came with 20th Century Fox, which allowed them to add a whole ton of more content to get like the breadth required to win in a streaming war. They got control over Hulu, but they didn't get full ownership of Hulu. And so Comcast still owns a chunk of Hulu in the US which makes all sorts of challenges for Disney on a tactical level on how to actually get to the place where they wanna be. But I think the strategy is clear. It's we wanna get to the point where we are owning that direct to consumer relationship. We are monetizing through a subscription product. We are monetizing through additional add-ons that people can do on top of that. And we are monetizing through our vast aray of merchandising, theme parks, cruise ships, and everything else to allow people to spend more and more and more with us. That strategy is still where they're going the last two big things Iger did before he left, were launching Disney Plus and buying Fox,Peter: LEt's be clear that Chappek isn't against any of those things. Strategically as you've pointed it out, he's on the same page. It's all just tactics not being quite the same as what Iger might have done or might now do.Edward: And even on tactics, I'm not sure, if you look at the things that have hurt the stock price and where Chap has taken ahead, like first of all, Disney Plus has grown faster than they ever thought they would. He over delivered on that. Whether that was his doing or the, the fact is the metric is much better than anyone expected, but there were mistakes along the way. He has fought. There's been lots of fights with the creative side of the organization. Chapek comes from the theme park side. He came into the CEO role and then immediately Covid hit and the theme parks all went to zero. So he was forced to figure out how to do Disney plus where all their revenues coming from for the foreseeable future. Now things have flipped and the theme parks are just minting money. They're doing really, really, really well. But he's pissed off a lot of people by raising prices dramatically. But again, I'm not sure what Iger would've done differently in that case because the demand for the theme parks has has gone way, way, way up. So in the short term, you can't go and build more theme parks. So supplies is what it is. And so you're left with two choices. Either you are raising prices or you are giving a poor consumer experience, either because the parks are just packed full, and they're just unpleasant, or you're turning away people at the door who have booked a vacation. And so none of those options seem great, and of those options, it feels like raising prices was probably the one that Iger would've done as well.Peter: Exactly. So here's the big question. I agree completely with that. It might be that how things play out now tactically and strategically would be the same regardless of which Bob is at the helm, but just having Iger just seems to have this warm glow that will just make the same tactics, not only more palatable but downright genius because they're coming from Iger instead of Chapek. What do you think?Edward: I think that's absolutely right. They're in such a tough spot right now. There's so much going on and it's super, super, super risky what they're trying to do. I think everyone knows that there's really no choice but to go down this path. But also everyone knows that it's a really hard path to go down. And so not only do you need to have the right strategy, which I think people think that is true. You need to have the right tactics, which frankly I don't think Chapek, if he messed up on tactics, it was on a marginal basis. But where there was a bigger mess up was a bunch of execution of those tactics. And so things like the Black Widow movie early on in the pandemic, they decided to take that out of the theaters and put it onto Disney plus. And I think that was a very rational tactical thing to do given the situation they're in. But in execution, Chapek got into a big fight with Scarlette Johansen, who really came down hard, sued Disney. They hurt their relationship with her. Now. Disney ends up hurting their reputation as a good place to go and work if you're a top tier creative. In the short term, maybe they make a little bit more money on the movie, but in the long run they damage the relationship with the very people that are creating the product that they need to excel with.Peter: Fair point. All right, let's pivot from DS to SBF and FTX. There you say that, or at least you're quoting SBF saying strategy was fine. The tactics were at fault. You don't really mean that, you're just saying that's what he said, but you think otherwise.Edward: I'm no financial expert, but I've been following it as closely as I can and it sure looks to me like there was all sorts of... So Fbf owned two companies. He had ftx, but he also had the trading arm, Alameda Research. And there was money traded back and forth between those two organizations. And what I understand is. So imagine if FTX had, I'm making up a number, 10 million tokens and they're sitting on them and those things are worth whatever someone's willing to pay for them and Alameda comes on and says, Hey, I'll buy one of your tokens for a thousand dollars. So now all of a sudden the stock value of those tokens is a thousand dollars times 10 million, which is a huge amount of money they're sitting on. And then they basically end up using that valuation as collateral to do all sorts of loans and leverage to go and do other things with their money. FTX then takes in a bunch of customer deposits and then loans those customer deposits over to Alameda. Alameda then is then sitting on a bunch of these tokens that they're using as collateral against the borrowing of that real money that people put into ftx. Alameda then loses a bunch of that money and it all comes tumbling down when they realize that their collateral is not worth anything. It's all made up collateral. That's my understanding of what happened. Nothing like that has happened exactly before, but things like that have happened before. It's effectively fraud. It's fraud and theft. SBF, however, went on and interviewed Kelsey Piper over at Vox, and his argument was hey, we were doing was great. We were doing all sorts of awesome things, but our record keeping was terrible. We just made a bunch of like rookie terrible, incompetent mistakes. The new CEO who came in to run the company, Is backing SPF up in that yeah, this whole thing is a mess. That everything here is. What was his quote? I quote, I quoted him on my piece. He said, never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. And this is from the guy who also oversaw the bankruptcy of Enron.So it was a mess. They clearly, clearly, clearly were tactically incompetent and SBF is claiming that they didn't know they were stealing all these funds. It's entirely possible that he's right because they seemed like they didn't really know anything that was going on. And there was no financial backups and no guardrails for anything. But generally the overall strategy was built on a house of cards to begin with. So whether their tactics were correct or not maybe it wouldn't have collapsed as badly if they had great tactics, but it was gonna collapse one way or other.Peter: In this case, it's not strategy versus tactics, as you say in the title of the piece, it's and. They're doing bad and both, and it's hard to, pin the blame on one type of decision or another.Edward: The hard part of writing this piece was that given the fact that their strategy was so unethical and terrible and their tactics were so incompetent, how did they manage to get as big as they did so that they caused this disaster to happen.Peter: It's crazy. But but then speaking of which, it takes us to our third character of the week, Elon Musk. Now, you and I had a conversation a couple weeks back. We were saying generally positive things about verification, badges and just the possibilities of getting the business model right. And of course it's too early to tell for sure. But, these couple of weeks since that conversation, well, things have gone differently.Edward: Specifically the thing that we talked about, which was the Twitter blue, $8 a month to get certified.Peter: Verified.Edward: Verified. Verified. And what happened was that the verification process was effectively just having a credit card. So it wasn't like they matched. Your name that you put on Twitter with the name on your credit card or check the address, or had you send a a driver's license with the verification, it was a matter of pay the $8 and you can name yourself whatever you want. In terms of. Strategic idea, allowing people to pay $8 to get certified seems like a very valid idea and a very, I don't know if it's, it is the right strategy, but arguably, at least we argued a couple of podcasts ago, is that it was a good strategy. In execution what that allowed them to do because they didn't create any of those guardrails, they didn't have any verification process beyond paying the $8 is people impersonated all sorts of companies. They impersonated Elon Musk, they impersonated giant companies and had them say ridiculous things with a certification check next to them, and it became a big joke. And so an example of potentially a good strategy with very weak tactical execution.Peter: And what about the broader issues? The way he's running the company, day to day tactics, strategy, whatever it is, it's not good, but what, which basket would you put it in?Edward: I think there's an overlap. First of all, part of it seems like he's kind of changing his strategy on the fly. He's going back and forth and changing what his strategy is, but I think in general, his thesis going into the company was that this company was mismanaged. We need to eliminate a large number of people at the company and replace them with other people. We need to change the culture of this place from one of working from 10:00 AM until 3:00 PM to one where you're working from 7:00 AM until midnight and coming in on the weekends and turning into a hard driving startup type culture with a much smaller team that's much more dedicated and highly compensated. And it feels like that's his strategy. And he wants to go to create a company that ships product really quickly, makes mistakes, fixes them, and keeps going. That is something that I think most owners of most businesses would want for their companies. The challenge becomes how do you get there from here? And that's where there's been lots of flailing and failing. That doesn't mean the whole process is gonna fail, but there's been lots of mistakes made in that process of getting from A to B. In a situation we're getting from A to A to B is gonna be hard no matter what, even if you did it perfect.Peter: So what's your longer term prognosis? Do you think that he'll get this strategy right and line up the tactics appropriately?Edward: I don't know. It's so hard to know. I think the strategy is right. The question is whether the company will survive the process of getting them there. They're burning through cash. As an example, they laid off a bunch of people via email that work in Europe, and you can't actually do that. It's illegal to do that in Europe, so all those people that they fired in Europe actually aren't fired, they turned off their salaries. They're not making any money anymore, but all those people have a class action lawsuit that's going to go against Twitter and there's going to be a huge fine. That type of stuff matters in a situation where it, if they succeed, it's gonna be by the skin of their teeth. They're the Amazon in 2001 where we need to keep doing everything right and working our butts off to keep this plane flying over the treetops so that we can take off and circle the planet. But before we can circle the planet, we need to get over these trees. If they get over the trees, I think there's a good argument. Twitter's a fantastic, unique product that can do all sorts of incredible things and far more than the old team was doing. But he still has to get over the trees and that's where it's a lot unclear.Peter: Yeah. So it takes us to kind of the bottom line, as you say, and I don't think anyone would disagree. Strategy becomes far more urgent in rapidly changing environments. Who could argue with that yet at the same time, in rapidly changing environments. We start rearranging deck chairs, which is far more tactical.Edward: I think when things are going smoothly, when things are not changing, strategy frankly doesn't matter very much. Tactics matter a little bit, and execution matters a lot. When you're in a place where things are changing rapidly and you need to get to someplace new, all of a sudden strategy matters a lot. But that doesn't mean that tactics and execution matter less. They still matter a lot too. It just becomes like everything matters. It's becomes so easy to fail. You only need one chin in the chain to break and you're not gonna get there.Peter: And I think all three of these cases show that interplay. So again, it's not strategy versus tactics, but focusing on the and, getting to sync up properly and, easier said than done. This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit <a href="https://marketingbs.substack.com/subscribe?utm_medium=podcast&amp;utm_campaign=CTA_2" rel="nofollow" target="_blank">marketingbs.substack.com/subscribe</a>

