The Prof G Pod with Scott Galloway - Future of Marketing: Part One

Episode Date: September 18, 2024

Today, we’re kicking off a special two-part series answering your questions about all things marketing.  Scott puts on his professor hat and answers your questions surrounding common marketing misconceptions, the power of community-driven marketing, and what the future holds for the industry.  Music: https://www.davidcuttermusic.com / @dcuttermusic Subscribe to No Mercy / No Malice Buy "The Algebra of Wealth," out now. Follow the podcast across socials @profgpod: Instagram Threads X Reddit Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Contact today. Ready, set, grow. Go to ConstantContact.ca and start your free trial today. Go to ConstantContact.ca for your free trial. ConstantContact.ca. Welcome to the Profit Pod's Office Hours. This is the part of the show where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind. Hey, Prof G. Hey, Scott and team. Hey, Scott. Hi, Prof G.

Hey, Prof G. Hey, Prof G. Hi, Professor G. Today, we're kicking off a special two-part series. I did not know that. I guess we're in part one today, answering your questions about all things marketing. I just got insecure. We'll answer your questions surrounding common marketing misconceptions, the power of community-driven marketing, and what the future holds for the industry. So with that, first question. Good day. This is Nick from Sheffield,

Massachusetts. I have two questions. The first is, what do you believe to be the greatest fallacy today in marketing, i.e. the greatest misconception or misperception that you encounter? And the second is, why is B2B marketing so dull? Hmm. Nick, why are you so like,

why are you so sexy with that whispering voice? Jesus, what are we exchanging like nuclear codes here? Anyways, look, the sun has passed midday on the world of brand strategy. I worry that, and I've tried to dramatically alter my curriculum to talk about algorithms, APIs, new platforms, supply chain, which I think is sort of the new gangster attribute of a company, if you will. If you think about all the companies that really add a lot of value, it's usually about a supply chain innovation, whether it's Netflix going from DVD to streaming to now producing stuff in Madrid and Seoul. Amazon is obviously a supply chain story. I think almost all massive, if you will,

value accretions are supply chain. You're like, well, what about NVIDIA, Scott? Well, that's supply chain too, bitch. How did we print money or create shareholder value? What was the algorithm for shareholder value from the end of World War II to the introduction of Google? Simple, manufacture a mediocre product. And it doesn't matter

because we had just leveled our competition, specifically Germany and Japan. And so we could produce a mediocre product. And it doesn't matter because we had just leveled our competition, specifically Germany and Japan. And so we could produce a mediocre product. And then we would wrap it in these amazing brand codes of American toughness or youth or sex appeal or European elegance or paternal love or maternal love, right? Let's turn 20 cents of peanut butter paste into $2 of peanut butter. Why? Because choosy moms choose Jif. And if you want to show your neighbors that you love your kids more, then it's worth it. This is maternal love. And these brand codes could be hammered away and cemented into our psyche using this extraordinarily cheap medium called broadcast television, where all of America spent five hours a day watching Y-Tang, which the astronauts drank, was good for you, right?

All of these amazing associations we were better at imbuing than anyone in the world. And that was the world of marketing, and there were marketing departments everywhere. And I worry now that the whole price, promotion, product, place thing, the four Ps in traditional marketing is essentially training kids to go to work for Kraft or General Foods or Procter & Gamble and be laid off two or three years later. Because where has the majority of capital gone? It's gone back into the product. Why? Because digital technologies have unlocked an opportunity to 10x products. The idea, the ability to unlock product quality and find the better product using digital technologies and these weapons of

mass diligence called Google and TripAdvisor and all these other platforms has essentially taken traditional marketing and kicked it in the nuts. So I think you're going to see a reallocation of capital going back to the original notion around CEO's job is to, or manager's job is to allocate resources to their greatest return. I think the greater return is pulling money out of marketing right now, and I hate to say it, and putting it into supply chain or actual product innovation using new digital technologies. But what about spending more money on Google? Yeah, that happened. I think that will likely slow down. It'll still be greater than the rest of the industry, but they have managed to bid up their prices through monopoly abuse.

And I think people are figuring out that it's no longer the deal it used to be. It's still a better deal than broadcast advertising. What does that mean? It means the CMO is like a second lieutenant in Vietnam, and that is their lifespan is going to be pretty short. It's going to be CSO, chief supply chain officer. I think the CMO is kind of already dead. They just don't know it. And I used to work with CMOs all through the 90s when I was running my first firm, Profit.

