Marketing in a New Media World

Abstract

Is marketing to blame for ruining the media and entertainment industry—with Hollywood movies focus-grouped to death, and news turned into click bait infotainment? It depends on whether you perceive marketing as a wall or frontier. The big studio structure certainly throws up plenty of walls, but there are also plenty of new frontiers. This chapter introduces several key marketing concepts and shows how media and entertainment executives might use them to refine their analysis of business problems, enrich their debates and improve their decision-making. As the Hollywood executive Peter Bart says, “There’s extraordinary opportunity around the world in new media; we’re in a great moment in terms of the way the world is acknowledging content.” In this regard, good marketing can help.

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Is marketing to blame for ruining the media and entertainment industry? Peter Bart seems to think so. During a week spent in Los Angeles as part of IESE’s Media AMP, our group was regaled with stories from the good old days by the veteran journalist-cum-studio executive who helped bring such classics as The Godfather to the big screen before he became editor of the showbiz bible, Variety, for which he still writes.

“When I left The New York Times to become vice president for production at Paramount Pictures, it was pre-corporate Hollywood. So if you fell in love with a film project, you could simply go out and do something about it. You didn’t have a marketing committee, and you didn’t have to consult about the international rights or about the video rights. The green light process today is extraordinarily complex.”

He recalls how he and his Paramount boss, Robert Evans, agreed to do The Godfather during a car ride together in which Bart said he had optioned an interesting book and Evans agreed it was a darn good story and within 20 minutes they had decided to proceed with it. Now, he laments, “the marketing concept is what’s controlling things.”

The entertainment business these days is based on tent-pole pictures—those bombastic blockbusters that exploit audience awareness of the source material long before the movie opens and are buttressed by tie-in merchandise. “These are the pictures that support the studio structure, and that’s why the big hero of the moment is, of all things, Marvel Comics. An interesting trick is that most of the superhero pictures open overseas first. Why? Number one, that’s the market: the overseas market represents about three-quarters of the overall business. Number two, it’s a safety valve,” meaning the studio is able to recoup its costs overseas before the movie is killed off by negative reviews at home.

“Frankly, I’m concerned that the art-house picture could become a thing of the past. It’s a bit on life support at the moment. You look at the multiplexes: it’s almost impossible to find a picture that any adult would want to see. You really are at the mercy of the superheroes. I don’t know about you guys, but I find it tough going. I don’t like all my protagonists to wear spandex,” he deadpans.

And for Bart it’s not just Hollywood that has been destroyed by the marketing guys in suits. He has equally scathing things to say about the media industry, especially those news networks that seem more interested in incorporating market-driven entertainment into their news cycles. “News has to stay about news,” he insists. “There’s already a great world out there for prepackaged, predictable opinion, but there’s very little that you can find in the way of straight news anymore. A company like CNN has to, in my opinion, focus on the fact that news is their franchise, and they’re not going to succeed through quasi-entertainment.”

Is Bart’s assessment as bleak as he makes it out to be? Should the ills of the media and entertainment industry be laid at the door of marketing?

To explore this question, we need to make sure we have a proper understanding of what marketing is, and its role in addressing business needs, including strategy development.

In this chapter, I will introduce several key marketing concepts and show how media and entertainment executives might use them to refine their analysis of business problems, enrich their debates and improve their decision-making. Hopefully even the most hard-bitten reader might come to see—as Bart himself admitted by the end of his talk—that in spite of all the ills, “there’s extraordinary opportunity around the world in new media; we’re in a great moment in terms of the way the world is acknowledging content.” And in this regard, I believe good marketing can help.

What Is Marketing?

It’s an oft-repeated gripe: marketing is about getting people to buy stuff they don’t need. But that’s not true. Marketing is about identifying and satisfying a customer need and, in doing so, creating value that can be captured and sustained.

Ted Levitt, considered one of the founding fathers of modern marketing, was adamant on this point. He famously challenged executives to ask themselves, “What business am I in?” How you answer that question, he said, would reveal your true orientation [1]. If, for example, you say, “I produce superhero blockbusters,” then you will probably be in the camp that Bart decries. You will have fallen into the product-focused trap, in which marketing is, indeed, used as a crude lever to get people to buy more of your stuff.

What Levitt wanted was for executives to reconceptualize their business in terms of “providing customer-creating value satisfactions” [2]. On this basis, marketing becomes the means of better understanding consumers and, with that understanding, capturing their attention and their business.

No matter whether you’ve heard this before, it’s worth going back and asking yourself, “What business am I in?” And make sure your answer is framed in terms of what superior value you are creating for your customers, not what kind of products you sell.

As a refresher, Fig.4.1 presents a well-known marketing framework, which will probably be familiar to many readers in the media industry [3].

Fig. 4.1

Well-known Marketing Framework

Source: Note on Marketing Strategy, Prof. Robert J. Dolan, Harvard Business School, https://cb.hbsp.harvard.edu/cbmp/product/598061-PDF-ENG

Every marketing analysis begins with this textbook analysis of the 5 Cs:

• Customers: what customer needs am I attempting to satisfy?

• Company: what special skills does my company have to satisfy those needs?

• Competitors: who’s my competition?

• Collaborators: whom can I enlist to help me reach my customers?

• Context: which external factors will condition my effort?

As this framework shows, the proper formulation of a marketing strategy always begins with an orientation on the customer.

Question:

How do you know your customers?

That’s easy, you say. We do a survey. The problem with market research surveys is that they tend to be self-reinforcing, telling you things you already know—or think you know. To borrow an old phrase, customer surveys get used like drunks use lampposts—for support rather than for illumination.