Marketing BS Podcast: Strategy vs Tactics

Marketing BS Podecast #3: Bluecheckmark Metrics (Now with Transcript!)

Marketing BS: Almost Real Fidelity

I have been playing around with some AI audio tools. This should allow all podcasts going forward to have full transcripts. It has also allowed for pretty fantastic text-to-voice applications. I spent an hour recording my voice to have it analyzed by the AI. This allows text editing of podcasts (i.e., In the live recording I say “price insensitive” when I should have said “price sensitive”. I can use a text editor to just delete and replace and the AI will put the new words in seamlessly - in my own voice. It’s like a personal deepfake).But the tool can do more than just find and replace words. Attached to this post is the full text of last week’s essay “Paying for Status” in audio form, read in my voice from an AI. It is also available via the Substack player, and all major podcast apps. If there is any interest at all, going forward I will include audio like this in all essays (and transcripts for all audio).The AI audio is not perfect, but, to me, it sounds a LOT better than most of the “robot” customer service voices one has to deal with in every day life. I would love your feedback on what you think of it. Just reply to this email. What else to expect this week:* This week’s essay is coming (Hopefully tomorrow. It was delayed due to Halloween). Topic is VR/AR and Meta’s new headset* Weekly marketing take with Peter Fader is on schedule for Thursday morning (now with a transcript!)* For those that are interested in our analytical exploratory take on the early Marvel Universe, a new Super Serious episode will also drop tomorrow - also now with a transcript for those who prefer to read rather than listenKeep it simple,Edward This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit marketingbs.substack.com/subscribe

I have been playing around with some AI audio tools. This should allow all podcasts going forward to have full transcripts. It has also allowed for pretty fantastic text-to-voice applications. I spent an hour recording my voice to have it analyzed by the AI. This allows text editing of podcasts (i.e., In the live recording I say “price insensitive” when I should have said “price sensitive”. I can use a text editor to just delete and replace and the AI will put the new words in seamlessly - in my own voice. It’s like a personal deepfake).But the tool can do more than just find and replace words. Attached to this post is the full text of last week’s essay “<a href="https://marketingbs.substack.com/p/marketing-bs-paying-for-status" rel="nofollow" target="_blank">Paying for Status</a>” in audio form, read in my voice from an AI. It is also available via the Substack player, and all major podcast apps. If there is any interest at all, going forward I will include audio like this in all essays (and transcripts for all audio).The AI audio is not perfect, but, to me, it sounds a LOT better than most of the “robot” customer service voices one has to deal with in every day life. I would love your feedback on what you think of it. Just reply to this email. What else to expect this week:* This week’s essay is coming (Hopefully tomorrow. It was delayed due to Halloween). Topic is VR/AR and Meta’s new headset* Weekly marketing take with Peter Fader is on schedule for Thursday morning (now with a transcript!)* For those that are interested in our analytical exploratory take on the early Marvel Universe, a new <a href="https://www.superserious616.com/" rel="nofollow" target="_blank">Super Serious</a> episode will also drop tomorrow - also now with a transcript for those who prefer to read rather than listenKeep it simple,Edward This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit <a href="https://marketingbs.substack.com/subscribe?utm_medium=podcast&amp;utm_campaign=CTA_2" rel="nofollow" target="_blank">marketingbs.substack.com/subscribe</a>

Marketing BS: "Paying for Status" Audio and Short Update

The experiment continues. Fader and Nevraumont explore the latest earnings results where brand spend seems to be up, while direct response spend is down. This is very different than any other downturn we have seen in the past. What is going on? We explore at least three theories.Thank you for the feedback on last week’s episode. I WILL work on getting some sort of “instant transcript” for these so they can be read as well as heard, but it may take me a while as it does not land on the top of my priority list. In the meantime know that these are very short and only once a week, so hopefully their value per minute of your time is high.Keep it simple,Edward This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit marketingbs.substack.com/subscribe

The experiment continues. Fader and Nevraumont explore the latest earnings results where brand spend seems to be up, while direct response spend is down. This is very different than any other downturn we have seen in the past. What is going on? We explore at least three theories.Thank you for the feedback on last week’s episode. I WILL work on getting some sort of “instant transcript” for these so they can be read as well as heard, but it may take me a while as it does not land on the top of my priority list. In the meantime know that these are very short and only once a week, so hopefully their value per minute of your time is high.Keep it simple,Edward This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit <a href="https://marketingbs.substack.com/subscribe?utm_medium=podcast&amp;utm_campaign=CTA_2" rel="nofollow" target="_blank">marketingbs.substack.com/subscribe</a>

Marketing BS Podcast Episode 2: Why is Brand spend increasing while DR is decreasing?

