Monthly Archives: July 2016

Learning Business From Burgers

This Foodie Friday brings news that the folks at Chipotle are doubling down. As you’re probably aware unless you’ve been under a rock for the last few months, Chipotle has had some serious issues with E.coli outbreaks in a number of their stores across the country. I wrote about this problem a few months back so we won’t review the details here. Suffice it to say that it has been a disaster for the chain and sales have plummeted.

Español: Restaurant Chipottle Mexican Grill in...

(Photo credit: Wikipedia)

In the wake of that, the chain has decided to open another chain. This one will serve burgers and has launched the first outlet in Ohio, calling it Tasty Made. It will serve the same sort of fare as McDonalds, Burger King, and any number of other chains: burgers, fries, and shakes. They intend, however, to put the Chipotle spin on them, as explained in this article:

The company said the new restaurant chain will use “high-quality ingredients that are grown and raised with respect for the animals, the land, and the farmers who produce them.” The company said the new restaurant chain will use “high-quality ingredients that are grown and raised with respect for the animals, the land, and the farmers who produce them.”

That’s the same philosophy as the main Chipotle chain and it had been serving them well until the bacteria breakout hit. Now one could rightly wonder why they’d be thinking about a couple of things. First, why burgers? It would seem as if the field is pretty well saturated and there is even a high-end competitor – Shake Shack – that seems to be in the space already. Second, why now?

I often remind clients that eBay wasn’t the first online auction site, Amazon wasn’t the first online retailer, and that the iPod wasn’t the first mp3 player. They just did things better. We’ve all heard the line about building a better mousetrap and that’s what Chipotle did in their original incarnation. There isn’t anything wrong with their model although obviously, the recent execution leaves quite a bit to be desired. None of us should be afraid to get into a crowded space if, and only if, we really do have a product that is obviously better to the consumer.

Why now? Why not. Their model works and they need to do something to jump start revenues since the flagship brand isn’t recovering quickly. They have other infrastructure already in place for marketing, real estate, systems, and distribution. In fact, they have a couple of other ideas (pizza!) in the works as well. I’ve found that if we wait until conditions are perfect, we’ll generally be waiting a long time.

Our love of a good burger isn’t going anywhere. Let’s see if Tasty Made does. No matter what, it’s will be interesting to learn from them.

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Filed under food, Thinking Aloud

Restoring The Balance And Destroying The Blocking

If you are in business and you market that business at all, chances are that you’re using digital media of one form or another to do so. I suspect that much of your budget for that has shifted a bit based on how widespread the ad-blocking phenomenon has become. I’ve written about it a few times and the practice of installing ad blocking software on computers and mobile devices continues to grow.

While several ad agencies and the Internet Advertising Bureau (IAB) continue to denounce the software as violating the value exchange compact (attention to ads in exchange for free content), they’re finally getting around to studying ways to get consumers to turn off the blocking software. Both the IAB and Omnicom published some results of their studies and they’re enlightening.

Advertisements, Salem, Massachusetts

(Photo credit: Wikipedia)

First Omnicom. Their study found that many ad-blocking users don’t dislike all advertising. They hate popups (who doesn’t!). 44% of those polled associate ad blocking mostly with blocking pop-up advertising. Popups are a type of ad that interrupts the content consuming experience, and that’s what’s pissing consumers off. As an aside, TV commercials do the same interrupting – is a remote control an ad blocker? Then there was this, as reported by MediaPost:

If consumers perceive a positive value exchange with websites, most are willing to go back to an ad-centric experience. In fact, consumers can be motivated to not only turn off their ad blockers, but will also disable them. Among those factors that would entice them to disable ad blockers, 28% would do so if the blockers slowed down their browsing speed, 24% if the ad blocker allows advertisements via payment, and 23% if they trusted websites to not serve annoying ads.  Consumers would disable their ad blockers if the website promised non-intrusive ads (35%).

In other words, people get that publishers need to monetize their content and don’t mind ads per se. They do mind being overwhelmed by ads or having to close several popups to get to the content they want. The IAB data echoed this:

A total of 330 people who said they used ad blockers blamed ads for making websites slower, either because the ads were too data-heavy or because there were too many of them…Not surprisingly, animated, moving and autoplay ads irritated consumers who used ad blockers the most, as did ads that covered up content and long video promos.

All of this sounds like common sense to me. Consumers don’t want their content consumption interrupted, delayed, or slowed-down. They don’t want to expend excess data loading ads. They understand the basic economics of the attention/value exchange but feel that publishers have tilted the balance too far in their own direction and are retaliating by blocking the ads that do so. If we’ll restore the balance the chances are good that they’ll go back to looking at the ads. Make sense?

