Creative Advertising’s Holy Grail? Almost.

The June 2013 issue of the Harvard Business Review contained a gem so powerful that it could rewrite creative advertising strategy overnight. “Creativity in Advertising: When It Works and When It Doesn’t,” is a summary article of a study that reviewed 437 TV advertising campaigns for 90 FMCGs over a span of five years.

The study found that creative ads no only perform better, but also actually do drive incremental revenue. You might think “Duh!” and also mimic a face-palm, but there are two very important findings here. First, rather than correlation, there’s now documented causation. Second, it’s the type of creativity that matters. Not all creativity is equally rewarded, some can actually hurt you, and its application is even product-specific.

Creativity is made up of five dimensions: Originality, Flexibility, Elaboration, Synthesis, and Artistic Value, and the most powerful combination of creativity is Originality + Elaboration. The article explains each dimension very well, which is why spending $6.95 on the PDF (if you are not already an HBR subscriber), is will be the best investment you have made as a marketer this millennium so far.

However, there is one giant caveat, which the authors are completely up-front about, but never delve in to: all the ads ran in Germany. What does that mean to you?

Stories abound about how ill-named products didn’t sell well when introduce into other countries, and it is now well known and documented that you can’t just move a product and advertising campaign from one country to another, from one culture to another.

A simple example is a life insurance TV campaign that ran in South America. The scene is set at night, and the camera is pointed at a bouncing car with fogged-up windows. Emanating from the car are certain sounds made by a woman that suggest that at present a very personal and private interaction is occurring; one that is known to occasionally occur in cars, but more often in bedrooms. As the camera ultimately reveals, the woman is performing CPR on her partner, which is a physically demanding act that would cause windows to fog up and the car to bounce suggestively.

The ad was successful in Brazil, because it is culturally relevant and appropriate. The ad agency (McCann-Erickson) than ran the same ad in Chile, where it cause outrage. What went wrong? Both countries are relatively close to one another, geographically speaking on a global scale, so shouldn’t they be similar enough culturally? Chile, it turns out, is a culturally very different from Brazil; it is politically, economically, and sexually a very conservative country. It didn’t matter that both nations are located in South America and had strong economic ties. What did matter is that they were cultural opposites.

So, how do you know that an ad successful in Germany would also be successful in the U.S.? More specifically, how do you know that the creative dimensions relevant to German culture map well to U.S. culture? How do you map culture to culture?

Luckily, there are culture assessment and mapping tools out there. The obvious one is the Cultural Orientation Indicator (COI PDF), developed by TMC, a subsidiary of Berlitz (the language people). It is actually a personal assessment tool. The COI focuses on the self and measures ten cultural dimensions, but I’ve used it to map countries’ cultures against one another. You’ll need to pay to gain access.

Here’s some example output:

Cultural Orientation Indicator Sample Output

Another good tool—this one is free (!)—was developed by Dutch professor and researcher Geert Hofstede, and is available via the Hofstede Centre’s website. Here you can assess and compare cultures on six dimensions (quite different from the COI).

Neither tool lets you query for similar cultures, but you can select individual countries and compare them to one another. Also, neither tool will tell you outright if the five creative dimensions correlate across cultures, but it’s a better approach to leveraging HBR’s insights into creativity than simply trying to replicate your advertising creative across different cultures and hoping for the same results. At least you are now empowered to better assess whether creative dimensions that play well in Germany are also likely to translate well into other countries and cultures for which you have advertising responsibility.

The true power of HBR’s research will be revealed over time as people match cultures against the five creative dimensions. That is the Holy Grail.

If you want to learn how to do this well, and how to develop your Cultural Intelligence (CQ), your best bet is to reach out to the Najafi Global Mindset Institute at the Thunderbird School of Global Management and find out where you rank in the Global Mindset Inventory (YouTube), so that you can learn how to best exploit these cultural mapping tools.

You Don’t Have a Brand

Last week I attended BtoB Magazine’s “The Evolving B2B Purchase Process: Conquering Unpredictability with Full-Funnel Marketing” webinar. Very interesting research findings were presented, and the Q&A was excellent.

The last question in the Q&A drove me crazy, however: Where and how do we begin our marketing efforts for “…a relatively new brand with no awareness?”

