Josh Kaufman, Scott Galloway, Rory Sutherland: This Stuck With Me: Everything You Definitely Don’t Know About Marketing (But Should), From 4 World Leading Experts!
Guests: Josh Kaufman, Scott Galloway, Rory Sutherland, Whitney Wolfe Herd
Full transcript · Read the full conversation in order, with its original context.
Contents1 chapter
§01Transcript — part 1§01Transcript — part 1
The thing I think about most, especially when I'm on the go but also when I'm sat here in The Diary Of A CEO studio, is the Wi-Fi and internet that we have to work with. In fact, anytime I'm filming away from the studio, one of the first things I do when I arrive is open up an app and do a speed test to see how strong the signal is.
The number of screenshots I've sent to my team about Wi-Fi signals at different locations is actually pretty crazy. It matters that much to me because it's such a competitive advantage to have fast Wi-Fi. On any given day, if I'm recording hours and hours of footage with a podcast guest, I then often have to have my team send that across to our London team who then do the edit.
So fast Wi-Fi and internet is not a "nice to have," it is absolutely business mission-critical. So, when it came to finding the best provider who could supply internet and Wi-Fi to our new LA studio, which I'm sat in right now, we looked at every single option.
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## Topic: Introduction [00:01:14]
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## Topic: Defining Marketing and Sales [00:02:05]
Marketing is just who might be interested in this thing. A lot of it is the fundamental thing that if no one knows you exist, no one's going to be able to buy your thing. And so, marketing is the process of attracting the attention of people who might be interested in the value that you're creating.
In an ideal world, you are making them curious, wanting to learn more, asking for additional information, and engaging with what it is that you have. A lot of people conflate marketing and sales. To me, they're distinct processes. Marketing is the attracting of attention and generating interest, and then sales is the process of convincing someone to buy and then getting them set up as a customer.
A lot of marketing comes down to what it is exactly that you're trying to gather attention for and where do those people generally hang out? What are they curious about? What are they already paying attention to? What can you take advantage of or dovetail into in order to attract someone's attention at the right moment, at the right time, and make them aware that you have something that could benefit their life? Here's what it is, and here's how you can benefit from it.
Because many companies see post-sale support as an annoyance. Like, "I've sold you the thing, why are you emailing me? Stop bothering me." They treat you like you're a nuisance.
Yeah, and that's a shame. Because really, those happy repeat customers are not just your high lifetime value customers, the customers that will stick with you and keep spending money with you. They're also a primary source of marketing. Word of mouth marketing is all happy customers telling other people who might benefit from your product that, "Hey, here's this wonderful thing, you should probably check it out."
So things like post-sale support, sometimes customer reactivation, are vital. As a very straightforward marketing technique called reactivation, if you can contact a previous customer and say, "Hey, you bought candles from us last year. Would you like to buy candles from us this year?" and get him to pick up just a couple more candles, the cost of that promotion is potentially very small.
You already know he exists, you already know that he's purchased. Can you just get him to do that again? Those are some of the most effective marketing sales campaigns that you can possibly run. But it also requires that they had a good experience with whatever it is that you're offering in the first place.
## Topic: The Shift from Brand to Innovation [00:04:53]
How has the landscape of advertising and brand building changed in your lifetime? And what is the most important thing for brands to understand now if they are to be successful?
My first job in business school, I started a company called Profit Brand Strategy. The basic notion was based on the principles of my professor, David Aaker, who is considered the father of modern branding. It was that the intangible associations with a brand or a set of products or services are the only sustainable advantage.
If you can wrap a set of products and services with these brand codes of masculinity, European elegance, or youth, and then pound away at those associations using this incredibly cheap, efficient medium called broadcast advertising, you can take a mediocre shoe, a salty snack, or a mediocre car and get amazing margins on it.
That was the algorithm for creating massive shareholder wealth from the end of World War II to the introduction of Google in the 90s. Find a mediocre product, wrap it in amazing brand codes to make people feel more patriotic or younger, stuff the channel with it, and print money. The P&Gs and the PepsiCos of the world were the economic titans of yesteryear.
The sun has passed midday on that because our weapons of diligence, whether it's Google, TripAdvisor, or Amazon reviews, now get us to the best product without the benefit of this "weapon of diligence" called brand. When I used to come to London, I used to stay at the Four Seasons or the Mandarin Oriental. Why? Because someone else was paying and they were always an eight.