This is especially true if you have a product orientation. Say you do a customer survey and it returns high demand or satisfaction for a particular product but rates soft or intangible factors lower. A product-focused manager will take this as a sign of approval and proceed in his or her desired direction. Meanwhile, the customer may, in fact, be more interested in the very things that you don’t see as important.

This problem is compounded by the wealth of customer data being generated by today’s digital tools. The more big data there is to sift though, the more marketing managers apply their own filtering criteria—bringing their own prejudices to bear on the findings. Then, when they finally launch the product in which they have invested so much time, money and effort, they are surprised to discover that customers are not the least bit interested. Yet this should come as no surprise, if they never really spent any time truly understanding their customers.

Part of the problem is contained in the very term “product or service provider.” Stop thinking of yourself as the provider of anything, as it reinforces yourself as the great giver when you should be the great perceiver of what customers believe they are getting from their point of view. As Levitt put it, people don’t buy drills, they buy the ability to make holes [4]. And it is this fundamental shift of perspective that you need to make when it comes to understanding your customers and your role in serving their needs. So don’t think of yourself as selling a magazine so much as “entertainment”; not a newspaper but “knowledge”; not a movie but “an experience.”

Bart tells the following story that perfectly illustrates this point: “The first hit picture that Bob Evans and I put together was a really ridiculous movie called Love Story with Ali MacGraw and Ryan O’Neal. The script wasn’t good, the cast was undistinguished, but when I saw the preview, there was something that went right. It was a real tearjerker. Everybody in the audience cried. Within a week, there were lines around the block to see this picture, for two reasons. First was the shared emotional experience of everyone crying together. Second, because of this experience, it was the most popular date movie of all time. It was a gigantic hit for us.”

In other words, their success was owed not so much to the quality of the product but to the experience that those customers were having. As such, don’t fall in love with your own product, as it can blind you from knowing your customer.

Take even the most disruptive innovations of recent times: the electric car, online shopping for home delivery, video-on-demand and e-book readers. All great products, as companies will tell you. Eco-friendly! Convenient! Great selection! Portable and space-saving for travel! But ask customers and you may get an entirely different story: poor performance, boring image, no spontaneity, spoiled for choice, irritating for those who like to flip back and forth or take notes. Such feedback might come to you through surveys, but the question is, are you paying attention?

The best way to know what you don’t know is to put yourself in the shoes of the customer, even one who may be very different from you. You have to go spend time with your customers: understand what delights them. And this has to involve those outside the marketing department. You will gain far richer insights by involving diverse groups of people that traverse various functions.

In Chap. 7 on Operations Management, we will see that when operational mistakes occur, they are usually because managers failed to devote sufficient attention to the decisive gaps among expectations, perceptions and reality. The same holds true for Marketing. According to the marketing scholar A. Parasuraman, clumsy marketing efforts arise as a consequence of not minding the following five gaps [5]:

• between marketer perceptions and consumer expectations;

• between marketer perceptions and the actual specifications established for a service;

• between the service specifications and the actual service delivery;

• between service delivery and external communications to consumers;

• between consumer expectations and consumer perceptions.

It is in these gaps where value creation frequently lies. Your marketing, as well as your operations, pricing strategies and business models, will be improved by adjusting your expectations and perceptions in light of your customers’.

One caveat concerns how to interpret unarticulated customer needs, either because, like having a clean bathroom, they go without saying, or because they are features that customers didn’t even know they wanted until they had them. This is an issue addressed by the Japanese professor Noriaki Kano, who developed the Kano Model to help get at this level of analysis. As he highlighted, what delights a customer today will eventually be old-hat tomorrow, so if you just keep giving customers more of what they have come to expect from you, it won’t boost their perceptions of you any—but if you stop delivering as expected, it will certainly lower them [6]. As such, you must constantly be reassessing your customer needs as they evolve over time.

Segmentation, Targeting and Positioning

Once you have analyzed your customers, the next step is to segment them so you can target and position your marketing messages effectively. Again, as with operations, critical to delivering breakthrough service is being clear about who your target markets are (or aren’t); otherwise your marketing efforts will amount to shots in the dark.

How should you segment consumers? Traditionally, this is done by grouping people according to age, income, gender and other demographic variables. Speaking to our Media AMP group, the marketing strategist Jamie Gutfreund shared a commonly used segmentation approach based on:

• those born post–World War II (Baby Boomers);

• those born between the early 1960s and the early 1980s (Generation X);

• those born between the early 1980s and the early 2000s (Generation Y, often referred to as Millennials);

• those born since the early 2000s (Generation Z, though marketers frequently refer to this cohort as the Internet Generation or Digital Natives, reflecting the all-pervasive influence of technology on their lives).

Gutfreund is particularly interested in the Millennials, whom she said impacted everything today—from how you set marketing goals to how you recruit. With an estimated two billion people in the Millennial age bracket globally, their purchasing power is going to be in the trillions, she said.

My colleague in the Marketing Department at IESE, Jose L. Nueno, agrees. He supervised a consumer research project on teens and their shopping patterns in eight countries and found that 12–19 year olds already represent a sizeable global market valued at $1 trillion annually. If that’s today, imagine their purchasing power in 2020 [7].

However, he makes an important distinction between the young people of mature economies (France, Japan, Spain, the UK and the USA in the study) and those of emerging economies (Brazil, China and Mexico). With nine times the number of children and teens in emerging markets as there are in developed ones, as well as higher ratios of working adults to senior citizens, the center of gravity is going to shift to emerging markets to serve the needs of their aspirational middle classes. This is something that marketers—especially those in the media and entertainment industry—need to be preparing for now, given the unique way that young people consume content (more on this later).

