NEW INC. MAGAZINE COLUMN BY HOWARD TULLMAN

 

Why Tech Isn't Improving Your Advertising

The algorithm may have taken over the ad buying, but there's still no telling exactly who is watching your messaging.

 

BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS@HOWARDTULLMAN1

 

Every entrepreneur will tell you that they absolutely hate to spend any of their scarce cash on advertising, for two main reasons. First, they're not sure that ads work-- there's a lot of "spray and pray" going on and not much in the way of credible measurement or tangible results. Second, they believe that their product or service is so great that people should simply be flocking to their doors to buy whatever they're selling. They think that, if you use your money to create exceptional products and services, you won't need to spend on advertising.

If only life were that fair or entrepreneurs were a little more realistic. For some businesses, advertising is the cost of being boring.  For others, it's an attempt to put lipstick on a pig. But at the end of the day, there's really not much choice. It's like dancing with a bear - you don't get to stop when you want to.

This antipathy is hardly an attitude limited to new business builders. The advertising industry has always known that, while everyone wants to make money, no one really wants to buy advertising. On its best day, advertising is a necessary evil and - much like cable television or insurance - always a grudge buy. Even worse, the advent of new technologies, which in other industries have dramatically improved transparency, productivity, and accountability, have only added more confusion, uncertainty, and imprecision to the ad game.

Advertising follows audiences, but with programmatic algorithms dictating the placement, frequency, and duration of digital ads, no one knows much of what's happening in the field. Claims about the effective addressability of digital ads are mostly optimistic fantasies clothed in the belief that the underlying tech will somehow get the job done. As John Wanamaker said long ago: "Half the money I spend on advertising is wasted; the trouble is, I don't know which half." Some things never change.

While some new companies like Dumbstruck can help advertisers determine whether the content of their ads is going to be effective, it's still anybody's guess as to whether you're getting your ads in front of the right buying audience at the right time and place. Context, given the abundant noise and clutter, is just as important as content, if not more so. Smart reach is still the name of the game and, as the migration from linear TV to digital video accelerates, determining whether ads are reaching the right folks, resonating with them, and driving purchase behavior is becoming increasingly difficult.  Average daily TV time is down from 3.5 hours a day in 2020 to less than 3 hours a day in 2023 while daily digital video viewing has grown by almost that exact amount from 2.5 hours a day to almost 3 hours a day in 2023.

As a result, linear TV ad spending has been flat to down over the last four years (stuck in the mid-$60 billions) and, even in an election year, there's not much enthusiasm for 2024. But, at least in the old days of traditional TV, you could sometimes see your ads running on the tube, while these days no one has any idea where their digital placements are showing up, what they're adjacent to, and who's seeing them. X (formerly Twitter and soon to be toast) is the most visible poster child for the risks of having no control and no say over what some algo decides to position next to your offerings. But the whole industry is now driven in large part by fraudulent next-gen click bait systems designed to attract programmatic ads.  These MFA programs have led to an environment where one in five links is to a fake site delivering made-up facts, phony health products, or pathetic financial pitches.  

That's no problem if you're targeting kids up to age 18, because since  TikTok and YouTube completely own the video market, the choices are pretty much locked in,  and frankly the advertisers focusing on these kids don't really care about quality engagement or first-party data. It's all about tonnage. TikTok's ad business is growing about twice as fast as Meta's and almost 4x faster - year over year - than Alphabet's. And because of TikTok's delivery methodology and typical video duration,  cost-per-view to advertisers is a fraction of what they have been paying for decades in more traditional channels.

But for mature and serious businesses seeking to actually connect to real human beings who are interested in learning about and ultimately purchasing their products and services, the problem is much more complex and challenging. TikTok isn't going to get the job done, but new ancillary networks are being built which make much more sense for serious advertisers. The most attractive of these are the retail media networks being developed by merchants like Walgreens, Kroger-Albertsons, and Walmart. They have extensive first-party data about their customers, strong and recurrent connections to them, and relatively high-quality engagement. But they lack the massive scale of players like Netflix. However, in combination, they can provide a solution which also offers levels of addressability, measurement and accountability that the digital vendors can't yet duplicate or effectively compete with.