Then I went on TripAdvisor and my social graph, and I found out people love the Connaught Hotel or the Ham Yard. So I started staying at boutique hotels. All of a sudden, product became the bomb again. Your ability to embrace these new mediums around social became more important than broadcast advertising.
The traditional vehicles for branding that I've been preaching in brand strategy are over. If you look at the majority of curriculums in marketing departments, you could argue we're just training people to go to work at Unilever or General Mills and be laid off 24 months later. Branding has become much more about innovation and actual product quality.
Tesla is a better product. Apple used to be an underpowered product with a great brand; now it's a great brand with a superior product. Airbnb is a much better product. Google is 10x better than what was there before it. Supply chain, design, the way you absorb the product, its ease of use—it’s moved from a brand economy to an innovation economy.
Rather than taking classes on advertising, I say take classes on supply chain or analytics or really understand industrial design. There was a general feeling that all product quality had maxed out, and then the internet came along and unlocked all this product innovation.
What do the most valuable companies in the world have in common? They either spend no money on advertising or they're spending less. Apple reallocated six or seven billion dollars out of broadcast advertising into its channel, into stores. They built 550 temples to the brand. I think of that as almost part of the product.
Advertising is a tax on the poor and the technologically illiterate. It's moved to more distribution and innovation. But for God's sake, don't avoid falling into the trap of thinking that the masters of the universe are branders or advertisers.
## Topic: Brand vs. Performance Marketing [00:10:22]
Having worked in the advertising industry, this is a conversation we have all the time with clients. You'll meet a certain type of client who is religious about the bottom of the funnel. If I can't track it and I don't know exactly what the return is, I won't do it. Then you'll sometimes meet the opposite: someone who just loves to spend on brand.
They're both wrong. Mark Ritson, a very good marketing professor, always talks about the importance of "Both-ism." He says it's vitally important that when I speak about the importance of brand marketing, you do not interpret this as denigrating digital marketing. In fact, I go a bit further and say the bottom of the funnel, in many respects, is the thing you have to optimize first.
If there's a bottleneck at the bottom of the funnel, there's no point in spending money on advertising because you'll just introduce more people to a disappointing experience. You've got to get the back end right. I would argue the first thing in theory you should optimize is repeat purchase. Having gone through the expense to acquire these customers, that's the metric that always fascinates me.
The question about electric cars isn't how many people are buying them or what percentage of the new car market in the UK they are. The only question worth asking really, in the long term, is: does anybody who buys an electric car go back to buying a gasoline car? Because if the answer to that is "hardly anyone," then you know the growth is going to be pretty spectacular.
So, the thing to understand in a market is to what extent does your product actually convert someone to something. You'd start with repeat purchase, then you go to conversion, and then you'd work your way up. But what tends to happen is when people are obsessed with quantification of everything, it's worth noting that all big data comes from the same place: the past.
So, there's a limit to how much big data, particularly if you've had some major event like a pandemic in between, can actually tell you about the future in any case. As David Ogilvy famously said, you're not advertising to a standing army, you're advertising to a moving parade. People are coming in and out of markets all the time.
You get some people who are just fame junkies. And by the way, I suppose there are brand categories where that's appropriate. If it's sold through retailers, for a Burger King or a McDonald's, that's not a totally crazy position. But the tragedy is this false dichotomy between brand advertising and what you might call performance or digital marketing, as if you have to be in one camp or the other.
## Topic: Personal Branding and Reciprocity [00:13:40]
There are figures on this. If you look at the work of Les Binet and Peter Field, the ratio shifts a little bit, but generally, they'll stipulate a figure around about the 60/40 mark in favor of brand or mass media expenditure. They have a mutually beneficial relationship. Top of the funnel makes the bottom of the funnel work.
Because direct marketing was unfashionable for a while, we spent a lot of time denigrating advertising spend because they got much bigger budgets than us. But we came to realize pretty quickly that there's nothing harder than direct marketing a product that nobody has ever heard of.
Every time American Express went on television or advertised big in mass media, the response rates to direct mail would increase pretty significantly. You have to work less hard. It’s that wonderful phrase from a book by Matt Johnson called *Brands That Mean Business*. His wonderful line is: "Having a great brand means you get to play the game of capitalism in easy mode."
Fame, to some extent, brings a load of benefits which aren't necessarily sales-related. For example, you can cock up and your customers will be more forgiving. Take the example of Apple. On a couple of occasions, Apple has produced products which had fairly major flaws, like the famous phone where if you held it in the wrong way, it didn't make phone calls. Given the reality distortion field around the Apple brand, people have passed over those incredibly rapidly.