It should be noted that these generational categorizations are largely pegged to North American phenomena—namely, the end of World War II, then various social revolutions, followed by a backlash and moral panic as those previous generations had children. So when a marketer says, “People in their 30s (Gen X) tend to be cynical, whereas people in their 20s (Gen Y) care more about the community,” it needs to be contextualized to your own sociocultural reality. There are studies showing that in Europe, for example, the same behavioral and attitudinal tendencies are exhibited at least a decade later than in the United States, with one British study finding so-called Millennials to be more cynical and less civic-minded and that the characteristics typically associated with Gen Y may, in fact, turn up more with Gen Z [8]. Indeed, as a Brazilian Media AMP executive pointed out, many of these generational characteristics are shaped by country-specific socioeconomic factors, so you have to be sure to consider disposable income and purchasing power before hastily defining a segment according to US-inspired realities.

Apart from demographic and geographic characteristics, you can also segment according to lifestyle habits, which is very relevant for the fast-changing media landscape. One thing on which everyone concurs is that today’s consumers defy easy categorization or description. With the plethora of social media tools available today, it has never been easier to reach an audience—nor harder to engage them. They are fickle media multitaskers, surfing the Internet, chatting online, using their cell phones and watching TV, all at the same time. This has an advantage: namely, that they are more receptive to a wide variety of messages via any channel. But there is also a drawback: their dwindling attention spans. In spite of, or perhaps because of, so much constant stimuli, they are binge watchers, viewing several episodes of a series back-to-back in one sitting—but it has to be a show worth them investing their time and attention. Their ideas about gender roles, categories and depictions are also less fixed, with three-quarters of women watching programs intended for men, said Gutfreund.

With consumers behaving so differently within each segment, and moving so much between segments, managers really need to question the assumptions upon which they do their market segmentation. Are age, income, gender and geography the correct bases? Is there even such a thing as the “average” customer that is homogeneous in his or her behavior and thinking?

It is important to give this careful consideration, because your subsequent marketing strategy will be positioned according to the behavioral rules of the segment you wish to target. In positioning yourself, you are essentially asking: Who am I? Who are my competitors? What do I offer? What is the reason for them to believe me (the why)?

Many pundits believe it was the failure to adequately address these fundamental questions that kept TiVo, the original digital video recorder, from ever taking off. Despite having a genuinely disruptive product on its hands, the benefits weren’t obvious to the consumer. Was it just a souped-up VCR? Yet another set-top box to buy? And the price point was too high for the average consumer to justify the expense, especially if they didn’t grasp the benefits. By the time consumers woke up to the joys of skipping commercials and watching programs whenever they wanted—in other words, the instant streaming, on-demand reality that we take for granted today—the market conditions had shifted, and there were other, cheaper services widely available. TiVo is a cautionary tale of how, even with a superior, game-changing product on your hands, it counts for little if you aren’t able to position it properly, with observable benefits aimed at the right target.

Allied to this, you need to anticipate what you will do if certain scenarios come to pass, such as how the competition may react. If you have got the segmentation wrong from the start, you will take aim at the wrong target, and your positioning scenarios will be woefully misguided.

A more useful approach may be to segment consumers according to social moods and value shifts—what the historians William Strauss and Neil Howe refer to as “turnings,” when people change how they feel about themselves, the culture, the nation and the future [9]. This may yield better market groupings that resonate beyond facile descriptors like age, income, gender and geography.

Gutfreund used the example of Gen Y and Gen Z. The cutoff ages between the two can be blurry. One way of distinguishing the split, she said, is according to their defining moments. For some, it’s pre–9/11 and post–9/11, between the idealists and those who see the world as a much darker place. For others, it’s Edward Snowden the hero versus Edward Snowden the traitor, when the actions of the whistleblower divided people into camps over the acceptable limits of information privacy.

Apart from coming up with some key differentials like these, so that your market segments are clearly distinguishable from each other, an effective segmentation must be measureable, substantial, accessible and actionable. Each segment requires a distinct marketing offer, so you don’t want your segments to be too small or narrow, as gathering the variables on them will get costly and you could end up targeting outliers, which won’t be profitable.

Pause for Thought

• Is my market segmentation right? What other variables should I be looking at?

• What are the behavioral rules of my target?

• What are the possible positioning concepts for each target segment?

• How should I adjust my current positioning?

• How am I setting the terms of the competitive game?

• What steps can I take now in anticipation of how my competitor might react, which would put them on the back foot?

Going to Market: Designing and Managing Channels of Distribution

Now you are ready to develop a marketing plan, which consists of 4 Ps:

• Product: what is your brand’s identity and what associations do you want it to have in the customer’s mind?

• Price: Chap. 2 on Strategy has a full discussion on price-setting strategies but suffice to say here that your price will be set somewhere between the cost to the firm and the willingness of the customer to pay, and how much leeway you have there depends on how well you have differentiated yourself in the customer’s mind so they are willing to pay more for your brand.

• Place: otherwise known as your distribution channels.

• Promotion: this is your actual marketing communication—what you say, how you say it, to whom you say it and how you will evaluate its success.

Rather than dwell on these basics, in this section I want to focus on the distribution strategy. The media industry is facing the most profound transformation in this regard. New technology and consumer trends are creating new channels of distribution that threaten the very existence of many incumbent players. This requires new strategies to go to market.

Traditionally, the distribution process to get your product/service to market looked something like the figure below. Firms had to go through the usual intermediaries or perform the intermediary functions themselves. Where they could cut out the middlemen, they would, as naturally you want the shortest channel possible between you and your customer (Fig. 4.2).