The bottom line is pretty simple. As attractive and rapid as the newest delivery and tracking ad technologies may seem, as the ad buyer you're being asked to put far too much trust and money in "take my word for it" systems where the results are machine-driven and fundamentally unmeasurable. A much better bet is to take a step back and use channels and vendors whose methodology and mechanics are clear, understandable and auditable in more concrete and convincing ways.

HOWARD TULLMAN JOINS LISA DENT ON WGN RADIO TO DISCUSS BRAND ISSUES

LISTEN TO THE SHOW HERE 

LISTEN TO THE SHOW HERE

NEW INC. MAGAZINE COLUMN FROM HOWARD TULLMAN

 

You Need to Reimagine How You Market Your Brand

Some of the big names in consumer products are losing share because they can no longer demonstrate that they deserve a price premium. Make sure you're doing the right things to communicate your product's value.

 

BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS@HOWARDTULLMAN1

 

Brands just aren't bringing it and getting the job done any longer. They used to represent a shorthand promise based on the simple premise that you could have basic confidence that you were getting more value for your spend even if you paid a premium for the privilege. That could be in the form of quality, durability, safety, ingredients or efficacy -- but we all believed for decades that something made a brand worth the additional investment. Brands were also an efficient way to address decision fatigue given the virtually unlimited shopping and product choices on the web today.

But now it seems that only those people (entertainers, influencers, gangbangers) who are utterly indifferent to price are still spending and sporting the top few big-name brands for reasons having much more to do with reputation, endorsement payouts and bragging rights than with any connection to reality. The world's wearing Apple watches these days while the jocks and party people are still sporting their diamond-encrusted Rolexes. We're never going to entirely eliminate the ancillary messaging and emotional considerations that accompany upscale brands that have little or nothing to do with function or features, but the days of blindly buying a premium brand for practical, prudent, and economic reasons are long gone for most products.

When you read investigative articles that suggest the private label brands at Costco or Walmart are being manufactured on the sly by the same makers of the branded goods, it's more than unsettling - it's a wake-up call. People aren't panting any more to pay up for products that are functionally indistinguishable from the private labels and even generics, which are being increasingly pushed by the large retail chains. We're seeing this all over the place, but especially with respect to the multi-billion-dollar marketplace for over-the-counter medications. 

Millions of consumers don't believe in much of anything these days, and the MAGAts only believe Trump, largely due to his eight-year assault on the truth. Brand names are just one important casualty. The Trumpist war on truth and medicine throughout the pandemic--which cost them tens of thousands of dead Red voters -- has really diminished consumer confidence in doctors and drugs in general. Drugs aren't the whole story, but they're a great early indicator of consumer brand behavior. As more and more products become confusingly similar and make identical claims regarding effectiveness, price rather than brand drives the decision bus.

There are several explanations for these new customer attitudes toward OTC medications that will eventually impact the future viability of every major brand. The players who react and adapt to the new environment and change their brand messaging, product offerings and customer interactions will survive and grow; those who choose to rest on their laurels and past performance will ride their brands right into the ground. Kraft Heinz's lousy results, even with higher prices, meant a newly-announced CEO. There's still time now - although Big Pharma doesn't seem to get the picture - and soon there will be plenty of blame for the losers and also-rans to spread around.

You could put part of the blame on the pharma companies themselves for clear and repeated price gouging, which the side-by-side comparative displays at Walgreens or CVS make abundantly clear to even the most obtuse observer. Wanna spend three bucks more for a bottle of Bayer aspirin or a tube of Neosporin for absolutely no good reason? Be my guest.

Of course, now that Walgreens has decided in its newest urban stores to hide virtually everything in closed cages or back-of-house, and to use kiosks and clerks to fill orders, maybe these awkward comparisons, which actually helped to educate the consumer, will disappear. That would be unfortunate but at least it won't kill the instant, internet-enabled, comparison pricing for virtually anything that's going on in every store. This smartphone-based smart shopping certainly hasn't made life any easier for the big brands.