It's very easy to measure the extent to which something has an effect on sales, but the effect something has on price elasticity and the extent to which you can command a premium because it's a great brand is harder to measure. When you sell something, the counterfactual is that you assume you wouldn't have sold it otherwise. But if you sell something for a high price, you can't in fact determine that without your advertising, you wouldn't have sold it for that premium price.
This quest for perfect measurement to reduce marketing to a kind of Newtonian physics is a bit of a false god.
Fame can also be applied in the topic of personal branding as well. Obviously, social media has allowed us all now to build our personal brands. You've got the Gary Vaynerchuks of the world who have built their companies because they've branded a person. What kind of shift have you seen in the desire for people to become brands themselves?
I think advertising always had those personal brands, and if anything, it's slightly diminished. *Campaign Magazine* always did a very good job of making sure there were 30 or 40 famous names within the business. That just happens in a different medium now; it happens on LinkedIn.
One of the greatest things, for example, is a wonderful guy called Dave Trott. He's a glorious advertising mind, just an absolute ornament to the industry. He, through Twitter and through blogging, has had a completely new lease of life and influence to a completely new generation of people and has been hugely valuable as a teacher.
One of the things that is complicated about this new world is that the most valuable thing I often do in the course of a working week is either to give something away or to put somebody in touch with something else. Neither of those things is in any way monetizable, but reciprocity would say otherwise. You've just got to rely on a high degree of reciprocity.
It always bothers me that we're in a business, advertising, which is paid by the hour, which is a terrible way to pay for ideas. Because the value of something has no relation to the time devoted to its inception.
The most valuable thing I probably did in my working life was to go to the government's Behavioral Insights Team. As a fanatic vaper, I'd been a long-time smoker and had been able to quit for the first time successfully by switching to vaping. I went to the team and I said, "Look, these things are coming over from Japan and the United States. I think there are two things you need to be alert to in psychology."
One is that because they actually replicate the habit of smoking, not just the nicotine, they are a major source of harm reduction. It may help people to quit. And the second thing I said is because of peculiar human psychology, half the people in the health and anti-smoking lobby will be fanatical about banning electronic cigarettes.
I think they went to the Cameron government and said, "Can we have a light touch on vaping regulation, please?" Various parts of the EU went for much stricter regulation, but the UK went a different way.
On that point of personal branding, do you think building a personal brand is important?
You have a personal brand whether you like it or not. That's one really important point about branding. People are going to perceive you in some way regardless of anything you do. They're going to form an impression of you, form an impression of what you're worth, what kind of business you are, and they will use all manner of inferences and heuristics to arrive at this conclusion.
This is why I argue that marketing isn't an optional extra; it's an essential. Because the worst thing you can do is build a great product and fail to present it in a way that is convincing, appealing, attractive, or which confers status on its users.
You're going to have a personal brand whether you like it or not, so you might as well try and have a good one. I think it probably is true to say that the personal brand requires sacrifice. Strategy is the art of sacrifice. Not totally true, I think there are win-wins, but you have to have weaknesses as well as strengths.
Interestingly, one of the things that would be part of my personal brand is I am not a CEO, I have no aspiration to be a CEO, and I know enough about myself to know I would not be good at that job. There are certain forms of ambition and aspiration which, consonant with a personal brand that I have, are basically avenues that are closed to me. I'm not very good at administration; I'm very bad at making difficult decisions.
But where I'd be useful, I'd be useful at making oblique or unusual suggestions. I'd be useful at getting people to consider the same thing in five different ways or promoting a counterintuitive thought. I might be useful at suggesting somebody—I've got a fairly good personal Rolodex. "Before you run off and do this on your own, why don't you talk to this guy at this university who's been studying this for the last 15 years?"
## Topic: Guerilla Marketing and Community [00:23:03]
In those early years of Tinder, I remember being told the story, maybe 10 years ago in San Francisco, when I was working there with a guy called Michael Birch, who is the old Bebo founder. In his little incubator, they were telling me the Tinder story of how you went to a fraternity. For people that don't know what a fraternity is, what’s a fraternity?
So I guess in the UK it would be like college clubs. We have sororities and fraternities. Sororities are a house of women, and fraternities are a house of men. Essentially, a lot of college students do something called "rush," where they go house to house and they meet all the women or all the men, and then they basically put in the name of the one they would really love to be a part of.