Fig. 4.2

Going to Market: The Traditional Way

Think of the newspaper business: it used to need delivery vans, kiosks, home deliverers and so on just to get its core product into the hands of the reader in time for breakfast. Now, the Internet has eliminated the need for all those intermediaries, which, on the face of it, should mean a shorter channel, making it cheaper for the newspaper to reach readers and put more control back in the hands of the business.

In reality, it is not working out that way. The balance of power has indeed shifted away from those old intermediaries, but instead of going back to the business, it has gone toward a new set of intermediaries—to the digital platform providers.

Zinio is a good example. This online kiosk converts magazines to digital formats so they can be read on multiple devices. If you are a magazine, you pay to be distributed there and take a small percentage of any sales. The concern is, there is little selectivity and Zinio cross-sells your product with other titles—and you are just one of thousands of other titles. In some ways, your magazine might be better positioned in your old physical corner kiosk. In theory, an online channel partner like Zinio should give you more scale to offset your loss of power, but the results so far are mixed. What you end up with is a new ecosystem model of distribution with some advantages but complex new challenges (Fig. 4.3).

Fig. 4.3

Going to Market: The New Ecosystem

Movie distribution is another example, as a guest speaker who works for an international movie distribution company made clear during the Media AMP. The new digital ecosystem has made her job easier, she said: “On the plus side, it has become much cheaper, as we just beam a signal via satellite.” She showed how she could just punch up a video on her iPad and send the file to the theater via a content delivery network (CDN). She is able to release the content simultaneously in theaters and through video-on-demand (VOD) systems. The latter is especially important in countries like Spain, where VOD surpasses DVDs. “We are going straight for VOD the way you used to release straight to DVD. This means no more DVD packaging costs,” she says. “And we are able to reach audiences the way they want to consume.”

But it is not all good news. First, the initial conversion costs to go from manual to digital distribution and exhibition have had to be absorbed by the traditional players. Taking a short-term hit may be tenable if you are able to renegotiate a better position for yourself in the new ecosystem.

Which brings us to the second, more critical issue going forward: in a world where content producers can reach their audiences directly, what exactly is the role of the distributor anymore? As with the music industry, when physical assets become instantly shareable virtually, the distributor has to find another way to add value, or its place in the ecosystem will be made redundant. Is it about becoming a better rights manager for the plethora of platforms that are emerging on which to distribute content? Is it about offering better marketing promotion and pricing of content targeted at specific segments in the “long tail” of media assets?

What we see increasingly are companies going for vertical integration—content producers like Disney owning the theaters in which its musicals are performed, or new media providers like Netflix now producing their own content. This is genuinely disruptive. Netflix has already signaled the shift by dropping major distribution deals—first with Starz in 2012 and then with Epix in 2015—in favor of positioning itself as the self-styled provider of more original, exclusive content. This leaves the distributers of Hollywood blockbuster fare having to negotiate new deals with other VOD services. They want to get their content out there, but the more platforms they do distribution deals with, the more that intermediaries like Netflix react to differentiate themselves.

But even owning a large part of the distribution network is no guarantee of controlling the marketing channel, as is illustrated by a case I have done on the Shubert Organization. This company owns and operates 17 Broadway theaters, as well as Shubert Ticketing and Telecharge.com to provide box-office sales, telephone sales, Internet sales, season and subscription sales, group sales and more. You would think they would have their marketing needs locked up. But the new digital ecosystem is making their job even harder. Search for “Broadway musicals” online and the top search result in Google is Broadway.com, an independent broker that sells tickets above list price. Prospective theatergoers will unknowingly pay the higher price, or they will angrily not pay for such an expensive ticket at all. Either way, Shubert loses out.

What can you do if you find yourself losing through the crowded online channel where a multitude of other ticket brokers and resellers vie for consumer attention? The high-earning, 55-to-65-year-old woman who may still buy a ticket by turning up at the box office is a dying breed. Shubert knows it has to attract more families, ethnic groups who don’t have the habit of going to the theater, and youth—none of whom has the disposable income to fork over $100-plus a ticket for a couple hours’ worth of entertainment.

The Hollywood marketing channels need to change, too, as Peter Bart explained: “The fascinating anomaly is that the studios have totally focused on the youth demo. Yet surveys indicate that the average frequent moviegoer in his early 20s owns at least four devices, multiple devices. That’s obviously competing for their attention. That’s what they want to do. My youngest daughter, for example, watches movies on her handheld and she hasn’t been to the movies in a long time.”

The only way to deal with such a proliferation of customer needs and to make yourself stand out in an ever more crowded media marketplace is through multichannel marketing.

Customers today are more knowledgeable: they do their market research online but make their purchase offline, or conversely, they use the physical outlet to do their market research but then make their purchase online. Mobility is huge, especially for group-oriented Millennials, said Jamie Gutfreund: “Seventy-five percent look at online reviews written by other fans, and 84 percent of their purchasing decisions are based on the opinions of friends and family. Ninety percent sleep with their phones within arm’s length. Half of consumers aged 12-17 have access to the Web only via mobile.” With at least a third of e-commerce clicks coming from a mobile device and rising, what does that tell you? The average person looks at his or her phone 150 times a day—you have to be top of mind in one of those 150 opportunities. Yet I continue to be amazed by how many websites are not mobile friendly.

