Volume 31: McKinsey places a cherry on it.

1. McKinsey places the cherry atop bullshit mountain.

tl;dr: “Performance branding.” Sounds great. Is utterly nonsensical.

Part of the reason I started this newsletter was to call out ‘bullshit mountain.’ The sheer, unscalable mountain of crap that surrounds marketing specifically and business more generally. So, imagine my delight when McKinsey placed a cherry on it with a recent thought leadership piece on branding.

Under a title clearly designed for search engine glory, “Performance branding and how it is reinventing marketing ROI,” I found myself reading this steaming pile three times in the vain hope that I must have missed something the first time, but no. At no point anywhere do they actually reference anything relevant to or pertinent to the field of branding. Not once. Nothing about building distinctiveness, salience, permission, creating a differentiated experience, the value (or not) of positioning, the importance of repetition, of managing and periodically reinvigorating long-lived brand assets, the importance of reach as a counterpoint to personalization, how to manage brand activities v’s activation activities, or how to establish emotional meaning rather than just rational ‘buy now’ promotions. Not even a mention in passing of brand purpose (thank god). Literally none of it.

Instead, we get an incoherent discourse on surveys, analytics, and data counterpointed by their belief that performance marketing will give marketers an edge amidst the unknowns of COVID-19 (a particularly jarring contrast given their otherwise focus on data) and the usual claptrap about agile testing of every nuance of every nuance, etc.

But, the most obvious and egregious error considering this comes from McKinsey is their core conceit about measurement and analysis. The authors fail to understand the fundamental reality that brand effects and activation effects show up across very different timeframes, so seeking to define a “single source of truth” for both via short-term measures designed for activation literally makes no sense.

Chopping and changing your brand the way you chop and change your activation campaigns is a surefire recipe for branding chaos and market-mush, not performance branding nirvana.

So, if it’s all such obvious nonsense, why put their name on it? Simple. It’s a cynical play from a strategy consultancy that’s increasingly renowned for it. The real problem with marketing today isn’t the ability to utilize performance marketing techniques, it’s the declining strategic value of marketing within the organization. As marketing departments get re-tooled and resources are piled into digital programmatic media and direct response promotions, marketing remit is becoming ever narrower and more tactical. As a result, there’s now a generation of marketers who know a lot about tactical activation and very little about what it takes to build a brand strategically. So rather than help them establish a credible knowledge base and understanding of how to build the case for and then actually go about building a brand, McKinsey says just to go ahead and use the tactical techniques you’re already comfortable with. Win! Well, it is for them, after they’ve sold you a $3m+ consulting contract to build out a performance branding stack that’ll get you precisely nowhere. This is such a cynical charade of feeding people what they think they’ll want to hear rather than what it’s important for them to actually know.

Oh, and to cap it off, I checked out the bios of the four authors. Not one has any branding experience at all.

Don’t waste your time with this shit. Instead, if you want to know more about how to balance brand and activation, read Binet & Field. If you want to know more about how brands grow, read Byron Sharp. Or if you just need a basic introduction to branding, start with Robert Jones. All are light years more cogent than this nonsense.

2. Advertisers have finally had enough of Facebook.

tl;dr: The #StopHateForProfit boycott movement has deeper implications.

The last time it was released, I jokingly observed that Interbrand's “best brands” ranking looked a lot more like a list of the world’s biggest monopolists than a list of the world’s best brands. At the time, I used the example of Facebook, which I argued probably has more negative equity than positive brand value.

It now appears that the impact of this negative equity is finally being felt. Facing a revolt from employees fed up with the serially appalling behavior of you-know-who, advertisers have started signing on to the #StopHateForProfit boycott. Which, unfortunately, in and is pretty meaningless in and of itself. Boycott Facebook in July, and then double your spend to catch up in August, what do they care?

But, there’s something deeper going on here that might force change onto a company that otherwise never will, at least not willingly. It isn’t just that advertisers might boycott them in the short-term that should be concerning for Zuckerberg and co, it’s that many have become so disgusted with the serial lying and cheating, dependence on toxic “engagement” algorithms that drive hate and societal division, and a callous failure to tackle blatant racism, CV-19 misinformation, and election meddling, that they’re now actively attempting to establish an advertising supply chain that doesn’t include Facebook at all. Wow. Advertisers are trying to figure out how to route around the most effective advertising machine ever created because of what it stands for and what it refuses to stand against. Just think about that for a second. Facebook has become an anti-brand. (Try to value that Interbrand; I dare you.)