It wasn’t the content of the question that bothered me—and the answer was very good—it’s the context that gave me palpitations, and almost caused me to scream “YOU DON’T HAVE A BRAND!” into my headset. Of course, in cyberspace no one can hear you scream, especially when you are on mute.

I hold in strong belief—and have previously stated here—that brands are not “made” nor “owned” by companies, but by consumers. Companies may own trademarks, but branding is a consumer’s mental process. Companies try to influence this process, yet ultimately they have no true control over it. Correlation of a consumer action to a marketer’s efforts does not equal its causation.

I’ve never been able to prove my belief. Finally, however, I happened upon a model that echoes my own conviction: McCracken’s Meaning Transfer Model.

In “Who is the Celebrity Endorser? Cultural Foundations of the Endorsement Process” (Journal of Consumer Research, Vol. 16, No. 3 (Dec., 1989), pp. 310-321; available on JSTOR), McCracken stipulates that “there is a conventional path for the movement of cultural meaning in consumer societies.”

While the article speaks to celebrity endorsements—how a personality imbues its persona onto a product—the model’s underpinnings rest on “cultural foundations” (read: psychology) shared by all of us (in the West).

There are three steps in the model. First, to pick the right celebrity “the advertiser identifies the cultural meanings intended for the product.” This speaks to product positioning—not tactically (conventional benefits) or strategically (competitive benefits), but psychologically. Think BMW’s “Ultimate Driving Machine,” versus Volvo’s safety and security positioning. Both are cars that will get you to where you want to go, but their positioning appeals to different audiences. This is where companies place their marketing chips for decades.

Next, “the advertiser surveys the culturally constituted world for the objects, persons, and contexts that already contain and give voice to these mednings.” The producer/advertiser seeks an individual/celebrity possessing elements congruent with the psychological profile they are trying to assign to their product. The advertiser similarly hopes that aspiration to these traits is resident within the target buyer. For example, Sebastian Vettel might be a good celebrity endorser for the Ultimate Driving Machine. For our purpose the object does not have to be a celebrity, but can be anything else that already carries the intended strong metaphorical meaning. Granite, for example, can represent the foundational financial strength that a bank wishes to emphasize.

Third, “the final act of meaning transfer is performed by the consumer, who must glimpse in a moment of recognition an essential similarity between the elements and the product in the ad…Consumers turn to their goods not only as bundles of utility with which to serve functions and satisfy needs, but also as bundles of meaning with which to fashion who they are and the world in which they live (Belk 1988).”

Just in case you didn’t catch that, while the meaning transfer steps are linear and sequential, 1-2-3, the meaning transfer motion is not. Meaning is not transferred from the producer into the product, and then from the product to the consumer. Consumers transfer their own meaning onto the product! The consumer has to be accepting and complicit in permitting the producer’s hoped for meaning—but the consumer may very simply attach an entirely unintended meaning, away from the producer’s intent. This is why consumer insights departments are so critical.

When consumers attach the same meaning repeatedly, and that action constitutes a preference over a product with similar tactical benefits, then brand-creation is in process, but not yet complete. A product is only a brand when it is chosen often enough, with high repetition, by a large number of people within the addressable target audience. Otherwise a product is just a commodity, regardless of price or positioning.

A good example of consumer brand ownership is Tropicana Orange Juice’s “rebranding” a few years back. A simple packaging change—the actual product inside the package had not changed—destroyed the meaning that consumers had themselves attached to the product. The updated look of the juice container was described as generic, and generic juice at a premium price was incongruent with consumers’ psychological needs. Ultimately, Tropicana was forced to retreat.

Most importantly, it means that companies must continuously research and learn why consumers are choosing their products, and then for the same product target the correctly personalized message at the right audience, in the right channel. Mixed messaging sends mixed signals that cause confusion and lead to brand erosion.

It also means that companies are not brand owners, they are brand stewards.

Persistence Hunting

The other day, watching a program on human origins and evolution, I learned or the term persistence hunting. It’s a technique we humans devised to hunt and kill fast [meaty] prey. The gist of it is to pursue a target for so long until it too exhausted (e.g., heat shock) to escape any further, making for an easy kill.

There’s an analogous tactic in digital marketing called “retargeting.” Retargeting is dead simple. Potential buyers visit a vendor’s website, get cookied, and then get served ads for the vendor’s offering on other sites. In essence, marketers get to pursue potential customers to the point of exhaustion, until they’re finally ready to buy (get killed)—or so the thinking goes.