Whatever your budget constraints may be, no one wants to look foolish or feel that they're being gouged. Mark Cuban's amazing new initiative - Cost Plus Drugs continues to gain traction and Amazon is jumping aggressively into the pharmacy business as well, which will clearly help drive drug prices down. It's no accident that Blue Shield California has announced plans to work with Amazon, Cuban and CVS on a new distribution system. President Biden's action in locking down the price of insulin for millions of patients is another amazing step forward.

You could say that the panache of pharma brands has been hard to polish and promote when there's so much noise in traditional broadcast channels, where every other ad is for some disease like TED, RVS or AMD that no one's ever heard of. These voluminous ads are clearly targeted to the few ancient and infirm people still watching the tube.  Ever since the success of the "purple pill" promotion, you no longer see the long-recognizable corporate names in their TV ads. The message is all about some made-up catchy name extracted by an overpaid ad agency from the drug's technical designation. Doctors now constantly complain that their patients no longer want diagnoses, they just want the pill with the cute name or the one that makes the fat go away.

And while cable subscriptions are largely a function of consumer inertia, the streamers are spending millions to try to move subscribers upstream to more expensive, ad-free tiers. They're telling the whole world that ads are worthless interruptions and an utter waste of time. In many ways, the bipolar ad industry is eating its own lunch and making its future prospects even more uncertain.

The clear implication in all this anti-ad messaging is that only morons and the poor have to suffer through dozens of ads every day in order to watch reruns, repetitive ad flights, and pitches for old people. Someone recently said that - given the average age of its audience - CBS now stands for "Could Be Sleeping."  And that it's really no harm, no foul if you should happen to nod off because in the online, all the time, connected world there's really nothing new about the nightly news. 

The message being sent to new generations of prospective viewers (and, obviously, consumers) is that all of the ads on traditional broadcast channels, cable stations, and even on much of the new and inexpensive offerings by the streamers are worthless wastes of their time and attention. As we enter the 2024 election ad cycle and suffer through the noise and clutter and the indiscriminate spray-and-pray ugliness, the situation will only worsen for the next 14 months, along with the ability of even the biggest brands to break through.

The bottom line for every business is that - while building and sustaining your brand will be important and challenging - it's even more critical to give your customers (past, present, and prospective) concrete reasons to continue to purchase, use and support your products and services.

Two key things to keep in mind:

(1)    Your team members will be essential to this process because people increasingly will be more likely to trust your employees, their interactions with them, and their suggestions and recommendations than anything else. Successful sales will always be a people business.  

(2)    Businesses and their brands in the future are going to have to have and successfully communicate to the world a purpose beyond profit in order to connect to tomorrow's consumers.

NEW INC. MAGAZINE COLUMN BY HOWARD TULLMAN

 

Walgreens Whiffs by Trying to Dodge the Truth

Companies and consumers are caught in a political spitting contest when most of the time they simply want to sell and buy everyday products.

BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS@TULLMAN

It’s becoming harder and harder for businesses to try to properly position, present, and then justify their day-to-day operating decisions (not to mention new initiatives, experiments and store designs) to their actual customers -- the vast majority of basically middle-of-the-road people who just want to get on with their lives and don’t regard every purchase they make as conscious and intentional demonstrations of strident political statements and positions. Sometimes a rose is just a rose, coffee’s just a cuppa, and having a beer and a brat isn’t burdened by momentous political concerns. That’s why most businesses--large and small -- try to stay as far away from politics as possible and encourage their employees to do the same,  at least at work. The very best place to leave your politics is at the office door.

When you look at things more closely, these so-called social and political “problems” are rarely the serious concerns of customers or consumers -- those folks are all about business as usual--not that they ever mind watching a stupid cat fight from time to time. The problems for most companies -- Anheuser Busch, Target, Major League Baseball -- flow from the constant noise, nagging, and nuisance of the crazy shit-disturbers on both sides of whatever the latest Fox-flogged installment of bogus concern and flatulent outrage happens to be.  Their painful posturing and fake outrage are then amplified by the click-crazy media and quickly spread across social media by people with a lot of anger, angst, and aggression and not much else to do with their time. But if you aren’t careful, their simplistic and baseless slanders can still slime your business.