And effectively, their job was to create this intangible kind of notion of these intangible associations. And also their job was to convince everyone that they were somehow the Yoda of the brand and no one else was allowed to even talk about it, that the whole brand thing was a Fabergé egg and only certain people could use certain words around the brand and no one else was allowed to even talk about it, that the whole brand thing was a Fabergé egg and only certain people could use certain words around the brand. And if you smudge the egg, it might be a career-ending injury. It's also fucking arrogant. What does that mean if you're working in advertising? Boy, am I going on here. It means if you already have momentum and you're doing well, you probably should stay put. I would argue if you're under the age of 40 and

you don't see like you're not skyrocketing at your current agency, I would say thinking about, I would consider getting out of that business and getting in on the client side to things that are more closer to the product, if you will. Anyways, I think that's a great question. I need to answer the biggest question, and that is the misconception. The biggest misconception in marketing is the following, and that is the belief or the misconception that choice is a good thing. It's not. Choice is a tax on consumers. Consumers don't want more choice. They want to be more confident in the choices presented. That is the basis of the category of retail that added more shareholder value in retail than any sector in history, and that especially retail. Why? I don't want every

yoga pant available. I don't want to go on Amazon and see 300. Some people do, obviously a lot do. But what I really want is someone with much better taste than me in Vancouver to pick the three best yoga pants. Anyways, next question. Hey, Scott, I'm Philip, a German-speaking podcaster currently doing an executive MBA. This weekend, we discussed in class that companies and universities should be communities. Additionally, creators often refer to their audience as a community. What are your thoughts on using communities as a marketing tool to create and retain customers and turn them into ambassadors?

Keep up the good work, and thank you for answering my question. Oh, sure. I mean, you know the answer to this, Philip. It's powerful. In my branch strategy class, I have a series of constructs. And I'm like, you may not remember me, you may not remember the class, but you need to remember these constructs. And I think I have about a dozen of them. And they're essentially models to kind of sort through the basics of marketing. And one of those models is called the clock model. And that is from 12 to 4 when the consumer enters or a stakeholder enters the franchise, that's pre-purchase marketing, advertising, PR, sampling, conventions, whatever it is, thought leadership that raises awareness,

creates hopefully intent to buy. Four to eight, the bottom of the clock is distribution. Like I walk into a Lexus dealership and I think this is a nice experience and it makes me feel better about the car. The ultimate kind of four to eight is Apple's gangster decision to take six or $7 billion a year out of advertising and put it into these 500 temples of the brand called their stores. I mean, I think actually, I think that may have been a more important move than the iPhone, although the iPhone is the one that harvests all that brand equity. But these stores, think about where you used to go to buy electronics, like a Verizon store with bad lighting and a guy named Roy. It's sort of where, I don't know, it was just awful,

right? Or, I mean, Best Buy does a good job, but it's not really aspirational. There was nothing aspirational in one of the largest categories in the world, technology. And Apple came in and said, why don't we make it feel like an Armani store that's like the coolest? I'd like to live in an Apple store. I think if they had a coffee shop, everyone would just go, hey, I think it would put Starbucks out of business if they started a coffee adjunct just called Apple Up or Apple Calf. Apple Calf. I like that. But C-A-F-F-E. Ooh, hashtag, trademark, Scott Galloway. Anyway, that's the distribution. That's four to eight. Eight to 12 is post-purchase. Loyalty programs, customer service, right? You go into Nordstrom, and if you're a customer there and you bought something, they are just going to take the return no matter what. FedEx, once you ship the product, you can track it. That was sort of the gangster move back in the 90s. I remember sending all my applications in for business school and freaking out because, of course, I waited to the deadline and I could go on the FedEx side and they had invested billions of dollars at that time. So tickets say I will assign by a woman named June Allison at the University of Pennsylvania Wharton, who will soon get about rejecting you. reject thank you june come back scott okay community post-purchase harley owners groups affinity programs loyalty kind of empowering or illuminating or activating your community is just huge and one of the reasons we try and do events and try and write back and i try to be

it's actually easy for me to be nice to people on the street is you want a community of people who are your evangelists. It's just no, when you have a small company, what's the most important thing? The core team of amazing players that you give a much equity to and literally nail them to the ground. That's number one. But what you also need is those first few clients. I was in the services business and I always said, our first three clients have to be just fanatical about us. We have to over-serve them. I don't care if we lose money. I don't care if you have to go on vacation with them. I don't care what it is. They have to be evangelists. So if you can create a community of evangelists or people who have sort of a goodwill towards you, and there's ways to activate that, obviously it's hugely important. Something NYU does not do well, does not do well. There's not that same sense of camaraderie or community post-purchase, if you will. So thinking about how to illuminate