Two-part interviews with successful CMOs: Their careers and how they got to where they are, and a deep dive into marketing channels for a specific business.  Companion to the Marketing BS Newsletter by Edward Nevraumont marketingbs.substack.com

A new experiment!Wharton Professor Peter Fader and I are going to try something new. Ever Wednesday (give or take) we will spend 10-20 minutes discussing the marketing implications of something topical in the news. In this first episode we discuss the parallels between P&amp;G’s recent announcement that they are raising prices, and Netflix’s recent earnings call (and their move into a lower-priced ad-supported tier).Some relevant links:Peter’s two part interview with Edward in November 2020: Part one. Part two.A 2019 essay about Amazon Prime Day and discounting where I quote Peter: Happy Double Prime DayThe WSJ article we discuss in the episode (free link)The October 18th, 2022 Netflix earnings call transcript.We would love your feedback on this experiment. Please reply to this email with your thoughts. I will forward all messages to Peter (unless you tell me not to). We do NOT have transcripts for the episodes yet, but if there is interest I will work on a solution. The provider I have used for my CMO interviews would be too slow, but there are acceptable AI solutions now that should be able to turn things around quickly at reasonable quality.Keep is simple,Edward  This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit marketingbs.substack.com/subscribe

A new experiment!Wharton <a href="https://marketing.wharton.upenn.edu/profile/faderp/" rel="nofollow" target="_blank">Professor Peter Fader</a> and I are going to try something new. Ever Wednesday (give or take) we will spend 10-20 minutes discussing the marketing implications of something topical in the news. In this first episode we discuss the parallels between P&amp;G’s recent announcement that they are raising prices, and Netflix’s recent earnings call (and their move into a lower-priced ad-supported tier).Some relevant links:Peter’s two part interview with Edward in November 2020: <a href="https://marketingbs.substack.com/p/podcast-peter-fader-wharton-professor#details" rel="nofollow" target="_blank">Part one</a>. <a href="https://marketingbs.substack.com/p/fader2" rel="nofollow" target="_blank">Part two</a>.A 2019 essay about Amazon Prime Day and discounting where I quote Peter: <a href="https://marketingbs.substack.com/p/happy-double-prime-day" rel="nofollow" target="_blank">Happy Double Prime Day</a><a href="https://www.wsj.com/articles/procter-gamble-bets-inflation-wont-push-shoppers-to-trade-down-11665871386?st=ntuz6xhrjrtoqux&amp;reflink=desktopwebshare_permalink" rel="nofollow" target="_blank">The WSJ article we discuss</a> in the episode (free link)<a href="https://www.fool.com/earnings/call-transcripts/2022/10/18/netflix-nflx-q3-2022-earnings-call-transcript/" rel="nofollow" target="_blank">The October 18th, 2022 Netflix earnings call transcript.</a>We would love your feedback on this experiment. Please reply to this email with your thoughts. I will forward all messages to Peter (unless you tell me not to). We do NOT have transcripts for the episodes yet, but if there is interest I will work on a solution. The provider I have used for my CMO interviews would be too slow, but there are acceptable AI solutions now that should be able to turn things around quickly at reasonable quality.Keep is simple,Edward This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit <a href="https://marketingbs.substack.com/subscribe?utm_medium=podcast&amp;utm_campaign=CTA_2" rel="nofollow" target="_blank">marketingbs.substack.com/subscribe</a>

