Under the Influence with Terry O'Reilly - S1E08 - The Marketing Genius of Steve Jobs, Part 2

Episode Date: February 26, 2012

This is part two of our look at Steve Jobs the marketer. This episode traces his triumphant return to Apple after being banished for 12 years and his bold choice to release advertising that suggested Apple was on the cusp of greatness. Hosted on Acast. See acast.com/privacy for more information.

Hi, it's Terry O'Reilly. As you may know, we've been producing a lot of bonus episodes while under the influences on hiatus. They're called the Beatleology Interviews, where I talk to people who knew the Beatles, work with them, love them, and the authors who write about them. Well, the Beatleology Interviews have become a hit, so we are spinning it out to be a standalone podcast series. You've already heard conversations with people like actors Mark Hamill, Malcolm McDowell, and Beatles confidant Astrid Kershaw. But coming up, I talk to May Pang, who dated John Lennon in the mid-70s. I talk to double fantasy guitarist Earl Slick, Apple Records creative director John Kosh. I'll be talking to Jan Hayworth,

who designed the Sgt. Pepper album cover. Very cool. And I'll talk to singer Dion, who is one of only five people still alive who were on the Sgt. Pepper cover. And two of those people were Beatles. The stories they tell are amazing. So thank you for making this series such a success. And please, do me a favor, follow the Beatleology interviews on your podcast app. You don't even have to be a huge Beatles fan, you just have to love storytelling. Subscribe now and don't miss a single beat. We'll see you next time. new locations. What matters is that you have something there to adapt with you, whether you need a challenge or rest. And Peloton has everything you need, whenever you need it. Find your push. Find your power. Peloton. Visit Peloton at onepeloton.ca. From the Under the Influence digital box set, this episode is from Season know, know.

You're not you when you're hungry. You're in good hands with us. You're under the influence with Terry O'Reilly. NBC Sports presents the third AFL-NFL World Championship game. The Super Bowl. The American Football League champions, the New York Jets, versus the National Football League champions, the Baltimore Colts. Super Bowl III has been called one of the greatest upsets in sports history. It was played on January 12, 1969 at the Orange Bowl in Miami. While it was called Super Bowl III, it was really Super Bowl I.

It was the first AFL-NFL game to be called a Super Bowl, but it was the third time the two leagues had met in a championship game. Hence, the two previous games were retroactively called Super Bowl I and Super Bowl II. The game pitted the AFL's New York Jets against the NFL's Baltimore Colts. The mighty NFL had dominated football since it began after World War I. The AFL, on the other hand, was an upstart that began in 1960. It was universally agreed that the AFL didn't have the caliber of talent the NFL had. So, when the AFL's New York Jets were matched against the 13-1 Baltimore Colts,

everyone braced for a one-sided blowout. The sports media proclaimed the Colts the greatest team in sports history. The Jets, on the other hand, were mostly made up of players who had been cut by the NFL, several of whom had been cut from the Baltimore Colts. But the Jets had signed a rugged University of Alabama quarterback

named Joe Namath. He was named Rookie of the Year in 1965, was the first quarterback to pass for 4,000 yards in a season, and was an All-star from 65 to 69. Yet, for all his accomplishments, no one gave Namath or his team any respect. As a matter of fact, an NFL coach ridiculed the Jets

by referring to the Super Bowl as Joe Namath's first professional football game. Then, the unthinkable happened. Namath appeared at the Miami Touchdown Club and was heckled by someone in the crowd who told him the Colts were going to punish the Jets. In frustration, Joe Namath stood up and boldly said, We're going to win this game.

I guarantee it. That guarantee would go down in history. First, it made most football fans and the press laugh out loud. The Jets coach later said he, quote, could have shot Namath for saying it. It was an outrageous statement to make for 19-point underdogs. But the Jets were confident. Their defense had led the AFL in total rushing yards allowed.

While the Colts had used a new zone defense successfully against other NFL teams, zone defenses were common in the AFL, and the Jets knew how to attack it. But most of all, Joe Namath could find ways to win. When the coin was finally tossed, the Baltimore Colts were about to learn the lesson of underestimating the competition. By halftime, the Jets led 7-0.

In the third quarter, the Jets controlled the ball for all but three minutes, and Namath was firing on all cylinders. You could see the frustration and worry on the Colts' faces. Late in the third quarter, the score jumped to 16-0. Finally, the Colts managed a touchdown, bringing the score to 16-7. But that was all she wrote. When time finally ran out, the Colts stood there exhausted and shocked.

The New York Jets had won the Super Bowl. The game is over. The New York Jets are the world champions. And Broadway Joe Namath had made good on his bold guarantee.