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Filed under digital media, Reality checks

Protecting Your Brand With Common Sense

The Olympic Games are almost upon us. Like most major sporting organizations, the Olympic Committee and the US Olympic Committee protect their commercial marks aggressively. That intellectual property is a huge piece of the value they sell to official sponsors and keeping non-sponsors from doing ambush marketing is a big part of any sports organization’s daily life. It becomes front and center during marquee events. 

Companies find ways around this enforcement, of course. You’ve probably seen dozens of ads about “The Big Game” every January. You know they reference The Super Bowl even though it’s never said, don’t you. It’s a term the NFL tried to protect but was unable to.  The USOC and IOC are just as aggressive about terminology ranging from the obvious (Olympics, Games, Medal, Rio) to the less obvious (Effort, Performance, Challenge).

Today isn’t about whether that’s a good thing or a bad thing. Having spent much of my career selling and protecting commercial sponsorships of sporting events, you can imagine where I come out on ambushing. I do, however, have a bone to pick from the other side of my career, which is digital. I think it’s instructive for all of us.

Social media is social. Sharable. A conversation. More importantly, social media has become how many people learn and stay in touch with what’s going on in the world. Not in the USOC’s eyes, apparently. They sent a letter out last week which reinforces all of the aforementioned commercial restrictions around the upcoming games, especially with respect to athletes who may be sponsored by non-USOC or Olympic sponsors. But the letter went further.

“Commercial entities may not post about the Trials or Games on their corporate social media accounts. This restriction includes the use of USOC’s trademarks in hashtags such as #Rio2016 or #TeamUSA.”

It doesn’t stop there. The same letter sent by the USOC reminds companies (except for those involved in news media) that they can’t reference any Olympic results or share or repost anything from the official Olympic account. I think that’s pretty far over the foul line. Social media by definition is meant to be circulated and almost any sponsor will mention “going viral” as one of their goals. How can you tweet or mention anything about the games without using a tag that’s discoverable? Why wouldn’t you want broader attention drawn to your event if it’s not otherwise a commercial message? Yes, I understand (better than most!) how sponsors try to share the brand equity of the event without authorization, but if all they’re doing is retweeting your own post, how are they sharing brand equity?

Protecting intellectual property is one of the most important things any brand or business can do. There are limits, however, and that protection should hardly ever interfere with common sense and the world of social sharing. You certainly don’t want to be seen as a bully. Do you agree with that?

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Filed under sports business, What's Going On

Why Free Data Is A Bad Thing For You

Everyone likes “free.” Heck, there are plenty of marketing tomes that say “free” might just be the most powerful word in marketing. Well, as usual, I’m here to burst your bubble about one particular aspect of something free which I find detrimental to us all. It’s something aggressively marketed by T-Mobile and Verizon but others do it as well. It’s called Zero-rating of data. Their “Binge On” and “FreeBee Data 360” offerings provide subscribers with free streaming media that doesn’t count against their data plans.

The basic concept is that ISP‘s – in this case the two aforementioned wireless carriers – don’t charge consumers for data used when the consumers use specific sites or services. That’s pretty appealing. In fact, T-Mobile reports that mobile subscribers who sign up for their “zero-rated video” offering immediately double their consumption of video. So why is this a bad thing?

Verizon bought Yahoo this morning. They previously bought AOL. One might expect that those two companies and their services will become zero-rated for Verizon customers. While T-Mobile has yet to buy a competitor, one can easily imagine them assembling their own lineup of content and service providers. Cable providers have been doing the same thing for a long time with fledgling cable networks. They take equity in these companies and, in return, provide carriage on a better tier (meaning it’s more widely available). These cable providers are also ISP’s.

The reason our digital ecosystem is flourishing is that until recently there was no one picking losers and winners. Zero-rating does exactly that. Think about the food court at a mall. There are two restaurants side by side, but one serves free food which is paid for by the mall landlords. Which one do you think will have the longer line, regardless of the quality of the food served? If a new streaming service enters the market but there is no data charge to visit their entrenched competitors, what chances do they have to succeed?

So yes, everyone likes free but in this case free is a bad thing. It will restrict the development of new companies. It will give more power to the gatekeepers. It enables internet providers to gain a significant advantage in the promotion of in-house services over competing independent companies, especially in data-heavy markets like video-streaming. Does that make sense?