Writing in IESE Insight magazine, Nueno states: “Companies have to make the most of all opportunities to interact with and relate to their customers at every stage of the marketing process. Social networks have become much more than platforms for self-promotion. A few years ago, brands were content to create Facebook fan pages, Twitter accounts, YouTube channels and blogs for sharing information of interest, with the aim of attracting followers and eventually converting them into customers. Today, they can sell directly through these channels. Sites such as Pinterest, where communities form according to interest, have seen spectacular growth and are turning into huge product recommendation platforms. Companies should not let channel proliferation or the rise of new media overwhelm them. To persuade the new consumer, they must arm themselves with a marketing strategy that integrates the various channels and uses each channel in the most appropriate way for each type of customer” [10].

That said, it is worth bearing in mind the observation of another Media AMP executive who said: “In a multichannel media environment, it seems rational to think that a traditional distribution channel should be out of business, and yet who knows? It only seems rational based on today’s information. And if there’s one thing I’ve learned in this new media landscape, it’s that nothing stays constant. There are always new disruptors, so by tomorrow the terms of the competitive game may have changed yet again, and the intermediary that seemed redundant by today’s standards may well be in a new position of strength.” As we live in this in-between state of affairs, we have to stay open-minded and ready for anything.

Media executives need to strike a tricky balance. If you divest yourself too much or too quickly of traditional channels in order to embrace the new, you may end up hurting yourself. Multichannel marketing is not about ditching the traditional channels, which may still serve some role; rather, it is about understanding how all the various channels must work together.

In order to navigate a multichannel environment, managers need to become equally multichannel in their thinking, developing what the Harvard Business School professor Michael Tushman calls “ambidexterity” [11]. Just like being able to use both hands equally well, media managers need to build marketing strategies that can attend to disparate logics at the same time.

Take the example of a traditional approach: an advertising agency produces a slick TV commercial costing millions of dollars. Then along comes a start-up that produces a low-budget commercial through crowdsourcing—perhaps not as slick but just as effective in terms of brand-building and reaching the target audience, at a fraction of the cost. If you are the traditional agency, how do you regard the start-up: as competency destroying or as competency enhancing? Actually, it’s both, and an “ambidextrous” response would be to do what Havas Media Group did when faced with precisely this scenario in 2012: it went and acquired a majority stake in Victors & Spoils.

As Tushman explained in research he shared at IESE: “This move demonstrates that Havas was at least prepared to embrace new technology and a very different business model from its own. Perhaps for Havas the move was nothing more than a preemptive strike against a competitive threat that it regarded as competency destroying. But maybe Havas realized something else, too: that open, distributed, peer-to-peer, community innovation is here to stay. As such, bringing game-changers like Victors & Spoils into the fold guarantees Havas’ own future—it is competency enhancing—as the company manages the tension between the ‘old world’ of innovation (one that depends on all creativity coming from inside the organization) and ‘the new.’ Solution-seeking organizations need to be on the lookout for this, learning how to adapt and benefit from these disruptions” [12].

Digital Marketing: A New Marketing Paradigm

There has been perhaps no greater change affecting marketing in recent years than the rise of social media. Marketers have always had to allocate budgets, opting either to “push” marketing messages on consumers or to be “pulled” by consumers who dictated the terms of the marketing effort. Social media have not only tipped the balance in favor of the latter approach, but in many cases consumers can cut out the marketers altogether and do their own marketing by talking among themselves. Today it is the consumers who control brand. This makes the job of marketing more challenging—but also more exciting and potentially more rewarding.

Take a quick straw poll among the people in your office to see how many of them use the following social media—Facebook, Twitter, LinkedIn, Pinterest, Instagram, Foursquare—or how many of them blog. By “user” I mean an active, daily user, and not a work account but for personal, non-work use. What surprises you most about your findings? How are they using these media? The important thing to realize about social media is that it is no longer a question of whether you should be present there or not; the fact is, you (and they) are there already, whether you consciously want to be or not.

One journalist commented that the rules of her profession dictated that she had to maintain a semblance of objectivity and neutrality at all times. “You’re not allowed to take sides,” she said. “Sometimes the best thing is to stay quiet and not engage in these media.”

That’s debatable. It is true that journalists don’t think like marketers, and marketers don’t think like journalists. But increasingly they need to start working together. Marketers can learn from journalists how to construct compelling storylines that connect with audiences, while journalists can learn from marketers how to make sure their stories are delivered through the best channels so they can generate conversations around an event or a cause.

Marketers sometimes fall down when it comes to content, bombing unsubtle promotional messages at consumers, which is not what they want. “Millennials don’t want pre-packaged, off-the-shelf brands,” said Gutfreund. “They want to be part of the story and its trajectory, knowing that they influenced the direction in some way. They want to be involved in the process. They’re not just ‘consumers,’ they’re ‘investors.’ As such, they don’t mind ads so long as they are relevant to their needs and interests, and engage them in some meaningful way—making them feel part of something larger, with some community or emotional aspect.”

And it is not just Millennials who are like this. It may have started with them, but more and more people think this way, said Gutfreund. “We want the context for the news: how does this affect me, what’s the backstory, how can I get involved? We look for the infographics, to see this story’s place in history.” Is it any wonder that one of the most talked-about media launches of 2014 was Vox.com whose motto is “Explain the news”? Its clickable headlines are all variations of “X Explained,” “Why X Matters,” “Here’s What X Means” and “X in Maps and Charts.”

No matter your personal level of engagement with social media, everyone needs to capitalize on this trend to a degree: some might be in social media only as observers, monitoring what is being said but not being proactively involved. That is a basic step, to at least be exposed to the tide of opinion out there, and to catch any dirty laundry being aired about your brand, which will show up online, so it is best to be prepared. The point is, you have to “be there” in some way, shape or form.

Think about it: for the first time you are able to be in direct contact and communication with people who “like” you, on a scale unheard of before. One journalist uses her Facebook page to take the pulse of readers. Another uses Facebook to connect in real time with listeners to her radio show, where they upload photos and share feedback. The goodwill and audience insights gained from such interactions can be priceless.