Against all odds, against all statistics, against all the predictions. In many ways, that historic upset parallels the comeback of Steve Jobs to Apple in 1997. Except, Apple was even more of an underdog. No one felt Apple had the caliber of talent left to compete. The press, the public, and Wall Street all bet against them. The company was reeling from a series of high-profile failures and was on track to lose $1 billion that year. It was just weeks away from bankruptcy.

But that was when Jobs made his bold guarantee. He launched the Think Different campaign that told the world that Apple was capable of thinking as differently as geniuses like Einstein, Edison, and Picasso. Now all he had to do was find a way to win. It would be the ultimate test of Steve Jobs the man, Steve Jobs the innovator, and especially Steve Jobs the marketer. You're under the influence.

When Steve Jobs launched the now-famous Think Different campaign, he essentially burned the boats. There was no going back. It was such a bold, stark declaration that not to meet it with astonishing new products would be to assure an even greater failure. But someone once said that Joe Namath's very presence on the field was worth a few points,

that his confidence was unstoppable. The same could be said of Jobs. That conviction led to the first triumphant collaboration of Steve Jobs and designer Jonathan Ive, the colorful iMac. Much of the press, as well as Bill Gates, wrote the iMac off by saying Apple was now, quote, providing leadership in colors.

But it was much more than that. It signaled the rebirth of Apple. iMacs didn't look like any other computer you had ever seen. Those vivid colors weren't just a design decision, by the way. They were a marketing decision, because they attracted customers by the millions. And while it was a relatively heavy desktop computer, it came with a handle tucked into the top. That, too, was a marketing decision. As Jonathan Ives said,

if you're scared of something, you won't touch it. So, by designing a handle on it, it makes a relationship possible. It was part of Jobs' philosophy that computers should always be friendly. The launch commercial for the iMac positioned its elegant simplicity against the more complicated PC. The PC.

Perpetually complicated. Profusely corded. Physically conspicuous. Particularly costly. Oh, and then there's the new iMac, which is about as un-PC as you can get. The iMac became the fastest-selling computer in Apple history. In 2000, Jobs unveiled his Digital Hub strategy.

Few understood it at the time. What he imagined was a universe of devices and applications that used your computer as mission control. It was a strategy that would pay huge dividends over the next 10 years. Not long after, as the world witnessed the dot-com bubble burst in 2000, followed by a recession after 9-11, most Silicon Valley companies were licking their wounds. But Jobs licked his lips.

He launched iTunes in January, the Mac OS X operating system in March, the Apple retail stores in May, and the iconic iPod in November. It was an extraordinary showing of bravado, followed by extraordinary marketing. When Jobs announced the Apple retail stores, he was immediately attacked from all sides.

The Apple board wasn't happy. They had watched Gateway computer stores fail. The press was particularly negative. Businessweek said, maybe it's time Steve Jobs stopped thinking quite so differently. A top retail consultant declared,

I give them two years before they're turning out the lights on a very painful and expensive mistake. But Jobs simply tuned them out. He wanted to control the buying process. He didn't want middlemen selling his computers. Most of all, he wanted to create an experience for customers.

The result was record-setting. Apple stores reached the $1 billion revenue milestone faster than any other retail store in history. Welcome back to Street Signs. Apple making a big bet on the Big Apple. The computer giant now is a prime piece of real estate on Manhattan's luxury-lined Fifth Avenue. Apple's new showcase store opens tonight in the city that never sleeps and fittingly it will be open 24 7 365 days a year apple's fifth avenue store in new york takes in more absolute dollars than any other store in manhattan including sacks and bloomingdales it also grosses more per square foot than any other store in the world as of today there are 326 apple retail stores total sales in 2010 9.8 billion dollars when apple introduced the iconic ipod in 2001 it revolutionized the way people listened to music. It wasn't the first MP3 player on the market,

and it actually did less and cost more. But it was a classic Jonathan Ive design, ultra-sleek, ultra-white, and best of all, it offered an ultra-promise. iPod. A thousand songs in your pocket. Jobs also realized he could sell more max by selling more iPods so he moved 75 million dollars of the Mac budget over to iPods which at the time was a category that didn't justify one

one-hundredth of that investment but it was shrewd marketing that decision helped sell over 300 million iPods cornering 70% of the music player market. And now Mac sales account for over 90% of all the computers with a price tag over $1,000. And we'll be right back. If you're looking for flexible workouts, Peloton's got you covered. Summer runs or playoff season meditations, whatever your vibe, If you're looking for flexible workouts, Peloton's got you covered. Summer runs or playoff season meditations, whatever your vibe, Peloton has thousands of classes built to push you. We know how life goes.