New Marketing BS podcast: Nevraumont and Fader

Stuart Wood

Interview: Stuart Wood, CEO Carvel Law, Part 2

Interview: Stuart Wood, CEO of Caravel Law, Part 1

Vineet Mehra

You can find Part One of my interview with Vineet Mehra here.In Part Two of the interview I spoke with Vineet about his time at Walgreens. We talked about what makes Walgreens/Boots different from CVS and their other competitors. We dove into how Vineet used the vast amounts of data Walgreens was collecting (&gt;80MM people in their US loyalty program) to fairly radically change business processes (including eliminating the flier completely). Enjoy.Transcript:Edward: This is part two of my interview with Vineet Mehra, Chief Growth and Experience Officer at Good Eggs. Today, we're going to dive into his time as CMO of Walgreens Boots Alliance.Hey Vineet, I think we can safely assume that our listeners are familiar with Walgreens. Walgreens is slightly behind CVS in terms of number of pharmacies in the US, but you're way ahead in terms of number of pharmacists. You can say the similar thing in the UK. Boots has almost twice as many locations as the number two player, but more than three times the number of pharmacists. Let's start there. Why do Walgreens and Boots have so many more pharmacists per location than their major competitors?Vineet: At the very core of Walgreens—and we'll focus on there for now—is this idea that the biggest asset the business had even in a digital age was that Walgreens had the best corners in America in terms of where our stores were located. You go to any major city, any suburb of a major city, places where you least suspect a Walgreens, and it's on that perfect corner. It's easy to get in and out of. It's centrally located. We had a Walgreens within 2–5 miles of every single person in America. That makes a really big difference in a business. Even in a digital age, believe it or not, physical location matters. I'm sure we'll get more into that, but that was a big part of what our difference was.Edward: Does that explain why you have more pharmacists? Because every location you have is a busier location than where your competitors are placed?Vineet: Yeah. We had some extremely busy locations and good corners where there's a lot of traffic. That probably does explain some of that for sure.Edward: How does the business do that? Is it just because you guys were around longer? It feels like every pharmacy would want to be in the best location. Why did Walgreens get the better locations and your competitors did not?Vineet: I definitely wasn't around for that period, but I'll tell you that the history of the company is fascinating at Walgreens. That idea of the best corners in America has been something that's been permeating in the company for multiple decades. While it sounds obvious, it's also not the cheapest play to go and acquire the best real estate in the country—the best corners—and build those out.I wouldn't say that that is the most obvious play in terms of economics, but Walgreens always had foresight. The team that built up this business up to almost 9000 stores across the country really focused on that fact. Isn't that how most great businesses are built? There are two or three things that initial leaders and founders think about, and they're uncompromising about it. In the case of Walgreens, it was all about finding the most convenient and easy locations for customers and patients to take care of their health. Edward: Does that philosophy continue? I know you used the word convenient. Clearly, most drugstores, pharmacies, and convenience stores—convenience stores even have the word convenience in their name. How much of that flows through the company, this idea of convenience? Being in those great locations is convenient. Are there other things that pushed you in that direction?Vineet: It's really about enabling people to take care of their health, but this idea of convenience is something that—as you see today—is all over the place. Convenience is taking different shapes and forms. Especially in a world like today where we live in an omnichannel world, people want to either pick up something. They want something delivered. They want something dropped off. There are so many different ways that people want to acquire the goods and services today that convenience remains a big part of not just Walgreens but of the industry. You think of the entire categories and businesses designing themselves around getting goods to you as quickly as possible, on demand as possible. I'd say that the Walgreens real estate strategy was just V1 of a world and human nature where people want things when they want them. That's especially true in healthcare and when you want to take care of a family.Edward: Let's talk a little bit about you coming on board. Clearly, the real estate play has already happened, but you got to keep this business growing. What are the next levels? What do you do as CMO to get this business growing? Because again, that's what you're responsible for inevitably, getting this thing to grow faster than it was before you came along.Vineet: It comes down to any job you get into. You look at what are your differentiated assets when you enter a role? Probably, that's part of selecting whether or not you join a company as well. Do you believe that if you join, there are differentiated assets that you can really leverage to drive competitive advantage? In this case, one of the things Walgreens Boots had was an unbelievable loyalty program membership. Walgreens had close to (say) 80 million, 90 million people in this loyalty program. Boots had—from a ratio standpoint—a similar percentage of the UK population. Let's call it 15 million–20 million.You put all that together. What I saw in a world where marketing was becoming increasingly digitized and increasingly programmatic was that we had access and understanding of what customers were doing because the vast majority of purchases happening at Walgreens were done as "logged-in users" of the Walgreens loyalty program. When you have access to that many customers and you have a platform like that, the opportunities in today's marketing ecosystem are endless. Step one was really thinking about what was the future of that loyalty program? How would we leverage our understanding of consumer behavior at the identity level in the most powerful way possible? That's where we went with our strategy. We call that mass personalization.Edward: Before you came on board, this loyalty program already existed. They already had these members, but you saw an opportunity to leverage them in a way they weren't doing before.Vineet: Yeah. The program was extremely successful, but it was largely a couponing program. You would log in and then get access to different coupons. You could use (if you recall) the Walgreens flyer or the paper pamphlet that will come into your mailbox every single week. There was a lot of that happening.You would get Walgreens points. You could use them to drive further discounts off the products you were buying. That's actually what it was. It was a promotion and discount program.Coming out of Silicon Valley myself right before the Walgreens opportunity, I saw an opportunity to drive personalization and not use such blunt instruments as general couponing, general paper flyers, and things going to people's homes.In today's world, if you get the right ad and MarTech in there, you can do things in a much more customized way. That's where we went off.Edward: This couponing program was not personalized coupons. If it was a diaper coupon, it went to everybody, whether or not they thought that person had kids or not.Vineet: There was some level of personalization, but it was things like you were part of a parent's club or you were part of another club. You were opting into different sorts of things where—as you know where the world's going today—can you almost predict what that person's next purchase is going to be and almost delight them before they're even thinking about the topic? It's all about can brands delight customers and do that at scale? That's what this strategy that we put in place called mass personalization was all about.Edward: That mass personalization, was it effectively hey, we're going to keep doing the coupon program we're doing before, but now, instead of sending everybody the same coupon or coupons based on their affinity groups, we're going to change those coupons up per person in a way that we think is going to drive conversion higher?Vineet: That was part of it, but it was so much bigger than that. It went all the way from shifting our media mix from being 70% bought in the upfronts—many of your listeners will know the upfront TV network buying situation—to 70% programmatic where we would buy most of our (let's say) CTV work and radio all programmatically because we could literally match customer cohorts through The Trade Desk and through DSPs into the the media world and get much more targeted in the messages we were sending.It went all the way from the media down to things like how we were doing couponing which became much more personalized. We actually eventually ended up eliminating the paper flyer and roto completely which was quite a big move at Walgreens because that was a huge part of the shopping experience and journey at Walgreens. Our coupons and our personalization became so much more effective from a redemption standpoint than just a blunt instrument and then all the way down to creating new revenue streams.We launched something called the Walgreens Advertising Group which was a way for CPG companies who really struggle with direct attribution of their marketing spend to actually buy into us almost like a media network and be able to track conversions with every dollar they