Facebook knows this, which is why it invests so heavily in wooing businesses to pay for advertising to reach desired segments. However, as great of an advertising platform as Facebook is, you don’t always have to pay a social media provider what you used to pay a newspaper to advertise. You can save money by running your own social media campaigns—especially if the aim is chiefly to build awareness, positive associations and engagement. Ad spots used to do that, but increasingly today’s social media conversations can do that for free. That is their beauty.

Again, it is not about ditching one for the other but of understanding how social media marketing fits as part of the whole marketing mix and being ambidextrous in managing them together. Traditional media, like television, still enjoy the greatest reach, and big established brands will continue to favor TV advertising—for now. But as the Internet increasingly replaces television as the main channel of leisure, you have to be positioned to make the switch, going from using social media as a complement to television, to the other way around as market needs demand.

Whichever medium, you need to be clear about the marketing objectives for each. Is it to attract new customers? Hear what people are saying about you? Get mentions? Become an opinion leader? Promote something? Is it for information or for entertainment?

It goes without saying that you need to have content. But what social media underscore is that, beyond having content, it needs to be relevant content. As the saying goes, content is king, but context is queen. What is the genuine conversation around your brand? Too many brands fall down on this point, thinking, like Kevin Costner’s character in Field of Dreams, “If we build it, they will come.” In social media terms, they won’t—not without a compelling reason that connects with them personally and that they care about passionately. As the Ogilvy & Mather advertising veteran Shelly Lazarus quipped, “Advertisers just have to understand that when we go to Facebook, it’s not to have a relationship with Wish-Bone Salad Dressing. Forget it. Give it up. It’s not working for us.” But if companies learn to get it right, social media platforms have the potential to institutionalize word of mouth. “And there’s nothing as powerful in advertising and marketing as word of mouth. For your friend to tell you, ‘I tried this, and it’s amazing,’ that’s almost a sure sale,” said Lazarus [13].

Movies are one of the best illustrations of how word of mouth, or WOM, affects sales, given the decisive role that personal recommendations play in getting potential spectators to actually go to the theater. Even the Oscars are essentially a sort of movie industry WOM. Simply being nominated for an Oscar (never mind actually winning it) generates more audience and more revenue. Social media networks have this same kind of signaling effect in the way they reinforce and amplify messages.

Guillermo Armelini, Jorge Gonzalez and I once carried out a study of movie releases to measure the impact—and interrelationships—of three key variables on movie success: paid-for advertising, publicity (i.e. media presence that hadn’t been paid for) and the conversations generated among potential and actual spectators. One of our conclusions was that WOM about a movie in social networks always had a positive impact on box-office revenue, independent of any prior advertising investment [14].

Given findings such as this, it is vital to understand how social media work, as electronic word of mouth (e-WOM) obeys very different rules from traditional advertising. By distinguishing between the two, it helps to see when one or the other might be more appropriate.

	Traditional advertising	Social media e-WOM
Reach	Mass market	Targeted communities
Credibility	Limited	High
Control	Full control over message, medium and frequency	Stimulated, but not controlled
Interactivity	Less scope for reaction or subsequent adjustment	Highly interactive and immediate
Intrusiveness	Message may be annoying, in content or frequency	Voluntary and consensual
Cost	High, among the most expensive	Low, though some hidden costs
Brand	Plays a decisive role in awareness and recognition, increasing brand value	Enhances brand value when positive, but no guarantee that comments will be favorable, and negative e-WOM can do serious brand damage
Sales	Stimulates interest and short-term sales elasticity, but better for “push” than “pull”	Correlation between conversations and behavior (sales), with strong “pull” effect
Products/ Services	Useful for informing the consumer of existence of products/services	Less useful for informing consumer of existence, better for encouraging consumption of products/services
Context	Generally works in all cultures	Frequency and intensity seem greater in more collective societies

As with any marketing plan, you need to consider the best means of communicating with your intended audience. If you cannot act transparently, if your product/service is not the kind that generates conversations, or if there are reputational risks, such as the very real possibility of generating hostile conversations, then perhaps you should hold back from, or keep a low profile on, social media. Decide exactly on which platforms you want to be, as well as the type of content (knowledge, promotions, applications, games), the user participation model (comments, surveys) and the balance between content and selling (with the rule of thumb being firstly inform, secondly entertain, thirdly interact and lastly sell). Finally, be sure to establish metrics to assess whether you have met your goals. Is it the number of registrations, ideas or conversations? Number of followers, recommendations or mentions? Always make sure the results are proportional to the investment.

Question:

Looking at the previous table, if you worked in the movie business, how would you choose to market a blockbuster (with high production costs, requiring a big-bang hit) versus a sleeper (with lower costs, whose success builds on a slow boil)?

Admittedly, deciding what strategy to pursue is not easy. As many companies are unsure of the effectiveness of social media, they just continue to spend where they know it still works (traditional advertising). That may work for the time being, but ask yourself: when do you need to start caring or worrying? Even though you may be doing quite well without social media marketing today, you don’t want to end up like the proverbial boiled frog that didn’t jump out of hot water until it was too late. Though the evolving digital realm can be confusing, with no tried-and-tested formulas or recipes, you have to do some experiments and start placing some bets today. If it feels to you like playing a (more or less educated) guessing game, take comfort from the fact that everyone else feels the same, and the ones who are making advances in digital marketing are those who have tried and failed more times. One Media AMP executive recommended allocating, say, 10 percent of your marketing budget to experimental campaigns, which may even be considered a write-off. The point is, you need to be doing something.