However, retargeting is missing a major point—it needs to be contextually relevant. Presently I’m getting pursued by Zvox, Watchismo, Hilton, and Medifast. Everywhere I go on the Web I’m being bombarded by ads for these companies’ products and services. But the ads themselves are not relevant to what I’m actually interested in at the moment. And that’s creepy.

While talking to Retargeter.com last week about possibly becoming an advertising client, the idea of being contextually relevant to the audience was a new one to them. While the claim that they reach 98% of the Web may be appealing to some, the idea of my stalking business prospects in their personal lives was repulsive to me.

Rather than retargeting on an opt-out basis, us marketers need to be given the choice of opt-in advertising; being able to choose specific sites where our ads would show, so that they make sense within the editorial context and frame of mind of our “prey.”

I don’t want to exhaust my potential customer with my commercial messaging. I want to befriend them.

At the heart of retargeting seems to be the primary need of the ad distributor to maximize their own profitability in the short term, without regard for the needs of me or my intended audience.

It would be such an easy fix.

MKTG PSYCH 101

Recent articles such as Marketing is Dead (HBR Blog) would have you believe that our profession is on the outs. On the contrary, of course, our job has always been to understand the buyer, matching benefits to needs in a meaningful and trustworthy way. The current misguided hype around the demise of marketing primarily comes from a misunderstanding of what marketing is: the process of getting a product to market and into the hands of buyers. This includes R&D, positioning, messaging, pricing, promotion, advertising, sales, and customer care.

Marketing is as much about the prospect as it is about the customer (or should be). And it’s not dead.

What has changed dramatically in the past few years are tactics employed in marketing, but the guiding principles have remained the same. To succeed in attracting buyers, there are three basic psychological concepts that marketers must leverage when developing messaging: cognitive fluency, social proof, and cognitive dissonance (the sequence changes to social proof, cognitive fluency, and cognitive dissonance if you are trying to establish yourself for the very first time).

Cognitive fluency basically means that something can be easily understood. And if something is easy to grasp that also signals to the brain that it is true—Occam’s Razor, or the that-makes-sense-to-me effect. This has profound implications on your positioning.

Let’s assume you have a product or service for which a category doesn’t presently exist. In theory you have a tremendous opportunity, because you can define and own a new category (think eBay). The unfortunate downside is that it actually takes a tremendous amount of resources—especially time and usually a lot of money—to do this missionary work successfully.

If you continuously need to explain your new category, you may be building up long-term brand equity should your business or product launch turn out successful. But in the interim, however, you are not enabling cognitive fluency, as potential buyers need to first spend countless brain cycles on making sense of your message. While they’re doing that they are not thinking about the benefits of your offering, and are thus significantly more likely to abandon the idea of engaging with you, since they are not building an emotional connection with your message.

That is because we humans naturally categorize, which helps us understand, only after which we can process further input. If I cannot very quickly categorize what you do, I simply seek other message that I can rapidly absorb and act on.

An easier approach that enables cognitive fluency is to pick an existing category, but carve out whitespace with that environment. Now, because the listener can rapidly categorize you, you can move the conversation more quickly, because you are being given license to explain how you are unique within that category. You are permitted to espouse on your unique selling proposition (USP, the thing that sets you apart). This is a fun conversation for both sides to have as all involved in this exchange of ideas and knowledge can contribute to the conversation, either by asking intelligent questions, or hopefully providing meaningful information.

The litmus test for cognitive fluency is not whether your product is easily explained, but if it’s easily understood.

Social proof has been in the marketing news a lot lately. That’s because it works. Social proof is the very basic concept that if you yourself are not familiar with something, but others you trust are and are happy with that product, you are significantly more likely to try the product. “If it’s good enough for Person X, it’s good enough for me.” Examples include movie recommendations, VC investment decisions (why you need to have a strong board), automobile purchases, etc. The list is literally endless.

Beware, however, that social proof can be used surreptitiously to move buyers to a purchase without that “proof” itself being true or validatable. Having only “4 more of [something] in stock” may or may not be true, but having only “two tickets left at this price” is almost always an outright lie. This feeling that an offer may cease to exist because others are seemingly acting upon it triggers a natural acquisition instinct; scarcity a market can make. While the proof itself isn’t really social—as it involves strangers, it is more societal or communal—some marketers hope to create then exploit a buyer’s emotional reaction.