spent.It went all the way from completely transforming our promo and couponing world, to programmatic media becoming the source of our growth dollars, to an advertising network, through to (lastly) the launching of a new app which was irreplaceable. I was in a retail pharmacy business at the height of COVID. People have to do vaccine setups, vaccination appointments, and testing. We created an app where personal health became the center of that app as opposed to couponing. The app became the digital front door for Walgreens which would then show you that you could go into shopping. You can go into healthcare. You can go into finding care. It was a total reinvestment in our app as well that became personalized to you as a user.Digital front door, media, couponing, and programmatic advertising really just transformed the infrastructure of the company.Edward: There's so much meat there. I want to dive into bits and pieces of this and we'll see how much time we have today. Let's talk about killing the flyer first. You had this flyer that existed for 100 years at Walgreens, and you killed it. First of all, how do you get that decision through internally to go and kill something that's been around for so long? Then, how do you know what it's costing you after you do it?Vineet: I don't know if it was really around for 100 years, but it's definitely around for quite a while. We're in this new golden age of marketing. What I love about this age we're in is that everything is measurable. Nothing has to be done with a blunt instrument.This was done very simply. We first ran A/B experiments. We took certain areas where we might have pulled the flyer, and we ran only couponing programs. We looked at redemption rates. We talked to manufacturers who were supporting a lot of those coupons. We basically looked at raw data and the cost of producing that flyer—which is not cheap. You've got to print it and there's a lot of labor that goes into planning this. It's almost like you're releasing a little mini magazine or you have local paper every single week because you got to pick every box. There was a lot of cost involved in that.We compared that cost to the upside of personalized couponing. We ran that in a very controlled way across the country in different areas with different cohorts and with different segments, and eventually got to the conclusion that hey, the data is now indisputable. The time is now. We made that call. Was it an easy call? No. Was it data-driven? Yes. Was it a popular call? I'd say with half the company, the people understood it. Probably, the other half of the company, to this day, would want it back because there are just no perfect decisions. You're inevitably going to leave some customers not happy with the fact that you make that call. But you take all of the costs and more importantly the mindshare of people who are investing weekly and making that flyer happen every week and you repurpose that to the future of what retail is going to be that also pays dividends. Less hard to measure, but sometimes as a leader, you've got to make those calls.Edward: Yeah. That's your limiting factor always, the number of smart people you have working for you and what they're spending their time on. What's the difference between couponing and flyers? Are those like electronic coupons? What do you mean by couponing?Vineet: The flyer was essentially something that would go into your home and you'd see all the sales at Walgreens that week. Couponing would be like you get those paper coupons you can cut out. What we moved to was much more digital couponing. Literally in your inbox, here are the best coupons for you this week. We would use that instead of the flyers themselves. Edward: Let's talk next about buying a television. You're buying 70% upfronts and then you switched to 70% programmatic television, is that right? Vineet: Programmatic media in general. Edward: A lot of programmatic media are things like digital paid social, Google Ad Network, and so on. Does that mean you shifted your spending from television to online digital?Vineet: Not necessarily. Programmatic is a word that gets used and abused in many ways in our industry. At least the way my mind captures it, there's the direct response which are AdWords and some of the social media networks that are there. We continued to do that. That was never going to change in our mix. What I'm talking about is more of the mid and the upper funnel where we did a lot of radio buys, TV buys, and some of that area that a lot of companies call brand media, a bit higher up in the funnel. A lot of that money was actually spent in the upfront. We would upfront-buy a whole bunch of TV inventory and lock that in. The problem with that is you don't have flexibility. If you try to cancel it, you get all these giant fees. It was really in that space around TV which we moved a lot more to things like CTV, over-the-top players, full-episode players, and things like Hulu, YouTube TV, et cetera. We started to shift a lot more money into still linear TV played on your screen but done through tools that were much more precise like connected TV and radio. Instead of going from general radio, we'd use things like Spotify and other ad networks that were much more logged-in, ID-based networks. You got to remember, because we had this loyalty program, we had IDs. We could actually match IDs in a much more powerful way than most companies could. For all intents and purposes, we almost created our own walled garden media network in a way. We were able to do that in a pretty powerful way.Edward: When you do that, do your CPMs go way up? When you're buying connected television or Spotify ads versus all city radio on the big station, your CPMs must be a lot higher. Vineet: CPMs will go up just due to scale. Frankly, a lot of those audiences in CTV are more expensive to buy than linear, but ultimately, effectiveness goes up. That's why I think you've got to really look at things like attribution and those kinds of things more than CPM to make these kinds of decisions. Edward: You could measure the lift when you started doing connected television because you could apply it to 80-million people on your loyalty program. How do you compare that to what it was before though? When you're running a national television ad, how do you know how effective that was?Vineet: It's what everyone does. What's that saying? Fifty percent of your marketing is wasted, you just don't know which half. I think the way you look at it is you look at things like foot traffic. You look at things like redemptions. You look at things like online site visitors. In the past, they were largely just multi-touch attribution tools that I would say are 60% at best. Even the best vendors in multi-touch will tell you these are not perfect tools. They're directional tools. But once you can get to ID-based and you can actually look at behaviors of groups of people that have been exposed to these ads within your own ecosystem, you can literally see what action they take after looking at that ad. It's almost taking a direct-to-consumer playbook to retail at scale. That's why we call it mass personalization.Edward: Is there a risk though that now, because you're doing these connected television, that's a lot more trackable? You spend $1 and you know you're making $1.50, whereas before, you were spending $1 and you didn't know how much you were making. To your point, you're 60% accurate. Is it possible that you end up trading accuracy for impact? Is it possible that television before was more impactful and you just didn't know?Vineet: It's possible. It's not that we moved out of TV. We were just rightsizing the amount of investment. We still did it upfront. I think that upfront TV is always going to play a role in large companies' marketing mix because you've got to raise top-of-mind awareness especially in a category like ours which is a high-frequency category. It played a role, but again, everything is A/B tested. We would take control groups, we would remix things, and then we would go to the next one. As long as as a marketer, you're focused on experimentation and A/B test-based decision-making, you can work your way through this world of imperfect data that we have. That was the approach that we took.Edward: Vineet, this has been fantastic. I would love to spend more time talking about basically the advertising group that you're building. I feel so many retailers are doing that now and I think digging into how you guys were thinking about it would be awesome, but we are going to wrap it up. Before we end, can you tell me a little bit about a quake book that you read that changed the way you think about the world?Vineet: Yeah. There's this amazing book by Bharath Anand—who I actually asked to join my board at Worldwide Effie—called The Content Trap. We live in a world now where with personalization, what's happening is we have so many channels we need to fill with content constantly. You've got journey after journey of email. You've got all these programmatic channels. You've got all these direct-response channels. The key really is how do you not get wound up in this trap of infinite content and instead focus very clearly on what the role of content is meant to do in every channel and really enable your business to not focus on volume but impact? It's a great book that is a great distraction of our time as marketers, which is how much content do I need? He really calls that the content trap. It's something worth talking about and reading.Edward: Vineet, thank you so much for your time today. This has been fantastic. Vineet: Thanks, Ed. Really appreciate it. Good to talk to you again.  This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit marketingbs.substack.com/subscribe

