Off Kilter.

Volume 23: The potato-pocalypse.
The contrarian’s guide to the business of brand, marketing and design.

1. Shopify Shop is brilliant, but why, oh why, did you call it Shop?

Tl;dr: Shopify rapidly emerging as the true foil for Amazon dominance.

Shopify is one of the shining lights of the startup world. As Canada’s most successful unicorn, it’s currently valued at around $70bn. What is it? It’s the e-commerce and fulfillment engine that allows thousands of small to medium sized businesses to sell things online. Which matters a lot, because Shopify is an increasingly important foil to an increasingly dominant Amazon, which has become notorious for treating its third party sellers appallingly…and then lying about it.

Which brings me to the brilliance of Shop, a new aggregating mobile app that brings the vast array of Shopify retailers into a single platform from which you and I can quickly and easily purchase. No need to install individual store apps, remember web URL’s, or individually type in our address or credit card details. Instead, we have an experience almost as easy as Amazon’s, but in a form factor that’s much, much healthier for the retailer we’re buying from. Win!

But that name. Why, oh why, would you call it Shop? This is naming 101. Generic category descriptors make for terrible brand-names. Why? Two simple reasons: First it’s almost impossible to legally protect the name in any meaningful way, and second, it’s almost impossible to fill a category descriptor with any kind of unique meaning. Just ask Booking.com, which has spent years and millions or dollars trying (and failing) to turn Booking into a meaningful brand. This is going to be a big problem because Amazon is an aggressive brand marketer and their name is literally everywhere. I know Shopify is run by engineers who likely love the “does what it says on the tin” nature of Shop, but they’ll have to seriously raise their brand game if they’re going to give Amazon a run for its money, which I sincerely hope that they do.

2. Want some ROI with that? To meet its potential, marketing needs a role-reset.

Tl;dr: Hard to fix something if you don’t know the role it needs to fulfill.

Last week the CEO of Coca Cola came out and said advertising, especially brand advertising, would be slashed because they “weren’t seeing the ROI.” If you’re a shareholder, this should make you concerned, because Coke is literally an advertising company. If you went to business school, it should make you ask basic questions like “over what time-period?” Seriously, of all the businesses that have the potential to benefit from brand advertising right now in a bid to support and build longer term market-share, Coca-Cola is it. Just like P&G, which is following that exact path.

This is a salutary tale. Marketing has been dumbed down so far that short-term ROI is now the equivalent of asking if you want fries with your burger.

The fastest way to improve short-term ROI from marketing is to slash how much you spend on it. But when you do that, really bad things tend to happen to your business across a longer time-frame, like selling less, losing market share, losing salience, being competitively disadvantaged, and finding yourself in a downward spiral that requires spending a lot more to finally arrest. While many businesses simply have no other choice right now because CV-19 is an extinction level event, for Coca-Cola that just isn’t the case.

With this in mind, I really love this framing of the strategic role of marketing within the organization. Here, author Doug Garnett posits that marketing has three roles that it must fulfill:

1. To be the experts in the market and the experts in ways profit can be created from the market.

2. To bring this expertise into the company and the execution of all roles.

3. To execute specific functions — primarily Placement and Promotion.

These three bullets are potentially very powerful, especially if we anchor everything around bullet number 1 (Although I’d personally change this to “value-creation” rather than “profit-creation.”) It also lines up with the article I shared last week about boards having higher expectations of the CMO than most CMO’s have of themselves. If we consider that coming out of the CV-19 crisis, companies will likely need to make profits again rather than simply act as vehicles for financial engineering, then marketers strategically framing their role as the market and value-creation experts makes all the sense in the world.

3. How brand purpose emerged and where does it go from here?

Tl;dr: From the existential guilt of the financial crisis to now.

I don’t know how long purpose as it pertains to business has existed as a concept, but I do remember writing about relative to brands in 2009. Coming out of the financial crisis, I was mostly working with clients that were either big banks or big tech and there was a palpable sense of existential guilt on display in both. With society on its knees, the bankers felt guilty that their actions had helped put it there, and the people in big-tech felt survivor-guilt that they’d largely avoided the fallout. And just like giving to charity, they all felt a need to do something for others that would make themselves feel better about themselves. From these early roots in financial-crisis guilt, brand-purpose went mainstream. It was something that I, and many of the people I worked with, desperately wanted to believe in. And there’s no doubt that many truly purposeful companies were formed from the ashes of crisis, as evidenced by the increase in B-Corp registrations.

But, like many things that begin with good intentions it also spawned a cynical underbelly. Simon Sinek’s “start with why” has become a hall pass for entrepreneurs and managers with no intention of instilling purpose into their operating model, management style, policies or products to pretend that they are. Advertising agencies gleefully serve marketers who, wanting to “be like Patagonia,” are all too eager to sign-off on purpose-vertising campaigns. And finally, a slew of 3rd rate brand consultants peddle “purpose” as a catchall answer for everything, because at it’s shallowest, it can be sold to clients without requiring an understanding of their business strategy, customer needs, competitive dynamics, product, or pretty much any of the really difficult parts of building a brand that’s fit to compete.

The inevitable bottom was reached when businesses like British American Tobacco and Mars proudly declared their commitment to “purpose”, despite the obvious challenge of their products giving people chronic diseases like diabetes and fatal ones like lung cancer.

So, what comes next? Well the advertising agencies and management consultants are at it again. (If you only have time for one of these articles, read the McKinsey one. The other is simply a new business pitch disguised as bragging). What does give me hope, however, are structural shifts in investor behavior. During the current crisis, companies with the strongest ESG fundamentals seem to be doing better than those without, and ESG based investment vehicles appear to be growing rather than shrinking. You see, the true challenge with purpose as an operating model was never the desire and always the incentives. For years, capital has incentivized businesses to avoid doing the right thing, like paying their taxes, or paying their people, or innovating, or looking out for their customers, or tackling environmental issues. Instead the focus has been on financial engineering and the buying-back of stock to make shareholders and management richer. Now that strategy is imploding, there might be a glimmer of hope for something better on the other side.

4. Oh to be Belgian. Terrible hardship as they’re told to eat fries twice a week.

Tl;dr: At last, some good news coming out of the CV-19 crisis.

Amidst a general sense of existential pandemic dread, some really weird stuff is happening. Like oil prices going negative, face-masks becoming a fashion accessory, a Frenchman mimicking Freddie Mercury on his balcony, cinema chains preemptively boycotting a major movie studio while closed, and the truly scary risk that there might be no beer (or drinking water for that matter, but beer is more important). So it isn’t really a surprise to see another unexpected consequence. Belgium finds itself with too many frozen potatoes.

With restaurants being shuttered and home freezers being full, Belgium faces a potato-pocalypse if hundreds of tonnes of frozen surplus aren’t consumed this year. And with no knowledge yet of when their famous pommes-frites stands are likely to re-open, the government are now looking to do a campaign in association with their supermarkets encouraging people to eat fries twice a week. At last, some good news.

Stay home. Stay safe. Eat your fries.

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If you’d like to talk about anything brand related, or even just to have a chat, that would be awesome. Please reach out. I particularly enjoy helping people solve tricky brand problems.

Cheers for now.

Paul
President, Invencion

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