Creating Customer Value: The Marketing of Experiences

Most readers will be familiar with the marketing funnel, which depicts the stages of a customer journey leading to acquisition and retention. Historically, this was treated as a linear process, with the marketing effort designed to intervene at key moments to influence the consumer in funneling down their choice-sets until they eventually “buy” and afterwards tell all their friends (Fig. 4.4).

Fig. 4.4

The Marketing Funnel

However, given the new digital paradigm, this journey is no longer linear or sequential. In fact, many brands don’t consider “awareness,” “consideration” and “expressing preferences” as intermediary steps to the end goal but as strategic opportunities to extend reach, create fans, strengthen engagement and even take action or buy in parallel. Moreover, all these “touchpoints” occur simultaneously and immediately in time and space, and the best lever to optimize them is by offering your customers experiences.

Jamie Gutfreund expanded on this idea: “The majority of Millennials say that, rather than buying a cool product, they would much prefer buying a cool experience, which they can share on social media and earn social capital for themselves. In this day and age when you can know everything beforehand—for example, when you can pirate the movie before it is released—the ‘extra’ you pay for by actually going to the theater is to have a shared experience.” (She gave the example of Secret Cinema, which is analyzed in Chap. 7 on Operations Management.)

This goes back to Peter Bart’s Love Story movie anecdote. Even though digital is changing the marketing approach, he says, “I’m retro enough to believe firmly that the experience of seeing a movie in a theater will forever be important. There’s simply no substitute for sharing, say, a comedy. Experience is the key now and always will be.”

Growing numbers of companies are on-board. D-Box, for instance, integrates motion systems into seats at movie theaters, museums and planetariums to create immersive experiences that synchronize velocity, engine vibrations and vehicle dynamics to the on-screen action. Several filmmakers have been experimenting with breaking the fourth wall by getting moviegoers to download apps before the movie begins. At certain points in the movie, audience members receive messages in real time. In one movie, the actors on screen call audience members for help, and depending on the answers given, the story unfolds in different directions, meaning that it is the audience that controls the story arc, and the same movie can have entirely different endings.

Jose L. Nueno stresses that this need for experiences is not just limited to domains that have always been associated with providing escapist entertainment; even traditional media like newspapers need to appreciate this shift. The big challenge facing print media today is often framed as an economic one: how to monetize news? But that’s a mistake, says Nueno. News never made money: what made money for newspapers was always advertising. As such, the real challenge is how to boost ad revenue, which ultimately depends on reader engagement. The more readers you have, the more advertisers you attract, and the more you can charge to reach them. And how do you attract and engage the attention of more readers? By offering them experiences. This doesn’t mean you have to drop all news stories that fail to entertain. It means understanding your readers’ habits and adopting a multichannel approach, as mentioned earlier. Maybe it is ramping up a different mix of content during the weekend when newspaper readership tends to drop off. Maybe it is adopting a hybrid model, one that blends offline and online worlds—turning newspapers into radio or TV by offering more audiovisual or multimedia content, or blending radio with imagery.

A useful exercise is to take each of your key customer segments and plot their touchpoints according to the actual channels they use. As shown by Table 4.1, one segment might become aware of your brand via friends on Facebook; do their research online; get advice in mobile chat forums; go to the store, kiosk, theater, and so on, to purchase; and then spread the word by posting comments or returning feedback online. Another might go to the store, kiosk, theater, and so on, to find out about your brand; do their research in mobile chat forums; express “likes” on Facebook and post photos on Instagram; purchase online; and then give feedback by posting a YouTube video review. By depicting the funnel this way, you can take targeted marketing actions aimed at heightening the experience at just the right moment, in the appropriate channel.

Table 4.1 Plot your customer touchpoints by the different channels they use

Try mapping the consumer journey for your own business, looking for those key moments when you can intrigue and surprise the consumer, respecting the human psychological need for adventure, transcendence, awe, wonder and delight. Don’t just think of one marketing idea and run with that one. You have to take a multidisciplinary approach, prototyping various ideas, and discarding those that don’t work, before you arrive at the marketing plan that works. As one Media AMP executive rightly observed, this requires striking a careful balance between pragmatism (making a profit) and passion (doing it just for fun). Though paradoxical, in modern media marketing you cannot have just one or the other—you have to have both. The management of creative marketing is not a momentary brainstorm but demands a serious dedication of time.

Question:

How much time are you dedicating toward reconceiving your marketing funnel and intentionally thinking of new ways to heighten consumer engagement through experiences?

Outside-in: A Change of Mindset

Reconceiving your value chain is the most useful but also the most painful thing you can do. Useful, in that the information on consumers available today is rich and plentiful, enabling you to identify and address blind spots like never before, in real time. Painful, in that because there is so much information, it takes that much more work. There are companies available to do the work for you (Conzoom.com springs to mind) but you do not have to pay for everything. There are free tools available. However, you do need to have a team dedicated to systematically collecting data on your marketing funnel.

In addition, this team needs people with the right sensitivity, as Nueno explains: “Market research used to be about knowing what question to ask, and framing the question to get an answer. Today, it’s a case of having lots of answers, and then knowing what to ask yourself to understand the answers in front of you. It is a completely different mindset. Instead of interrupting and asking, it is about listening and observing, and learning how to interpret the answers.”

Do you have this sensibility in your organization? “You need to have a healthy workplace culture where this is encouraged in a deliberate, conscious way,” said Gutfreund. “To know your audience, to speak their language, you have to understand their world. Outside-in thinking is your secret weapon. Get out of your bubble to connect with the market ‘out there.’ Get some fresh input and inspiration from unlikely quarters, maybe even from other industries, to unleash those serendipitous ‘aha’ moments.” (Chap. 5 on Decisive Leadership makes a similar point, recommending that you “visit your future,” looking at how others tackle related problems to yield surprising solutions for your own situation.)