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Filed under digital media, Reality checks

The Importance Of Eating It

This Foodie Friday we turn to a business lesson surfaced by hospital food. My mom recently had a short stay and her sole complaint (after heart surgery!) about the experience was the food. As it turns out, she is far from alone in this. This article from an Ottawa newspaper (via First We feast) tells the story of a how a hospital changed the nature of its food service. It’s the reason why that’s instructive to the rest of us.

One of the administrators actually ate some of the hospital food. What happened next was that he got some other managers to do the same.  For a week. As the article said:

He and other managers didn’t particularly like what they tasted and saw. After food managers choked down three meals a day for a week, there was a consensus that things had to change.

Nothing like eating your own dog food, right? But that’s a critical part of serving our customers well and each of us needs to do that on a regular basis. When was the last time you tried to go through checkout on your own online store? How was the experience? How about trying to return what you purchased or put in a call to your customer service department? My guess is that none of your top managers have done any of those things in a while.

Several years ago I wrote a post on eating your own dogfood. That had to do with believing in what it is that you sold. I’d like to extend that concept to not just believing in it but actually experiencing it so that your belief is grounded in reality and not through rose-colored glasses. The hospital administrator answered a complaint about the food thusly:

 “Our management team has recently eaten hospital food for a week and agrees with your observation that we need to improve the presentation and taste.”

That answer is one I’d believe as a consumer because it’s grounded in some first-hand experience with their food. When was the last time you tasted yours?

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Filed under food, Huh?, Thinking Aloud

Mass Markets And Mass Media

I’ve written a number of times over the last few years about the changing patterns of content consumption and how those changes are affecting the media business. I read some statistics last week that make me think we’re almost at the tipping point where we’ll see some irreversible things happening that affect not just media but marketing as well.

First, the statistics. The report is GfK‘s The Home Technology Monitor and while there wasn’t much “new” in it, the acceleration of some trends is interesting:

New findings from GfK show that US TV households are embracing alternatives to cable and satellite reception. Levels of broadcast-only reception and Internet-only video subscriptions have both risen over the past year, with fully one-quarter (25%) of all US TV households now going without cable and satellite reception. TV households with a resident between 18 and 34 years old are much more likely to be opting for alternatives to cable and satellite; 22% of these homes are using broadcast-only reception (versus 17% of all US households), and 13% are only watching an Internet service on their TV sets (versus 6% of all TV homes). Overall, 38% of 18-to-34 households rely on some kind of alternative TV reception or video source, versus 25% of all homes.

Why this is meaningful has to do with the symbiotic relationship between mass marketing and mass media. As Ben Thompson put it in a Stratechery post:

The inescapable reality is that TV advertisers are 20th-century companies: built for mass markets, not niches, for brick-and-mortar retailers, not e-commerce. These companies were built on TV, and TV was built on their advertisements, and while they are propping each other up for now, the decline of one will hasten the decline of the other.

As you can see from the chart, viewing of traditional TV by young people in the first quarter of this year (traditionally a high-viewing quarter as many people stay inside during winter) dropped precipitously. There aren’t many mass markets and there really aren’t mass media. Why, then, are we focused on measuring things that are no longer really relevant? Anyone?

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Filed under digital media, What's Going On

Playing It Backward

I spend a fair amount of time working with startup companies. By definition, these businesses have a lot of planning and building to do. What problem are we solving? How will we make a product or service that accomplishes that solution? What will that cost and what’s the financial plan? How do we gain enough traction to scale? It often seems overwhelming, even to someone with my years of experience. When I can see that there is a fair amount of frustration on my clients’ faces, I’ll usually ask if they know how great golfers think about how to attack a hole.

Stay with me here – this isn’t yet another excuse to talk about golf here on the screed. Great golfers will play a hole backward. They start by thinking about where the pin is on the green (front, middle, back, left, center, or right) using the pin sheet every caddie and player carries. That sheet gives them the location – how many feet on from the front, how many feet from one edge. That allows them to figure out the best angle for the approach shot, which then dictates where they want to land the tee shot. Backward.

I think great business people often play their businesses backward. Some might call it starting with the end in mind but I think it’s more than that. For example, I think it’s a better and more accurate method if you begin with what number of customers get you to sustained profitability and go backward to find out how you’ll scale to that number (I generally use 10x growth per year) than to begin with where you think you might be now and guess at growth rates. The former gives you targets that will get you where you want to go and an ability to formulate marketing and other budgets to support that growth. The latter is reacting to where you might find yourself without a clear path or guidance for budgeting.

I try to play most decisions backward. Where is the pin (my goal)? Where is the best place from which to attack it and how do I get to that place? Execution then becomes simpler – I’m only focused on the next shot – the next task – because I know I have a plan. Do you?

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Filed under Consulting, Helpful Hints