New father, new routines, new locations. What matters is that you have something there to adapt with you, whether you need a challenge or rest. And Peloton has everything you need, whenever you need it. Find your push. Find your. And Peloton has everything you need, whenever you need it. Find your push. Find your power. Peloton. Visit Peloton at onepeloton.ca.

If you're enjoying this episode, why not dip into our archives, available wherever you download your pods. Go to terryoreilly.ca for a master episode list. When Apple introduced iTunes later in 2001, it gave people an elegant and simple way to organize their music. But when it introduced the iTunes Store in 2003, it offered something else, a way to purchase music.

You have to put that launch into proper context. People were already finding all the music they wanted for free online, with file-sharing services like Napster and Kazaa jobs felt that people had an emotional connection to music that they wanted to own their favorite songs not just rent them and he believed deep in his heart that they really didn't want to steal them so jobs approached the major record labels and proposed a deal. iTunes would sell songs for 99 cents, and the ease of use would make the purchase simple and impulsive. The labels would get 70 cents.

As Time magazine notes, Jobs pulled off two remarkable feats here. First, he convinced the famously reluctant record labels to let Apple sell their songs online. A big reason why the labels agreed was because they felt safe inside the closed, technological universe Apple offered. Yet another benefit of Jobs' digital hub philosophy. Second, in maybe his biggest coup,

he convinced consumers to pay for what they could steal. In other words, he beat free. Apple predicted it would sell one million songs in six months. They did it in six days. By 2008, the public had purchased five billion songs, and Apple surpassed Walmart to become the largest music retailer in the US. Steve Jobs favorite artist of all time was Bob Dylan. He managed to convince Dylan to shoot a commercial for the iPod for free. As a result the album Modern Time shot to the top of the Billboard chart giving Dylan

his first number one album since 1976. Advertising Age magazine maintains that the Dylan iPod commercial changed everything because it flipped the formula. For the first time, an advertiser didn't write a big check to the artist. It just offered to generate sales. Later, you too would agree to the same deal. Apple had become so cool that artists would seem hip and relevant just by associating with them. In 2007, Jobs unveiled his latest disruption to yet another industry, the iPhone. Where he once said that an iPod was like having a thousand songs in your pocket, he now seductively announced the iPhone was like having your life in your pocket.

By the end of 2010, 90 million iPhones had been sold. One year later, Apple was selling over 220,000 a day, reaping over 50% of the total profits generated in the global telephone market. All these years, you've gone through the day without email like this in your pocket, or stock updates like this in your pocket, or internet like this in your pocket and you survive. The question is, how?

Next, Jobs tackled a category that had been around for a decade and had almost zero consumer demand. Tablet Computing In 2010, he unveiled the device in one of his famous keynote presentations. There, he put a picture of an iPhone and a Mac up on the screen and asked the audience if there was, quote, room for something in the middle. Yes, said Jobs, we call it the iPad. Later, he asked his ad agency to create a manifesto commercial

that declared how revolutionary the iPad was. He wanted to preempt the other companies who would be coming out with copycat tablets within the year. What is iPad? iPad is thin. iPad is beautiful. iPad goes anywhere and lasts all day.

There's no right way or wrong way. It's crazy powerful. It's magical. You already know how to use it. It's 200,000 apps and counting. All the world's websites in your hands. It's video, photos, more books than you could read in a lifetime. It's already a revolution, and it's only just begun.

Apple would sell more than one million iPads in its first month, twice as fast as the iPod. Through all these amazing product launches, it has to be remembered that Steve Jobs was a master salesman. His new product presentations became the most highly anticipated events in the technology world. He achieved this by using secrecy as a strategy, not just to protect proprietary technology, but to generate publicity.

You may think that saying nothing is a poor way to generate press, but Jobs knew otherwise. First, Apple is fanatical about secrecy. Employees don't even talk to their spouses about their work. When referring to Apple outside its walls, they often call it the fruit company. You might notice there are virtually no bloggers from within Apple. When I asked TBWA Shia Day's creative director, Duncan Milner, who oversees the Apple account, a question for this episode. He said,

Sorry Terry, I can't answer any questions about Apple. By keeping the details of a new product presentation secret, Jobs would whip the press into a frenzy. As a result, for example, a Harvard professor estimated that Apple got as much as $400 million in free publicity between the time Jobs announced the iPod and when Apple sold their very first one. In other words, by maintaining secrecy, the resulting publicity explosion

meant that Apple almost never had to do any pre-launch advertising. Think about that. Very few major companies can survive without advertising an upcoming product. Conventional marketing wisdom dictates that potential customers must be made aware of a new product well in advance in order to stir up demand and interest. Think about car companies announcing next year's new model

or movie ads previewing an upcoming film. Not so Apple. It let the press do all the pre-publicity, generated completely by a strategy of silence. Even the structure of Jobs' presentations created excitement. Taking center stage, he would present current sales figures for Apple products, give a review of Apple items released in the last few months. Then he would present one or more new products and would begin to conclude by saying, I really want to thank you for coming here and seeing it with us today. We're really, really proud of it. Everybody's worked really hard on it. So thank you.