Marketers are well advised to be truthful in their social proof messaging, lest lies and deceit reveal themselves at a later time to cause brand equity erosion. Don’t trade-short term gains for long-term profits (read: customer loyalty).

Fred Wilson (AVC.com) summarized the importance of social proof in his seminal Marketing blog post where he wrote that “marketing is for companies who have sucky products.” The point is that aside from needing to make sure that you actually have a good product, equally important is that your first customers (“Innovators”) are ecstatic about it. This will (a) make them share their experience with others and provide you with the most powerful marketing of all, word of mouth (e.g., social proof), and (b) provide you with truthful customer testimonial (e.g., social proof) on which others can safely base their purchasing decisions.

“Crossing the Chasm” (HarperBusiness, 1990) relies entirely on social proof. The next group of buyers only ever buys because the previous group—on whose recommendation the current buying decision hinges—has successfully adopted the product.

Social proof = trust = reduced risk.

Cognitive dissonance refers to holding competing or incongruent thoughts in the brain at the same time. Apparently that’s a feeling—almost an emotion—which people don’t like. But it also makes the brain think—literally. Most of the time the brain is at rest, helping the body perform autonomic functions. Every once in a while the brain actually signals to us that we should be paying attention to something; that’s the thinking part.

Cognitive dissonance causes thinking because conflicting beliefs must be resolved. The cognitive dissonance theory states that we change our attitude toward one of the conflicting beliefs to once more achieve harmony. However, in marketing the approach is that both conflicting beliefs are indeed true, and what must change is our attitude toward the outcome, which we previously thought untrue or impossible. For example, you can perspire profusely but still smell great, or you can drink coffee that whitens your teeth.

And that’s a powerful ally in messaging. Your USP must evoke “positive” cognitive dissonance by promoting a benefit that was previously considered a trade-off. But this USP must also be true! If your USP does not deliver on its promise, word will get around quickly and your competitors will crush you.

A USP that creates positive cognitive dissonance and actually delivers on its promise unhinges the competition in such a way that it cannot easily combat your claims.

Positive cognitive dissonance = yes, you can have your cake and eat it, too.

All three concepts highlight why a strategic approach to marketing is so critical. Without a good understanding of the buyer’s perception of your product you will never be able to categorize yourself in a meaningful manner that enables cognitive fluency. Without happy customers you will not experience social proof. And without a USP that enables positive cognitive dissonance you will not set yourself apart from your competition.

B2B Marketing: Then & Now

Copyright Steve Patrizi

Don’t gotta say more than that (but you can read Steve Patrizi’s post here). Pairs well with The Seller’s Compass™.

Oops!

The other day I received an email from Dean & Deluca with the subject line: “Oops!”

Oops what? I hadn’t order anything. Was this spam? Did D&D get hacked? Did I leave my credit card somewhere? Am I receiving a gift (cheese please!).

WTO!!! (What the Oops!)

Turns out, D&D had apparently sent me a marketing email earlier with a link to an item that was out of stock—or so they claim… To patch things up I was offered a coupon for 10% off my entire next purchase. Talk about pro-active customer care. Or was it?

I am suspicious; I smell the next evolution in relationship marketing. It’s dead simple to purposely generate an “adverse” event like an out-of-stock SKU, and then leverage that occasion into a “positive” situation for the vendor.

D&D’s email doesn’t say which product was out of stock, they only apologize for something being out of stock. Then they offer me a discount on hugely overpriced merchandise (some of which I’d really like to own). Any marketer could purposely create a minor annoyance, apologize profusely to endear themselves to me, then offer me a discount not on the item out of stock, but on my entire next order to entice me to spend A LOT more money on them than I had previously planned to. Thus emptying my wallet and driving their bottom line.

One of two simple scenarios is at play here: (1) D&D accidentally screwed up and wants to make things right by diffusing my negative emotions; or (2) D&D purposely screwed up and wants to make things “right” by exploiting my positive emotions brought on by their corrective effort.

Do I honestly believe D&D purposely created this situation? I can’t claim nor prove that they did. But their vague message about something being out of stock made me realize how easy it is to manipulate consumers’ emotions into larger than planned purchases.