During a visit to IESE’s New York Center, Nancy Dubuc, president and CEO of A&E Networks and the History channel, shared a story of how she literally brought consumer-led creativity into her organization.

“We had an incident where we got a call from a studio, upset because they saw a promotional trailer online for Bates Motel that we hadn’t shared with them, since we usually would share the marketing with them. The producers of the show also saw it and said, ‘It’s great, but how could you not run it by us?’ I had no idea what they were talking about. So I immediately went on YouTube and found a Bates Motel promo, complete with our logo. We traced it back to a 21-year-old fan in Ohio who had produced it himself. He got very scared that he was getting a phone call from the legal department at A&E.”

Did they sue? “He was then promptly hired,” said Dubuc. “I hope that’s a small example of where we can see this going. Technology is getting smaller and more user-friendly. Our online editors in the marketing groups are all doing their own editing on desktop now. That’s been happening for years, and hopefully that will continue to get more and more sophisticated. But what I’m the most concerned about is: where are the true creators? Where are the people (like this 21-year-old) who are making and writing and doing this stuff? As the market continues to fragment, and the point of entry keeps getting lower and lower, the biggest challenge with YouTube and all the digital platforms is how do you break through, how do you get noticed? There’s such a sea of material out there that it’s very hard to find what’s good. If you can hold on to your brand as a curator, then you have a winning advantage as relates to your two-way conversation with the consumer. You have to learn to become a curator of great things.”

The way Dubuc reacted to this consumer-led initiative suggests a radically different, outside-in mindset, which is how marketing needs to be managed today. Doesn’t this also echo Havas’ acquisition of Victors & Spoils mentioned earlier?

To become that “curator of great things,” able to spot and leverage the myriad opportunities out there, media managers must learn to do marketing in a “mindful” rather than mindless way. The Harvard psychology professor Ellen Langer talks a lot about training your brain to behave in a “mindful” way, derived from decades of research she has done on the topic. When we do things on autopilot—either out of habit or because we have enjoyed some past success by doing it that way before—we unwittingly set traps for ourselves and miss out on vital opportunities for learning, discovery and growth. This is dangerous, says Langer, especially when situations and circumstances change, because we lose the mental agility to process new inputs and fail to act in novel ways appropriate to the new context [15].

Georgetown University Professor Luc Wathieu and I once collaborated on a case study on El Bulli, the world-famous restaurant of chef Ferran Adria. Inspired by Adria and the work of Langer, we developed a conceptual model to understand the impediments to innovation. We grouped them according to two big concepts: walls and frontiers. As you manage marketing in the new media context, you will invariably run up against barriers. In some cases, these can be physical obstacles or constraints that others put before you, such as work silos, lack of time, no resources, short-term targets set by your boss, your board or another management body. We call these “walls,” and it is the CEO and board’s responsibility to remove some of them.

But there other kinds of barriers, called “frontiers.” These exist in the mind. We become trapped by categories and stereotypes; fall back on automatic behavior; act from a single perspective. This is the mindlessness that Langer refers to, and which she says can be overcome through reframing techniques. (Remember the discussion on “breaking the frame” from the opening of this book?) This requires a conscious, daily effort on your part to train your mind to keep your thought patterns in check every time you are tempted to surrender to old habits or fatalistic thinking. The good news is, as conveyed by the word “frontiers,” these borders can be crossed; “frontiers” implies a degree of porousness or plasticity that “walls” does not.

Try This Exercise for Yourself and Within Your Teams:

In your company: What are the walls? What are the frontiers?

In pondering these questions for himself, one Media AMP executive noted that “the broadcasting guys get successful but then don’t think they can learn from anyone else. Someone in radio doesn’t think across categories and disciplines or beyond current revenue streams. There’s a lot of arrogance that comes with success. But many times ‘success’ for them means they’ve just perfected the art of doing the same thing hundreds of times over.”

Another executive added: “The journalist’s mind is conditioned to deliver to an agreed story format. There’s an automatic way you approach a story. The perception of what ‘success’ means is defined by a predefined set of news values that the industry rewards as successful.”

Other executives suggested that ethical or legal compliance issues could be walls or frontiers, alternatively putting constraints on or releasing creative freedom, depending on the circumstances and how you approached them.

Being able to conceive of your media challenges in this way is the first step in being able to solve them. But it takes humility to learn from others—and that is a quality in short supply in the media and entertainment industry.

So as Peter Bart alleged, is marketing to blame for ruining the media and entertainment industry? It depends on whether you perceive marketing as a wall or frontier. The Hollywood studio structure, with its huge overheads, certainly throws up plenty of walls for delivering big-screen entertainment. But there are plenty of new frontiers, particularly when it comes to your channel. Bart quotes studio exec Jeffrey Katzenberg, who predicted that before long movies will be released ubiquitously in a variety of formats to suit customers’ viewing preferences, with prices set according to screen size. Instead of competing with the small screen, Hollywood can embrace it as a new outlet to market its content [16].

Bart also likes Katzenberg’s advice to the next generation who will need to manage these challenges: “People used to tell young people, ‘Follow your dream.’ That’s bull. Follow your skill. If you’re good at something, pursue that, because it’s a lot better bet than trying to figure out what your dreams are.”

To put it another way, even in an industry whose lifeblood is artistic creativity, you need to be properly skilled in business basics like marketing. Then you have a shot at building and sustaining a dream brand.