This is a way a lot of people find friendship and community. So with Tinder, I essentially went back to my alma mater at SMU. I'd just graduated, so a lot of my best friends were still in school. So I got access to the campus, and I would start at the sororities and then go to the fraternities. I'd essentially have all the young women download it and then run to the fraternity, and then they would download it, and then everyone would start connecting.
I heard about this 10 years ago because we were building community-centric apps. We were building something called Blab, which resembles what Clubhouse is now. When we were talking about the marketing strategy, Tinder kept coming up. That was the thesis: should we go to fraternities to try and build that sort of isolated tight community to try and get product-market fit?
Because network effects really, really matter, especially in the dating game.
The most important. That's why there's only a handful of dating apps that have ever survived. There was a superpower in the timing of it all because I had just graduated and I knew all of these people. If some random startup founder knocks on a sorority door, the police are coming. You can't do that. So I felt like I had this insider hook because I was technically an extension of that by proxy.
I took the photo of one of my guy friends back then who all the young women had a mega crush on, and then I took the photo of my best friend, Danielle, who was very well-liked on campus. I went into her journalism class and I basically snuck into her journalism class and used Photoshop. I took the Tinder screens and I put the guy's face on one and her face on the other and said, "Find out who likes you on campus."
Then I saved it to a file, and I went to FedEx across the street and I printed 1,000 copies. I quite literally handed different students on campus $20 to go distribute them under dorm doors and to put them on windshields and to essentially distribute these flyers everywhere.
That was just one of the tactics I used. Then I had a few T-shirts printed up that said, "Don't ask for my number, find me on Tinder." I had my girlfriends wear the T-shirts and we went to the bar. I gave them a couple hundred bucks, and they would go around and buy drinks, and then when people would ask for their number, they'd essentially say, "You have to download Tinder."
It was a lot of these tiny hacking concepts that made no sense. No one had ever done these things before. I had no playbook. It was just what felt around me. It was just bringing the real-life dating experience to life through an app marketing.
There's so many important messages of marketing there. The first one that you said was that you were the customer. You were so close to the customer that you understood them. I've seen over and over again from speaking to really successful CEOs and founders how important naivety was.
So important. Just following your gut.
Because then that's creating something from first principles as opposed to convention. That's real innovation. It creates solutions that are more suited for today. This is sometimes why I think some of the best founders don't come from business school or from marketing school. The best marketers aren't marketing graduates because naivety is such a superpower.
It's a superpower. Following your instinct. If you understand what moves people and what motivates people, then you have this opportunity to connect with them on a real level. I remember we would make these signs that had the big X's, like "no," and they said, "No Facebook, no Instagram, no Snapchat, no Bumble."
This was like week three of Bumble. We would post those all over the universities. So there was this association where it was like, "Wait, I can't do the things I really want to do. I want to sit in class and Snapchat, I want to sit in class and Instagram. What the hell is Bumble?"
So we were essentially seeding this psychological curiosity. And then we were actually sending young women wearing Bumble shirts into classes 10 or 15 minutes late, interrupting a class of 300 people and saying, "Oh, sorry, wrong room," but everyone's looking at this young woman or young man wearing a Bumble T-shirt.
We were seeding curiosity and this "why is Bumble everywhere" type of thing. A lot of people think, "Oh, well, I can just go start an app and I'll just buy some Instagram ads and I'll be successful." If people only knew the fraction of the insane everyday little hacks that I did and our team did to bring this to life.
We were the first tech brand to do humor accounts, to pay for the humor memes. Do you remember the humor memes? Years and years ago, I remember reaching out to one of these meme accounts, and they're like, "Wait, you want to pay us? I'm confused. How does that work?" And we're like, "Okay, here's the deal, we'll give you $100." We turn around a year later, that same account is charging $100,000 a post.
So there's also something about luck and timing. Being just right before something. If you look at Bumble, we were also beating the woman drum, this drum of "we need to advocate for women," beating this drum of "let's put women first, let's elevate women." Women are not equal in their relationships, women are not being treated respectfully, women are being abused on the internet. We were saying this in 2014, and then MeToo would come a couple of years later.
So I think we've been lucky as a business to basically be right before the wave and then we've been able to be a part of that wave versus chasing a wave. So many people chase a wave. They look around them and think, "Well, what's cool? How do I chase that?" I feel like we've always had the good fortune to go first.
## Topic: Closing Credits [00:33:41]
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