Interview: Vineet Mehra -- Former CMO Walgreens; Chief Growth + Experience Officer Good Eggs -- Part 2

Interview: Vineet Mehra -- Former CMO Walgreens; Chief Growth + Experience Officer Good Eggs -- Part 1

Angela Rizzo

eSentire

Interview: Angela Rizzo, CMO eSentire, Part 2

I wasn’t sure I would have a new essay for you this week. Unfortunately the new kiddo has had to spend more time in the hospital (nothing serious, but out of caution “just in case”). I’m not worried about him, but it has taken up a fair amount of time (beyond the normal baby-taking-care-of time). Rather than leave you with nothing this week (and next) I am polishing off this interview that has not been released yet. Angela WAS the CMO of eSentire, a leading company in the cyber-security space. Since the recording of this episode she has left eSentire and is looking for her next opportunity. If you would like to get in contact with her, please just reply to this email. (For all interviews you can click on the link next to the audio player to add the stream to a podcast player).TranscriptEdward: My guest today is Angela Rizzo, CMO of eSentire. Today we cover Angela's career and path to CMO—Sprint, EDS, Hewlett-Packard. Angela is now the CMO of eSentire, the global leader in managed detection of cyber threats. I'm super pumped to have this discussion.Angela, you were recently promoted from VP of marketing to CMO. How has your job changed? What did you do to get that promotion?Angela: I joined eSentire as VP of marketing in July of 2018. When I came on board, most of the marketing focus at that time was on face-to-face events. We knew that we needed to add more programs that delivered higher quality marketing-qualified leads.I realized that the team was really talented. They just needed a bit more direction and leadership support. I moved quickly to work with the team to expand our focus from an events-only focus to include integrated campaigns, focused on what issues the customers were really grappling with, and how eSentire MDR could solve those issues.We started doing more paid promotions—Google display ads, paid social media, SEM, SEO. I put in a lead-scoring program. We also started doing a lead-nurture program. We started to build transparency in reporting by creating new marketing dashboards in the sales force that covered everything from where were these MQLs being created to how much pipeline were we actually generating that was marketing-attributed.Edward: You were doing all that as the VP of marketing, or you didn't start doing that until you became CMO?Angela: That's correct. That's what I was doing as VP of marketing that I think led to the promotion to CMO.Edward: What happened when you became CMO? How did the job change? Did you take on other responsibilities, or was it just an escalated title and compensation package?Angela: No, I did take on more responsibilities. I actually took on the corporate comms function which I had never run before. That included analyst relations, public relations, community relations, and employee relations. This was January of 2020. I get the promotion at the end of the month, and then COVID hits at the end of February. Now, I'm finding myself focusing on how we need to communicate to our customers on what's going on with the company so they can be assured that we're still going to have 100% operations.Edward: Did you have any experience doing those things before you became CMO?Angela: No, I did not. Along with putting together the customer communications, we also worked doing employee communications. We were at a point prior to the pandemic where we were doing quarterly employee all-hands. We actually went weekly once the pandemic hit in March.We were actually pretty fortunate, Ed because the company was prepared to have every single employee work from home. Everybody started working from home in mid-March, and we were doing weekly all-hands meetings. As the CMO, I was actually pulling together the content, making sure that these meetings got scheduled. Our CEO and entire leadership team participated in every meeting because we felt that it was just critical that we kept everybody up-to-date on what was going on.If you recall, a year ago nobody really knew what was happening day-to-day. We have employees all over the world. We have employees in North America, Ireland, London, and Canada. We just needed to have this regular cadence of meetings to keep folks informed. I think at the end of the year, we ended up doing 20 all-hands meetings starting in mid-March.Edward: It worked out great. Obviously, you stepped into the role and you did fantastically. How did they trust you to do that though? You had no experience doing that particular part of the job. Why did they thrust you into that role?Angela: I demonstrated as VP of marketing when I first started that I could look across the organization and figure out what are the things that are either broken or need some TLC. In addition to the marketing function, I actually took on the business development reps when I first took on the VP of marketing role.I did that because I thought we could do a much better job flowing all of our leads and MQLs into the business development reps if we were part of the same team. I was demonstrating as VP of marketing that I could take on roles that might not have traditionally been part of marketing, and almost, I would say immediately, within a few weeks or a few months, start to show progress.Edward: When you took on those BDRs, you had never led a team of BDRs before. Is that correct?Angela: I did have some experience at HP. We had an SDR team down at Conway, Arkansas when I was running the cloud team. I worked with a small group of those SDRs. But this was a little bit different because the entire company was focused on this group of BDRs. They did nothing else other than support what we're doing at eSentire.They were aligned with sales, and I had convinced leadership that if we could align these BDRs with marketing, I really felt like we could improve productivity. We could make sure that they're focused on all the inbound leads as well as doing the outbound, and it would probably help us with better alignment across the employee base. I have to tell you, I'm proud to say that we did exceed all of our key objectives in the calendar year 2019 as we were going into 2020 when I received the promotion in January of 2020.Edward: Your success there with the BDRs, do you think that was instrumental towards the organization taking a risk on you, bringing you in as CMO, having you oversee these areas that you'd never overseen before?Angela: I was able to demonstrate that I really like to get my hands on the things that are most broken, and see what we can do to really fix them, and move them forward. This was an area at the time in the business that we really weren't getting what we needed out of this team. To turn it around and to see the progress within the first 30 days, and then to really see it mature over the next several quarters was really a feather in my hat. It really did help move the business forward in terms of providing more top-of-pipeline opportunities for sales reps.Edward: I want to go back now to see the path that got you to where you are now. What were you like when you were 12-14 years old?Angela: I'm number six out of seven kids. I was the entertainer in the family. I always had the ability to make people laugh. I love the crowd. When I was in junior high—I guess that would be when I was 12 or 14—I ran for student body president of the school and won. That was the beginning and maybe close to the end of my political career.I was a pretty happy kid. I was very upbeat, and I just loved surrounding myself with people. Back in the time I grew up, Ed, it was in the 60s and 70s. There wasn't an internet. There weren't iPads. There weren't cellphones. We played outside. We were always active, always engaged with other people. My dad worked, my mom stayed at home. It was pretty much a traditional family at that point.Edward: A little later on when you were about 18, you started doing stand-up comedy?Angela: Yes, 18 or 19 years old I did stand-up. People always encouraged me to try to do it. They thought I was funny. I thought I'll give it a shot. I have to tell you, the first time I was on stage and told a joke and got a laugh, it was amazing. It's like a drug. I have done stand-up comedy off and on throughout my life. The first time I did stand-up I was 19 years old, and then I didn't do it for a while.When I started