 The insurmountable challenge -- much like any debate with your teenage children -- is that there’s no right answer or remedy sufficient to satisfy people who are invested in and enjoying the tumult, who thrive by surfing the strife, and who haven’t the slightest interest in any reasonable discussion or resolution. Much like the MAGAt morons in Congress, the mess and the misery, the distraction and disruption, and the colossal wastes of time and energy are the entire point of the exercise.   

So, it’s almost impossible for even the best-intentioned managers, as they try to run their companies, to successfully navigate the increasingly perilous path between the deluded debaters, the drop-in dilettantes, and the dishonest disrupters. For sure, you don’t want these outsiders influencing or interfering with the way you run your business.  But too often one unfortunate result-- knowing that these idiots are out there-- is a kind of paralysis that sets in and gets in the way of innovation, risk taking, and forward motion.

 That’s not a happy result for anyone, but there are actually worse, self-inflicted things that can happen to your company if you’re not careful. One of the worst mistakes any owner or manager can make is to lie to themselves and to their employees and customers. This happens so often lately because of the treacherous tension between political correctness, the pressure and fear of false and critical social media, and the continuing need for authenticity.

The only right approach in these cases is to tell the truth and tell it like it is. This is a lesson that Walgreens among plenty of other businesses clearly hasn’t learned. Half a lie is still a lie and the whole truth is the only thing that stands the test of time and gets the job done.

 In the latest case, Walgreens introduced a new concept store in Chicago with only two aisles of basic products for shoppers to peruse while the rest of the merchandise is securely out of sight. With a perfectly straight face, while the entire world knows that retail stores are being flagrantly ripped off daily, Walgreens claimed that the new format is an experiment in digital-first merchandising to “benefit” customers. Not, mind you, to benefit customers by reducing shrinkage to avoid raising prices or closing the store entirely, but so that customers could order online for pickup or order in-store at kiosks. And, to make things worse, Walgreens’ messaging specifically said that the new design had nothing to do with anti-theft measures that every other retailer in the country has implemented. This was a complete lie and an attempt to head off the obvious, expected noise from the usual suspects.

When the laughing died down, Walgreens’ management looked like complete idiots. Worse yet, their PR positioning didn’t work for a minute. Regular customers were inconvenienced, obviously unhappy, and insulted and offended by Walgreens transparent explanation. Of course, the haters immediately turned out to cry racism and discrimination. So, in short order, the company managed to make everyone unhappy.

 More importantly, Walgreens sacrificed a great deal of their customers’ hard-earned goodwill and the trust of the community as well. It’s clear that the alternative to telling the truth, even when the truth hurts, is a walk down the thankless path of trying to please a bunch of hypocrites and pro forma protestors while you fail to speak frankly and honestly to the people who count - your customers.  And equally importantly, you’re lying to your employees, who have a very serious stake in this conversation. Everyone understands that retail theft has reached epidemic levels, especially when “justified and explained” by naïve and manipulative politicians like the new mayor in Chicago. No one doubts the need for the stores to take appropriate actions to stop the bleeding.

The front line of defense, and the people most often in harm’s way of these assorted criminals, including organized shoplifting rings,  are team members, not the suits sitting back in the corporate offices. Telling these folks, mainly for insurance reasons, to do nothing to prevent the thefts; to ignore crooks and creeps running from the stores with bags full of merchandise; and to stand down while these arrogant assholes taunt them and make fools out of the paying customers isn’t a solution.  This policy is just the latest concession to the rampant crime we’re seeing in many major cities and the inability of their political leaders to do anything to confront or change the situation. The pols are encouraging the thieves to keep it up and this puts the employees at even greater risk which is what’s driving major retailers like Nordstroms and Walmart out of various downtown areas.

 If consumer trust and confidence in the honesty and sincerity of our leaders in every area of business, law and government isn’t already at historic lows, the weak and dishonest efforts like these by Walgreens to try to avoid having forthright and open conversations with all the stakeholders about what needs to be done and what actions can be taken just makes the situation worse.

 A lie may fool someone else, but it tells the truth about you.