This powerful post from Joy Howard, CMO of Dashlane, should bring pause to any Facebook board member. They should worry that this movement to cut them out of the mix entirely might become a slowly, slowly, and then all of a sudden kind of thing as advertisers begin to discover and then share meaningful alternatives with similar performance characteristics with each other.

To finish, I’d like to leave you with this excerpt from her excellent post:

What’s changed is that advertising is no longer about growing your customer base and building your business by bankrolling the free press. We’re no longer helping to pay the salaries of journalists documenting truth and editorialists making sense of the world. Instead we help fuel an engine of hate. The engine that polarizes communities runs on our ad dollars. Facebook doesn’t support journalists—it disintermediates their platforms. And in doing so has forged a path toward disintermediating the truth.   

3. The enemy of my enemy is my friend.

tl;dr: Monopolists line up proxies to get into each other’s businesses.

I wrote a couple of weeks ago about big strategic moves being made by Big Tech. Now a slew of partner announcements means it’s already time to issue an update.

First up, Slack announced a partnership with Amazon to more fully integrate with AWS and utilize Chime, the AWS voice and video calling service. In return, Amazon will deploy Slack as a company-wide team collaboration solution. This is a big deal for a number of reasons. First, it gives Amazon skin in the enterprise collaboration game against Microsoft, second it gives Slack an instant product roadmap to compete with the capabilities of both Microsoft Teams and Zoom, and finally the enterprise agreement with Amazon gives Slack critical credibility when selling to the notoriously conservative IT departments of enterprise clients, which is where the money is. It also opens up the fascinating possibility that at some point in the future Amazon might just decide to buy Slack outright - setting up a huge vertically integrated fight with Microsoft for the IT dollars of the enterprise. While Slack probably didn’t have much choice with Microsoft actively trying to put them out of business, this is the most dynamic of moves.

Up next, Shopify are rapidly becoming the partner of choice for anyone seeking to break Amazon’s dominance of online retail. Hot off of their deal to enable e-commerce in partnership with Facebook, Shopify are now partnering with Walmart to compete directly with Amazon for 3rd party merchant dollars. With Walmart having been a CV-19 winner, they’re now taking the battle for online sales direct to Amazon’s front door.

And finally, Microsoft announced this week that they’re shutting down their laggardly Mixer videogame streaming service that nominally competes with Amazon owned Twitch. Instead shifting to partner with Facebook Gaming, which itself runs at a fairly lowly third place in viewer numbers behind Twitch and YouTube. This is less a big strategic move for Microsoft and more an elegant exit from a non-core business they’re not very competitive in. For Facebook, it’s a different story. This deal can potentially provide an important source of new users in their play for an increasingly important media genre.

4. A corporate breakup is the ultimate symbol of capitalist success. We should demand more of them.

tl;dr: Breaking up monopolies unleashes dynamism and value.

While the break-up and regulation of monopoly power often gets tarred with the brush of left-wing big government socialism, the reality is that it’s the ultimate symbol of capitalist success, and has traditionally created significant shareholder value.

Take, for example, the breakup of the Bell Telecom monopoly in 1984. Far from the worst predictions of the doom-mongers of the day, the combined value of AT&T and the seven spun-off baby bells more than doubled in less than five years, Sprint and MCI became multi-billion dollar businesses, and a slew of niche providers emerged.

Today, Apple, Amazon, and Microsoft are far more powerful than AT&T ever was, with market capitalizations each in excess of $1trn, and Google and Facebook aren’t that far behind. All should be broken into smaller, more dynamic competitors without the artificial benefits of monopolistic dominance. I don’t say that because these are bad companies (well, not all of them anyway), quite the opposite. It’s just that their exceptional success now means they have market power that acts to stifle economic dynamism and innovation.

This is why Apple can stage an elaborate show hyping marginal me-too features that have existed on other OS’s for years, and then without any irony call it innovation. There just isn’t enough meaningful competition to make them innovate anymore. They won the war and now they’re getting fat off the land. Rather than a single Apple, imagine if several children of Apple were out there competing with each other instead? Now add billions of dollars of VC money attracted by the possibilities of this newly competitive environment, and then multiply that by the scale of Amazon, Microsoft, Google and Facebook too. It’s a compelling picture for any lover of the baser competitive instincts of capitalism.

If we really wanted to create value, grow the US economy and drive economic dynamism, breaking up a few big monopolists might just be a good place to start.