Lesson? Beware of your own and marketers’ intentions.

Five Marketing Trends That Drive Me Crazy

1. Numbered lists
2. Lists about lists
3. Meaningless lists
4. Pointless lists
5. Copied lists

Not “should,” but “can” you emulate Apple?

In “The perils of best practice: Should you emulate Apple?” the McKinsey Quarterly examines the practice of copying successful companies, and uses Apple as a case in point. The theme is, can you identify best practices, and is it a good idea to copy them?

If only it were that easy.

You should also ask the “can” question: Can you emulate Apple and its best practices? More abstractly, can you copy the best practices of your more successful competitors and steal some of their market share, or begin to outperform the market yourself?

I don’t have the answers, but here are some considerations.

The VRIO framework talks about:

• Value
• Rarity
• Imitability
• Organization

(1) Does your product/service/solution provide value to the customer; (2) are you the sole or one of very few providers with that capability; and (3) are there notable barriers to copying your offering? In comparison to yours, how do competitive offerings stack up?

Most importantly, is your company organized in such a way that you can (could) consistently exploit your market differentiation? Being the best isn’t good enough, it’s being able to defend being the best that matters, and that’s what “organization” in VRIO speaks to.

“O” is about all the things that are hugely difficult to emulate:

• Operational effectiveness and excellence
• Corporate culture that learns from success and failure
• Ability to innovate — interpret signals from slow and fast culture
• Comp plans that foster innovation
• Customer-centric service design

Courtesy BECKMANN BIO s.p.r.l. http://beckmann-bio.com/files/dictionnaire/vrio_analysis.html

Only when what you deliver is valuable, rare, and difficult to imitate, and you are fantastically well organized will you be able to emulate a company like Apple, or your very best competitors.

And then it’s not about emulation, but about domination. Taking a cue from the Five Forces: for example, what inputs could you dominate to keep competitors at bay? Apple has signed huge contracts for glass for its portable devices, purchasing as much as 70% (if I recall correctly) of the available supply. That (a) creates shortages for competitors, and (b) drives up the price for the remaining manufacturing capacity. In your business, do you have enough cash to manhandle your competitors’ supply chains?

Back to the larger questions of should and can you emulate Apple, which has a Superstack—a nearly wholly owned and fully integrated value chain (infographic PDF).

Accenture Superstack (appropriated w/o permission from Superstack PDF. Sorry.)

[FWIW, as much as people say that Google purchased Motorola Mobility for its patents, I can just smell the Superstack synergies, which likely weren't lost on Google. Watch for a similar Microsoft move. . .]

In an era of outsourcing and specialization, how vertically integrated are you? Should you engage in M&A or, against the recommendation of the Five Forces model for many alternate suppliers, should you have just a few highly symbiotic, tightly coupled single-vendor relationships. How would those be affected during economically tough times?

What does your more successful competitor really deliver? Is it a product or an experience? Apple delivers a fully integrated and portable experience. You can watch the photos you took on your iPhone either on your iPad or even on your TV via Apple TV. You can listen to the music you purchased on your iMac via your iPhone or iPod. Apple makes available what matters to you in your personal life anywhere you want to experience that. They’ve made a conscious choice to leave the office behind. Microsoft, Google, and Oracle will fight that battle (not just with data availability, but secure portable application availability).

The “should you” question really is about strategy. What do you want to be when you grow up? And will emulating someone else actually get you there?

The “can you” question really is about capabilities. Can you successfully implement similar strategic and tactical choices that will ostensibly result in the same outcomes for you as they do for your competitors?

Which question you ask first is of academic importance—they’re two sides of the same coin, and in both cases the answer needs to be “yes.”

Ask yourself these questions:

• What is our company good at?
• What is our company bad at?
• What is our competition good at?
• What is our competition bad at?
• Is our product valuable, rare, and inimitable?
• Are we organized in a way that provides value (triple bottom line?), and is that organization difficult to copy (causal ambiguity).
• Who are our direct competitors; who is entering our space with a similar solution; what dissimilar (substitute) solutions exist that accomplish the same outcome?
• How are our competitors organized?
• Do we have a clearly defined strategy, and is everyone in the company aware of this strategy and working toward its success?
• Is sameness a viable differentiation strategy? Yes? No? For what reasons? What gaps need to be plugged?
• Do we have a brand in good standing?