He would start to walk off the stage, then suddenly stop, pause, turn back to the audience and say, I forgot. There is one more thing. It was then he would reveal the biggest news of the presentation, like the MacBook Pro, the iPod Shuffle, or the iPod Touch. Over the years, his one more thing moment became the most anticipated part of his presentations. Well, but there is one more thing. There is one more thing. But we do have one more thing.

I got one more thing. It was pure showmanship. When Jobs launched the iPad in 2010 at a theater in San Francisco, Apple quietly bought up all the outdoor signage around the venue. Then, while the audience was inside watching Jobs unveil the iPad, every single poster outside was changed. So when the crowd poured out onto the street, all they saw were iPad posters everywhere. And when you look closer at those posters, the time on the iPad clock said 9.41 a.m.

because that was the exact moment Jobs unveiled the iPad to the world. It is that attention to detail that makes Apple singular in the world of marketing and injects so much value into the company in May of 2000 Apple's market value was 1 20th that of Microsoft ten years later Apple surpassed Microsoft and on May 26 2010 just after 2 30 p.m. Apple became the second most valuable company in the world after Exxon one year later Apple was sitting on cash reserves of over 100 billion dollars $100 billion, more than the U.S. Treasury Department. Advertising Age magazine recently pointed out that, as a marketer, Steve Jobs was decidedly and effectively old school. In 2010, Apple spent $420 million on advertising,

dominated by network TV, newspapers, magazines, circulars, and billboards. Yet, for all the digital disruption Jobs brought to the world, he spent less than 10% in digital marketing. He clearly didn't think much of the web as a branding medium. But Jobs has always flouted the conventional rules. No focus groups, no research, no reluctance to cannibalize his own products, no substantial investment in digital marketing. And all this contrarian thinking only resulted in one of the most valuable companies in the world.

You have to wonder what jobs would have brought us had he lived past 56. What about a wireless keyboard that helps you surf on a holographic screen? Or three-dimensional computing with cubes and prisms that represent apps that you spin with your hands in the air to interact with different programs? Or what about a voice-controlled TV screen with built-in Wi-Fi? Sound like a fantasy?

Nope. They're all recent Apple patent filings. Amazingly, Stephen Paul Jobs has a few more surprises in store for us yet. Bet MGM is an official sports betting partner of the National Hockey League and has your back all season long. From puck drop to the final shot, you're always taken care of with a sportsbook born in Vegas.

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wager. Ontario only. Please play responsibly. If you have any questions or concerns about your gambling or someone close to you, please contact Connex Ontario at 1-866-531-2600 to speak to an advisor free of charge. BetMGM operates pursuant to an operating agreement with iGaming Ontario. Everything a company does is a marketing act. That's why I admire Steve Jobs so much as a marketer.

He understood that. Even the smallest design elements screamed Apple's brand. He knew that packaging could be theater. He knew that secrecy could be publicity. He knew that technology

had to be friendly. He met with his ad agency every Wednesday afternoon to throw around ideas. He would take them behind locked doors to show them the latest secret projects.

He shared his passion with them so that each ad was infused with his emotion. He even managed to inject humor into the new iPhone's virtual assistant. Siri, I know iPhones are good, but what is the best smartphone? Wait, there are other phones? Pixar meets Apple. Steve Jobs was that rare mixture of micromanager and big picture visionary. Copywriter Rob Siltonan called him a mixture of Michelangelo and John McEnroe. But that explosive temper was usually triggered when his standards weren't being met.

Larry Ellison, CEO of Oracle, said, I'm willing to live with the best the world can provide. Steve wasn't. It's remarkable to think that the iPhone and the iPad were both launched after he was diagnosed with cancer. His sense of purpose was almost unstoppable. He died on October 5, 2011. Sprint placed a print ad on the back of Rolling Stone magazine one week later.

It simply said, Steve's Legacy, 1955 to... And then there was a blank space. It was just one more thing to remind us we will forever be under his influence. I'm Terry O'Reilly. Thank you. Hello, this is Siri calling. Under the influence has made a factual error. Apple doesn't have $100 billion in the bank. It has $100 billion and 31 cents.

It pays to be accurate, Terrence. Under the Influence was produced by Pirate Toronto and New York.