working at Sprint, we started going to a local bar down the street from the office. I was going there doing amateur comedy nights once a week. I probably did it for a couple of months and then I thought, I want to focus on my career. I don't think being a standup comedian is really going to make it for me. I really want to focus my time and energy on building my career.Edward: What did you take away from that time, if anything, from years of comedy? Was it a pure distraction, or did you learn anything there that you use today?Angela: Back then, I was really struggling with my sexuality. I was gay and was having a hard time dealing with who I was and being my authentic self. I found that back then, I really couldn't talk about the things about my life because anytime you start to talk about your life you expose who you are and how you feel. The comedy that I was doing was very surface-level.Fast forward a few years later, I realized that once I could get on stage and just be myself, talk about my life, and be authentic, I think having that level of authenticity is really important because if you're hiding something, whether it's something personal about you or something you don't want people to know, you can't be truly authentic.What I learned from comedy was, yeah it's fun to get up, tell a joke, and get a laugh, but if you really want to do stand-up comedy, you really have to talk about your life and talk about who you are. I didn't really do that until probably, fast forward 15-20 years later when I was in Kansas City doing stand-up comedy and then really just being able to be my authentic self.Edward: Let's jump ahead a little bit. Where were you in your career when you were 25?Angela: This was a tough time in my life. I just mentioned being gay, and I was actually married when I was 19. I got recently divorced at 25. I was very disconnected from my family. I was unemployed at the time. I was having trouble finding work. I only had a high school diploma. I did not go to college because I got married at a very young age. It was a very difficult time and one of my brothers is a podiatrist, and I convinced him to hire me part-time just to help him in his office. He had an office in San Francisco.I would schedule the appointments for him. I'd do the billing. Those were the other key roles. One of the things that I had to do in this role is I had to rub lotion on the feet of old people. His patients were really old. I recall the moment that I was doing it for a patient and I just said to myself, this is not my life, I can't do this.It's circa 1987, Sprint at the time was headquartered in Burlingame, California and they were running a job fair. I applied and I was hired at Sprint as a customer service rep. That really was the big change in my life when I was 25 years old. I ended up getting on at Sprint, and then three months later, I was promoted to supervisor. Eighteen months later there was an opportunity to move to Kansas City.There was a huge contract that Sprint won that I thought, I can just start up my life over. I can start in a new city with a new job at this company that I've been with for a few years. Let's go for a few years. Let's see what happens. The rest is history. I've never looked back from that time.Edward: You spent 12 years at Sprint, moving up progressively more senior the whole time you were there. What skills did you develop there at Sprint that serve you now as CMO?Angela: It comes back to building great relationships with the people that you work with especially with customers. I love working with customers. I work very hard so that people—not only my peers and people who I work with but also customers—know that they can count on me. I took advantage of every opportunity that I was afforded at Sprint. I really developed this reputation as someone who could get stuff done.When I had the opportunity to move to Kansas City, I jumped. I thought I would be here in Kansas City for a few years. I was actually here for 10 years. I moved back to San Francisco and then back to Kansas City, but we might get into that. I have to tell you that in order to think about what skills I learned as a CMO, I was in a support position after I moved to Kansas City. I'd learned over time that the best thing that I could do is find ways to say yes when somebody came to you with a problem.Somebody wants something, how do I get to yes? It wasn't always that way. At first, when somebody would come to me with an issue, I would find all the reasons and excuses why it couldn't be done. Back at that time, I was really the office of no. It was because at that time, I had a boss who had very adversarial relationships with his peers. I realized I was modeling his behavior. He left Sprint. I started reporting to a new boss, and this is probably one of the people who has had the most influence in my life, my new boss at that time.Again, this was 1990-1991. Her name is Nancy Cole, and she taught me that in order to succeed, I need to focus on what could be done, not what could not be done. How do you say yes when somebody brings a problem? They don't want to hear why it's hard. They need you to figure out how to get it done. That approach and perspective changed everything for me.It was also at a time where I was encouraged to get my undergraduate degree. Nancy wanted to promote me to director but she couldn't do it until I had my degree. At the time, I was actually in a non-traditional college. I was going to school at night taking an accelerated program every five weeks, earning three credits. I needed to go faster so I doubled up on the course work in an accelerated program, two classes a week. These were four hours every evening and I was still working full-time.I ended up graduating with honors in '94 with a Bachelor in Business Administration, and then shortly thereafter, I was promoted to director. It really was this lesson of someone in sales, a customer, or someone in another department comes to you and they need something, how do you say yes? How do you figure out how to solve their problem?Edward: I want to jump ahead to your time at HP. You were there for a decade, advancing in sales, getting progressively more senior in sales, and then you switched into marketing. How did that happen?Angela: My entire career to date spans over 34 years in technology. I've had the opportunity to lead many functions in my career—sales, operations, customer service, product management. Marketing was the one area that had always interested me, and I'm always up for learning new things. When the opportunity presented itself for me to move into a leadership role from sales to marketing, I really jumped at the chance.Edward: I want to talk about how that happens though. You, obviously, at that point had demonstrated your ability in sales. Marketing is very different from sales, and you jumped in at a fairly senior level. What did they see in your sales skills that they thought you would excel in a marketing role?Angela: I've always had a knack to be able to translate really technical concepts to non-technical teams, look at what customer requirements are, and then translate what the customer requirements are back into the technical teams. We thought the skill would bode well in marketing, really understanding what is it that we're trying to deliver to the customers and how do we translate that back into not only the technical teams but into how we market the offerings.Edward: What are your productivity tricks? What do you do to be productive that most people don't do?Angela: I really believe that people do not need to be micromanaged. Most people and most people that I have come across in my career, there have been very few instances where I have come across an employee who doesn't want to do a good job. Most people want to do good. They want to succeed. They want to work hard. They just need guidance. They don't need to be micromanaged.I treat my relationships with my employees almost as a partnership. These are the things that we need to accomplish. This is the time frame of when we need to accomplish these things. Let's figure out how we're going to get there. Let's establish these goals. Let's measure. Let's adjust. Let's repeat. It really boils down to just trusting my team to do their jobs and being available to them when they need my support.Edward: Angela this has been fantastic. We'll pick this up tomorrow with a dive into your time at eSentire. This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit marketingbs.substack.com/subscribe