or really engage or activate this community and give them opportunities to get together. One of the things we're talking about for all of our podcasts is doing a series of events or a tour next year, because when we meet people and you're nice to them and they see you live, they just feel more cemented. They feel more engaged. They feel more intimate with the brand. So yeah, you knew I was going to agree with you. The question is, what is actionable here? If you were to roll out or unfurl the brand clock in terms of resources, you want to have a bias. Now, what's that bias? you want capital to be slanted downhill what do i mean by that you want to have a bias against pre-purchase kind of a mediocre bias against distribution and you want to have a bias towards post-purchase why because pre-purchase is over invested because it's

cool i used to go back to new york and advertise with condé nas because i wanted to have lunch in the condé nas cafeteria with my friend David Carey because the people were hot and I got to see Anna Winter and they would invite me to these cool parties and I felt cool. And you get to hang out with good looking people who wear black and invite you to cool parties when you spend money on pre-purchase, mostly agency people and magazines and media companies. Purchase is kind of fun at stores, expensive, but kind of fun. Post-purchase is kind of fun. That's stores. Expensive, but kind of fun. Post-purchase is boring. That's slipping a pizza under the door to a bunch of MIS guys building CRM databases. It's not romantic. It's not sexy. And guess what? The inverse correlation holds here as it does with careers. The less sexy, the greater the ROI. So I want you to have a bias towards post-purchase loyalty programs, database marketing, CRM, and also community, if you will. Thanks for the question. We have one quick break before our final question. Stay with us. Welcome back. Question number three. Hey, Scott. I'm a 40-year-old freelance film professional

working behind the camera as a cinematographer. I've managed to navigate the industry's challenges in recent years, primarily by working on broadcast and internet commercials, even as the industry as a whole, including film, TV, and reality content, has scaled back. With high-quality videos now achievable on consumer-grade cameras and personal phones, do you think there still will be a need for professionally made commercial and marketing campaigns from a branding perspective? Or are we likely to see a decline in demand for my services? Alternatively, could the growing need for video content

across numerous mobile platforms ensure ongoing demand for professional production? Essentially, will my skills be needed in 10 or 20 years? Anonymous, you're at exactly the wrong age or the tough age because it's not like you're 25. If you were 25, I'd say get the hell out of Dodge. But if you're 40, it means you're probably pretty good at what you do. You have some professional credibility, some awareness, some momentum, contacts, and that's tough around whether you should can that and go be a commercial real estate broker or something. I'm not suggesting

you do that or do something else. And so if you've done well, I would say, all right, what are we going to do if we want to stay in this industry? The term I would use or the statement I always make is that AI is not going to take your job. Someone who understands AI is going to take your job. And that is you need to become a warrior around where there'll be growth in the industry. And that is getting 80% of the production value for 20% of the price. sets, and I'm not going to hire an agency who's going to show up and storyboard it and do all this cool shit and take me out to dinner and charge me a quarter of a million dollars before I even see a reel. I think those days are gone unless you're a super high-end, high-budget production luxury brand or automobile company. I just think that's going away. But I'm a guy who understands the newest technologies and can string together kind of what I'll call the old Navy of video production. What do I mean by that? I can give you 80% of the gap for 50, not even that, 50, 20, 10% of the price. So I think

you've got to become a ninja warrior in terms of these new tools that take costs out and figure out a way to use, I don't know if it's Firefly, I forget what the other visual one is that everyone's talking about, but you have got to get very good at AI and be able to spin up assets at a fraction of the cost. You have got to go back to school, if you will, get really fast out with these technologies with one objective. How do I produce something of 80% of the quality that I have produced in the past for 20% of the price? That should be your goal. What technologies, what skills do I need to garner such that I could do that? It is not easy. It is not easy. And there will always be signs of hope to hold on to the old days, but make that transition. You're still a young man. Anyways, you want to be the old Navy, if you will, of cinematography. Thanks for the question. That's all for this episode. If you'd like to submit a question, please email a voice recording

to officehoursatpropgmedia.com. Again, that's officehoursatpropgmedia.com. This episode was produced by Caroline Shagrin. Jennifer Sanchez is our associate producer and Drew Burrows is our technical director. Thank you for listening to the PropG Pod from the Vox Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn. And please follow our PropG Markets Pod wherever you get your pods for new episodes every Monday and Thursday.