Then you can ask yourself: Should I copy my competitors’ best practices? By now you ought to know if they would add value to your organization, and if you could implement them successfully.

Customer Segmentation

Someone asked me today what the ideal customer is, so that he could target similar companies. I answered in the form of a question: “Patient, stupid, bags of money?” Of course, that’s not true, those types of customers make you dumb and make you lose your edge.

The real question was about segmentation. How can you tell what your best customer type is? There are myriad formulas for that. You want to be in good good standing with your customers, so net promoter score matters. You want them the to pay their bills on time (low risk credit score). You want them to give you repeat business (customer retention; customer lifetime value). You want them to be low-maintenance, self-sufficient. Then you want to do some cohort analysis to see if you can identify other commonalities that will let you target a specific sub-segment of a market.

Blah blah blah…

Your best customers appreciate that you make them more money, and in return they help you make more money. Simple.

Your best customers are those who realize real value from your solution, and who acknowledge that by paying you back with sending new customers your way unsolicited; you are in a mutually beneficial relationship. Are you tracking this metric?

Once you’ve identified that segment, look inward to see what you are doing for them that makes them appreciate you. Other customers have the same solution but either aren’t realizing the same value, don’t know that they are realizing the same value, or realize it but still don’t send you new business. Why?

Ask yourself, what are you doing for those that send you new business? Have you trained them better than others to fully exploit the capabilities of your solution? Are you still nurturing them post-sale so that they feel appreciated and consider you a partner instead of a vendor?

It’s not what you are offering but what you are doing that makes the difference. Find that and make it scalable, and you’ll have found the key to riches.

MoBaBu Strategy

There are two well established and universally accepted business-level strategies: cost leadership and product differentiation. Cost leadership lets you compete on price while still maintaining above average profitability (compared to your peers), and product differentiation lets you compete on benefits (personal utility) that purchasers will gladly pay more money for.

Think dish washing liquid vs. Rolex watches. Both compete in industries that address broad audiences, but Palmolive does not position itself as a luxury solution, and Rolex, even though it’s “just” at watch, does not position itself as a mass market product.

Price isn’t so much the driving factor—although income strata do play a big role—as needs and desires are.

Copyright Wikipedia

Mapping these products against Maslow’s hierarchy of needs (above), Palmolive sits between Physiological and Safety (eating off clean dishes means you won’t die from food poisoning, but also your neighbors won’t be impressed that you have clean dishes), and a Rolex watch is nestled in between Esteem and Self-actualization (any watch will tell time just as well, but this one reminds you and the people around you that you are awesome).

These strategies are not mutually exclusive; every company strives for cost efficiencies, differentiation, and market leadership of some sort. But either strategy requires markedly different organizational, operational, and marketing execution, which is why a company must decide how it wants to compete, what it wants to be when it grows up.

But what about the middle of the pyramid? How can you compete there when it’s generally assumed that if you don’t lead in cost or differentiation that you can at best earn average profits? There is a third strategy: Most Bang for the Buck (MoBaBu!). MoBaBu lets you cover the Safety-Love/belonging-Esteem spectrum.

Sure, Rolex might provide more bang for the buck when compared to Urwerk, a pretty good $75,000 watch (sorry, I haven’t done my homework on surfactants in dish detergents). But that’s not the point. There are broad categories where companies have established MoBaBu leadership. Hyundai in automobiles for example—they may only be 95% as good as Toyota or Honda in fit, finish, and performance, but at a lower cost and with a lot more features. You definitely get more for your $.

Come to think of it, that’s what Consumer Reports “Recommended” rating is all about.

MoBaBu isn’t just a mishmash of cost and differentiation strategies. It does require both elements, but most importantly MoBaBu requires customer insights, market foresight, and true leadership: a corporate culture of empowerment that creates and rewards engaged employees who communicate upward what they think the market can really benefit from.

MoBaBu shoppers are not on the cutting edge, but they sure can do simple value math, and retire comfortably because even though in their minds they never truly sacrifice, they still are thrifty. Marketers are well advised to engineer for this savvy subculture that has great spending power and is experiencing recession fatigue.

Is your organization structured to exploit this opportunity?