I wasn’t sure I would have a new essay for you this week. Unfortunately the new kiddo has had to spend more time in the hospital (nothing serious, but out of caution “just in case”). I’m not worried about him, but it has taken up a fair amount of time (beyond the normal baby-taking-care-of time). Rather than leave you with nothing this week (and next) I am polishing off this interview that has not been released yet. Angela WAS the CMO of eSentire, a leading company in the cyber-security space. Since the recording of this episode she has left eSentire and is looking for her next opportunity. If you would like to get in contact with her, please just reply to this email. (For all interviews you can click on the link next to the audio player to add the stream to a podcast player).TranscriptEdward: My guest today is Angela Rizzo, CMO of eSentire. Today we cover Angela's career and path to CMO—Sprint, EDS, Hewlett-Packard. Angela is now the CMO of eSentire, the global leader in managed detection of cyber threats. I'm super pumped to have this discussion.Angela, you were recently promoted from VP of marketing to CMO. How has your job changed? What did you do to get that promotion?Angela: I joined eSentire as VP of marketing in July of 2018. When I came on board, most of the marketing focus at that time was on face-to-face events. We knew that we needed to add more programs that delivered higher quality marketing-qualified leads.I realized that the team was really talented. They just needed a bit more direction and leadership support. I moved quickly to work with the team to expand our focus from an events-only focus to include integrated campaigns, focused on what issues the customers were really grappling with, and how eSentire MDR could solve those issues.We started doing more paid promotions—Google display ads, paid social media, SEM, SEO. I put in a lead-scoring program. We also started doing a lead-nurture program. We started to build transparency in reporting by creating new marketing dashboards in the sales force that covered everything from where were these MQLs being created to how much pipeline were we actually generating that was marketing-attributed.Edward: You were doing all that as the VP of marketing, or you didn't start doing that until you became CMO?Angela: That's correct. That's what I was doing as VP of marketing that I think led to the promotion to CMO.Edward: What happened when you became CMO? How did the job change? Did you take on other responsibilities, or was it just an escalated title and compensation package?Angela: No, I did take on more responsibilities. I actually took on the corporate comms function which I had never run before. That included analyst relations, public relations, community relations, and employee relations. This was January of 2020. I get the promotion at the end of the month, and then COVID hits at the end of February. Now, I'm finding myself focusing on how we need to communicate to our customers on what's going on with the company so they can be assured that we're still going to have 100% operations.Edward: Did you have any experience doing those things before you became CMO?Angela: No, I did not. Along with putting together the customer communications, we also worked doing employee communications. We were at a point prior to the pandemic where we were doing quarterly employee all-hands. We actually went weekly once the pandemic hit in March.We were actually pretty fortunate, Ed because the company was prepared to have every single employee work from home. Everybody started working from home in mid-March, and we were doing weekly all-hands meetings. As the CMO, I was actually pulling together the content, making sure that these meetings got scheduled. Our CEO and entire leadership team participated in every meeting because we felt that it was just critical that we kept everybody up-to-date on what was going on.If you recall, a year ago nobody really knew what was happening day-to-day. We have employees all over the world. We have employees in North America, Ireland, London, and Canada. We just needed to have this regular cadence of meetings to keep folks informed. I think at the end of the year, we ended up doing 20 all-hands meetings starting in mid-March.Edward: It worked out great. Obviously, you stepped into the role and you did fantastically. How did they trust you to do that though? You had no experience doing that particular part of the job. Why did they thrust you into that role?Angela: I demonstrated as VP of marketing when I first started that I could look across the organization and figure out what are the things that are either broken or need some TLC. In addition to the marketing function, I actually took on the business development reps when I first took on the VP of marketing role.I did that because I thought we could do a much better job flowing all of our leads and MQLs into the business development reps if we were part of the same team. I was demonstrating as VP of marketing that I could take on roles that might not have traditionally been part of marketing, and almost, I would say immediately, within a few weeks or a few months, start to show progress.Edward: When you took on those BDRs, you had never led a team of BDRs before. Is that correct?Angela: I did have some experience at HP. We had an SDR team down at Conway, Arkansas when I was running the cloud team. I worked with a small group of those SDRs. But this was a little bit different because the entire company was focused on this group of BDRs. They did nothing else other than support what we're doing at eSentire.They were aligned with sales, and I had convinced leadership that if we could align these BDRs with marketing, I really felt like we could improve productivity. We could make sure that they're focused on all the inbound leads as well as doing the outbound, and it would probably help us with better alignment across the employee base. I have to tell you, I'm proud to say that we did exceed all of our key objectives in the calendar year 2019 as we were going into 2020 when I received the promotion in January of 2020.Edward: Your success there with the BDRs, do you think that was instrumental towards the organization taking a risk on you, bringing you in as CMO, having you oversee these areas that you'd never overseen before?Angela: I was able to demonstrate that I really like to get my hands on the things that are most broken, and see what we can do to really fix them, and move them forward. This was an area at the time in the business that we really weren't getting what we needed out of this team. To turn it around and to see the progress within the first 30 days, and then to really see it mature over the next several quarters was really a feather in my hat. It really did help move the business forward in terms of providing more top-of-pipeline opportunities for sales reps.Edward: I want to go back now to see the path that got you to where you are now. What were you like when you were 12-14 years old?Angela: I'm number six out of seven kids. I was the entertainer in the family. I always had the ability to make people laugh. I love the crowd. When I was in junior high—I guess that would be when I was 12 or 14—I ran for student body president of the school and won. That was the beginning and maybe close to the end of my political career.I was a pretty happy kid. I was very upbeat, and I just loved surrounding myself with people. Back in the time I grew up, Ed, it was in the 60s and 70s. There wasn't an internet. There weren't iPads. There weren't cellphones. We played outside. We were always active, always engaged with other people. My dad worked, my mom stayed at home. It was pretty much a traditional family at that point.Edward: A little later on when you were about 18, you started doing stand-up comedy?Angela: Yes, 18 or 19 years old I did stand-up. People always encouraged me to try to do it. They thought I was funny. I thought I'll give it a shot. I have to tell you, the first time I was on stage and told a joke and got a laugh, it was amazing. It's like a drug. I have done stand-up comedy off and on throughout my life. The first time I did stand-up I was 19 years old, and then I didn't do it for a while.When I started working at Sprint, we started going to a local bar down the street from the office. I was going there doing amateur comedy nights once a week. I probably did it for a couple of months and then I thought, I want to focus on my career. I don't think being a standup comedian is really going to make it for me. I really want to focus my time and energy on building my career.Edward: What did you take away from that time, if anything, from years of comedy? Was it a pure distraction, or did you learn anything there that you use today?Angela: Back then, I was really struggling with my sexuality. I was gay and was having a hard time dealing with who I was and being my authentic self. I found that back then, I really couldn't talk about the things about my life because anytime you start to talk about your life you expose who you are and how you feel. The comedy that I was doing was very surface-level.Fast forward a few years later, I realized that once I could get on stage and just be myself, talk about my life, and be authentic, I think having that level of authenticity is really important because if you're hiding something, whether it's something personal about you or something you don't want people to know, you can't be truly authentic.What I learned from comedy was, yeah it's fun to get up, tell a joke, and get a laugh, but if you really want to do stand-up comedy, you really have to talk about your life and talk about who you are. I didn't really do that until probably, fast forward 15-20 years later when I was in Kansas City doing stand-up comedy and then really just being able to be my authentic self.Edward: Let's jump ahead a little bit. Where were you in your career when you were 25?Angela: This was a tough time in my life. I just mentioned being gay, and I was actually married when I was 19. I got recently divorced at 25. I was very disconnected from my family. I was unemployed at the time. I was having trouble finding work. I only had a high school diploma. I did not go to college because I got married at a very young age. It was a very difficult time and one of my brothers is a podiatrist, and I convinced him to hire me part-time just to help him in his office. He had an office in San Francisco.I would schedule the appointments for him. I'd do the billing. Those were the other key roles. One of the things that I had to do in this role is I had to rub lotion on the feet of old people. His patients were really old. I recall the moment that I was doing it for a patient and I just said to myself, this is not my life, I can't do this.It's circa 1987, Sprint at the time was headquartered in Burlingame, California and they were running a job fair. I applied and I was hired at Sprint as a customer service rep. That really was the big change in my life when I was 25 years old. I ended up getting on at Sprint, and then three months later, I was promoted to supervisor. Eighteen months later there was an opportunity to move to Kansas City.There was a huge contract that Sprint won that I thought, I can just start up my life over. I can start in a new city with a new job at this company that I've been with for a few years. Let's go for a few years. Let's see what happens. The rest is history. I've never looked back from that time.Edward: You spent 12 years at Sprint, moving up progressively more senior the whole time you were there. What skills did you develop there at Sprint that serve you now as CMO?Angela: It comes back to building great relationships with the people that you work with especially with customers. I love working with customers. I work very hard so that people—not only my peers and people who I work with but also customers—know that they can count on me. I took advantage of every opportunity that I was afforded at Sprint. I really developed this reputation as someone who could get stuff done.When I had the opportunity to move to Kansas City, I jumped. I thought I would be here in Kansas City for a few years. I was actually here for 10 years. I moved back to San Francisco and then back to Kansas City, but we might get into that. I have to tell you that in order to think about what skills I learned as a CMO, I was in a support position after I moved to Kansas City. I'd learned over time that the best thing that I could do is find ways to say yes when somebody came to you with a problem.Somebody wants something, how do I get to yes? It wasn't always that way. At first, when somebody would come to me with an issue, I would find all the reasons and excuses why it couldn't be done. Back at that time, I was really the office of no. It was because at that time, I had a boss who had very adversarial relationships with his peers. I realized I was modeling his behavior. He left Sprint. I started reporting to a new boss, and this is probably one of the people who has had the most influence in my life, my new boss at that time.Again, this was 1990-1991. Her name is Nancy Cole, and she taught me that in order to succeed, I need to focus on what could be done, not what could not be done. How do you say yes when somebody brings a problem? They don't want to hear why it's hard. They need you to figure out how to get it done. That approach and perspective changed everything for me.It was also at a time where I was encouraged to get my undergraduate degree. Nancy wanted to promote me to director but she couldn't do it until I had my degree. At the time, I was actually in a non-traditional college. I was going to school at night taking an accelerated program every five weeks, earning three credits. I needed to go faster so I doubled up on the course work in an accelerated program, two classes a week. These were four hours every evening and I was still working full-time.I ended up graduating with honors in '94 with a Bachelor in Business Administration, and then shortly thereafter, I was promoted to director. It really was this lesson of someone in sales, a customer, or someone in another department comes to you and they need something, how do you say yes? How do you figure out how to solve their problem?Edward: I want to jump ahead to your time at HP. You were there for a decade, advancing in sales, getting progressively more senior in sales, and then you switched into marketing. How did that happen?Angela: My entire career to date spans over 34 years in technology. I've had the opportunity to lead many functions in my career—sales, operations, customer service, product management. Marketing was the one area that had always interested me, and I'm always up for learning new things. When the opportunity presented itself for me to move into a leadership role from sales to marketing, I really jumped at the chance.Edward: I want to talk about how that happens though. You, obviously, at that point had demonstrated your ability in sales. Marketing is very different from sales, and you jumped in at a fairly senior level. What did they see in your sales skills that they thought you would excel in a marketing role?Angela: I've always had a knack to be able to translate really technical concepts to non-technical teams, look at what customer requirements are, and then translate what the customer requirements are back into the technical teams. We thought the skill would bode well in marketing, really understanding what is it that we're trying to deliver to the customers and how do we translate that back into not only the technical teams but into how we market the offerings.Edward: What are your productivity tricks? What do you do to be productive that most people don't do?Angela: I really believe that people do not need to be micromanaged. Most people and most people that I have come across in my career, there have been very few instances where I have come across an employee who doesn't want to do a good job. Most people want to do good. They want to succeed. They want to work hard. They just need guidance. They don't need to be micromanaged.I treat my relationships with my employees almost as a partnership. These are the things that we need to accomplish. This is the time frame of when we need to accomplish these things. Let's figure out how we're going to get there. Let's establish these goals. Let's measure. Let's adjust. Let's repeat. It really boils down to just trusting my team to do their jobs and being available to them when they need my support.Edward: Angela this has been fantastic. We'll pick this up tomorrow with a dive into your time at eSentire. This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit <a href="https://marketingbs.substack.com/subscribe?utm_medium=podcast&amp;utm_campaign=CTA_2" rel="nofollow" target="_blank">marketingbs.substack.com/subscribe</a>

Interview: Angela Rizzo, CMO eSentire Part 1

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