The ‘Better Economy’ and What It Means for PR

The ‘Better Economy’ and What It Means for PR

This piece originally appeared in the November 2017 issue of O’dwyer’s Magazine.

By Jason Mandell

A number of years ago I read a book called “The Fall of Advertising and the Rise of PR” by Al and Laura Ries. The basic premise was that marketing was shifting away from traditional paid advertising to one dominated by what is today commonly referred to as earned and owned media. As the co-founder of a San Francisco-based PR firm, I believed every word, and had already witnessed this happening first-hand.

Companies such as eBay, Google, Amazon and Netflix were prime examples. None of these brands spent a dime on advertising in their early years, and most didn’t even pay for PR. They grew organically because what they were doing was so exciting to so many people.

The preceding advertising-dominated era was perhaps best showcased in the AMC series “Mad Men,” in which high-powered ad execs were portrayed as regularly building or saving brands. They would rely on TV-based campaigns that preyed on our emotional connections, employing tactics like puppies, babies and beautiful women to win over an audience. If it pushed the right buttons, a commercial could fundamentally change the trajectory of a company.

We talk a lot now about how the Internet and social media has democratized marketing and media, but the Ries’ wrote their book before blogs, Twitter, Instagram et al were part of our world. The basic premise has actually been in the making for a very long time.

Beyond what’s been happening in marketing, there is a far bigger macro trend evolving that I refer to as the “Better Economy.” Success in many ways has become quite simple: the way you win today is by creating something better than what existed before. It seems obvious, but that often wasn’t the case before. Those revolutionary brands mentioned before all have one thing in common: they improved on what had come previously. Google was better than Yahoo. Netflix was better than Blockbuster. Amazon was better than Borders. eBay was better than driving down the street to your neighbor’s garage sale.

They didn’t have to pay anyone to sell that story to consumers. It was a field of dreams – build it and they will come. The entrenched competition couldn’t compete because they were simply inferior. No ad campaign could change that.

But those companies, and many others like them in the pre-social world, still had their work cut out for them. It took years for them to spread the word to the masses and grow into market leaders. Remember, Twitter was invented in 2006; by then Google was already worth over $100 billion and Amazon $15 billion.

The most recent period has quickened the pace; markets are changing faster than ever before. A company like Uber can go from startup to market leader in just a few years through a mix of  world-of-mouth marketing and a dramatic improvement in product, in this case over the taxi-based system it displaced. A sample Tweet circa 2012 might have looked something like this: “Just used this new service called @uber, so much better than Yellow Cab, try it out! #taxissuck #gethomefast #iloveuber.”

This ‘Better Economy’ has been driving the incredible growth of Silicon Valley and all of the other Valley and Alleys and Silicons around the world for nearly 20 years. That’s nothing new. What is new is this trend is becoming so powerful that even the largest brands in the oldest industries are powerless to stop it.

From banking to beer to transportation to energy to food to retail and fashion, every industry has felt threatened by the chance of something better coming along and making it obsolete before it even finishes preparing for its quarterly analyst briefing (Ok, maybe not that fast!). In earlier eras, being the market leader usually meant two huge advantages: control of distribution and access, and the biggest advertising budget you could muster. New upstart competitor at your ankles? You can squeeze them out by limiting their access to customers and pouring a small fortune into the highly effective 30-second spots to be devoured by impressionable consumers.

My personal favorite is the beer industry. A fantastic documentary called Beer Wars details how the beer oligopoly of Budweiser, Miller and Coors controlled the market for decades through a three-tier distribution system the government created after Prohibition. Partnering with a regional distributor compels them to push your product over the little guys which lends itself well to retailers, bars and restaurants that care about volume discounting to max their bottom line. The end result was grocery shelves filled with 30 different Anheuser Busch products and taps exclusively pouring drafts from the three big brewing giants. These profits were then spent on sport league sponsorships and TV campaigns featuring frogs, bikinis and “cool” dudes convincing you to drink the beer regardless of how it tasted. Small brewers couldn’t compete with that.

But things started to change once the craft beer market gained momentum in small pockets around the country, driven entirely by consumer demand. One six-pack at a time, people started to realize that beer actually could taste good, or at the very least was far better than what had previously only been available. Suddenly they had access like never before. People began to talk. Then they starting blogging and sharing their new favorite beers in droves. Beer discovery became a market into of itself with festivals and pairings and all kinds of fun. The marketing cost is essentially zero.

Today, craft beer is approaching 20% market share in the U.S. and growing about 13% annually versus a decline in the “domestic” beer market. The consumer is now empowered in ways never before possible and the big brewers are no longer capable of controlling access and developing cute ads meant to move the market share needle. If millennials aren’t watching those ads, how can they be reached? The big guys are so desperate, they even spent a million dollars on a Super Bowl ad making fun of beer geeks all the while buying up every craft brewer willing to sell its soul.

Our longtime client American Giant is one of the poster childs of the ‘Better Economy’ in the fashion sector. The company has spent virtually nothing on traditional paid media in its six-plus year history, relying on a branding, earned and owned media campaign that focused on the greatest sweartshirt ever made. The CEO outlined this trend in a book we co-authored with him called “I F***ing Love That Company.

That brings me to my final key component of this new ‘Better Economy’: customer relationships. Before these big changes started to occur, customer service was usually an afterthought for a big company. They did it only because they had to, and invested the bare minimum to get by. Some people would inevitably complain or be unsatisfied, but those people were drops in the bucket compared to a deep infrastructure that could throw a few million bucks at a TV campaign in a matter of days.

But social media-fueled, word-of-mouth has created a massive problem for market leaders and a wonderful opportunity for the disruptors. Suddenly, a random Instagram or YouTube “celebrity” with 100,000 followers can harm your brand with one simple scream. Yelp, TripAdvisor, Glassdoor and all the rest of the review sites have provided easy access to first-hand, unfiltered critiques of your company. And often there’s very little, if anything, that can be done about it. This means that if a company does not have an authentic, customer-first philosophy that enables it to put out fires in a genuine manner, it’s at great risk for brand deterioration.

The good news is a well-oiled social media and customer service team can be invaluable to building and maintaining a brand. Even better, doing so costs a pittance compared to trying gain share and change behavior through traditional paid media campaigns.

There’s a confluence of trends that have given power to the consumer, and brought big brands, typically used to controlling and influencing markets with relative ease, to their knees. The old methods no longer work, but new ones have emerged that are truly better for everyone. Lucky for us, PR practitioners are one of the big benefactors.

Welcome to the ‘Better Economy.’

 

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