Notes:
Post Corona: From Crisis to Opportunity by Scott Galloway
Rethinking brand for the rise of digital commerce
Transcript:
Peter Crosby:
Welcome to Unpacking the Digital Shelf, where we explore brand manufacturing in the digital age.
Peter Crosby:
Hey everyone, Peter Crosby here from the Digital Shelf Institute. Today it's never been clearer that Performance advertising-- forever linked with the DTC start-up media darlings of the past five years-- is the cool kid on the block. At the same time, mention the word brand building to your CEO and you're likely to be sent to the land of misfit toys. In fact, in his book Post Corona, professor Scott Galloway went so far as to declare the death of the brand age, saying that algorithms, user reviews and convenience all make the old fashioned notion of brand irrelevant today. But.... is all this an accurate view of the world? Will the drug of performance marketing get brands to the future margins and consumer loyalty that longevity requires? To help us answer that question, Lauren Livak and I spoke with John Denny, VP of eCommerce & Digital Marketing for CAVU Venture partners. John is a veteran of brand building, performance advertising, ecommerce and everything in between.
Peter Crosby:
So John, thank you so much for lending your brain to our podcast today. We are super honored to have you on.
John Denny:
Great to be here Peter, long time listener of your podcast. And they're an awesome education resource for folks in our industry. So great job you guys.
Peter Crosby:
Gosh, you Are so kind. Thank you. Well, it only happens because people like you take the time to share with the community. So we appreciate that. And we've been talking a lot about this debate about brand versus performance advertising, and what's been going on right now with retail media, et cetera. And you really have a unique perspective, given your experience on focusing on both areas of performance versus brand during your career. So tell us a little bit about where you've been and how that shaped your views on this debate?
John Denny:
Yeah, so it's really interesting. I've sort of had this bipolar existence moving from brand advertising to performance advertising. So one of my earliest experiences in my career was at an agency called Chiat/Day. And for those of you who don't know Chiat/Day, it is one of it's known as one of the most foremost centers of excellence for brand and building brand. And it's famous for building the apple brand with Steve jobs. So if you ever read Walter Isaacson's biography of Steve jobs, he goes into it in length. The experience that Steve Jobs had, he was 12 years in exile. He returned to Apple in 1997 to a company that had lost a billion the year before, had only about 90 days of working capital to pay people, and the stock was at an all time low. And it was so bad that his chief rival Michael Dell was quoted to a reporter as saying essentially, "Hey, Apple should just give all their money back to shareholders and shut the whole thing down."
John Denny:
So it was in tough shape. And so what the first thing that Steve jobs did, and he knew he didn't have a lot of time, was to call in Chiat/Day, Jay Chiat and our creative director, Lee cloud. Because he knew that building a brand had importance both for his internal morale of his team, his company, as well as what he was going to do in the world. So working over the next month or so, that team collectively came up with one of the most famous advertising campaigns ever created. It was the Think Different campaign, here's to the crazy ones. That sparked decades of incredible work that you flash forward to today and in January Apple briefly passed three trillion in valuation. And now you look at Michael Dell's company and Apple is a hundred times the valuation of that company.
John Denny:
So incredible sort of experience in power branding. Also how consumer decision making happens, decades of research about how do people choose what they're going to do? Decades of research on behavioral economics. We'll talk more about that a little bit later. But so that was a powerful experience. Jump from there into almost a purely performance mindset. So I started working at the DDB Agency working with the Altavista search engine. And Peter I'm guessing since, since this isn't your first rodeo...
Peter Crosby:
Yes. I'm old, thank you.
John Denny:
You remember Altavista.
Peter Crosby:
I do remember Al Vista.
John Denny:
Exactly. So Altavista, for those of you old school people, know that it was the Google of the nineties, the most powerful search engine out there.
Peter Crosby:
It was no Ask Jeeves, but okay. I'll give you that.
John Denny:
Exactly, exactly. But that experience was incredible understanding the platform that was going to create paid search advertising. I think last time I checked it's worth about 60 billion today. But incredible in terms of response in a performance sort of atmosphere. And so moved from there to CMGI, worked with Dave Weatherall, who was one of the inventors of the behaviorally targeted programmatic display ad. That was an incredible experience in the power of performance and targeting. Moved later to Advance Conde Nast and headed up teams all about E-commerce, search engine optimization, paid search, programmatic marketing. So it was all about instantaneous performance. Like you were looking that day at what you did in advertising channels and how it performed to the day, the hour, the minute in terms of results. So again, it's a very bipolar sort of experience across the landscape.
Lauren Livak:
So John then in your most recent experience with Cavu Partners, it seems like you're really on the cutting edge with the fastest growing consumer brands and D to C brands. And you're working with them over the last few years, like Oatly, Beyond meat, as well as Buy. What have you been seeing with those brands?
John Denny:
Yeah, it's an amazing thing that I get to do because previously I worked at Buy for four years before joining Capital Venture Partners and buy was an investment of capital venture partners. And there I was working in a silo, but now the amazing thing, so over the last four years we partnered with probably 30 brands within our portfolio.
Peter Crosby:
Wow, 30. Holy.
John Denny:
Yeah. And then we've got all because we are a high profile venture capital organization, if you are a high growth consumer brand out there, you're going to be reaching out to us and talking to us about potentially investing in your brand. So that experience has given us a deep look under the hood at what all these companies are doing in terms of investing to drive the fastest growth that we're seeing in the consumer space today. And so you see these amazing things where I'll see something that a company's doing in 2018 and then it looks like they're growing incredibly quickly. And then flash forward four years later and uh-oh, cautionary tale. Something's happened and they aren't growing at that pace. So it's really been an amazing education opportunity to really see what works and what may not work over the long term.
Peter Crosby:
And John, as we talked about at the start of the podcast, we've been seeing this sea change going on across the marketing world. A big shift of money out of brand building activity and into performance marketing and in large part due to the pandemic, but also just the rise of digital commerce sort of on its own. And the addition of retail media now, was what it? Amazon reported 31 billion dollars in revenue from their ad platform.
John Denny:
Yeah.
Peter Crosby:
In fact there was a great quote from a recent Forester report that you shared with us about the spreading skepticism of brand building among company leadership today. And the report said something like, well, not something like, I have the quote. So brand marketing is seen as fluffy, many CFOs abhor the intangibility of the brand. Instead they latch onto lower funnel performance marketing efforts because of perceived precision and instant measurability of leads and sales.
John Denny:
Exactly.
Peter Crosby:
How do you respond to that? Yeah.
John Denny:
Exactly. And, this is something that I see across the leadership teams that I interact with across our portfolio brands and all of these brands that we're constantly talking to leadership teams, CEOs, CFOs, CMOs, across these high growth brands. And this is the mindset that exists out there. And I love this, actually there was a webinar by the econometrician, Dr. Grace Kites, who is with Magic Numbers based in the UK. And so she looks in her business at okay, effectiveness of advertising. I spent a dollar here, what was the result in sales? And so, she was relating on this webinar how she's been tutoring this marketer who is like a fast growth's startup. And she's saying, well, you're spending all your money in performance advertising, you need to balance that. You need to balance something with brand advertising.
John Denny:
And so he went back to his founder and he talked to his founder and then he came back to Grace. And she said, this is what he said. "I said, I spoke to one of the founders about brand building. He was like, 'Yeah, I'm not trying to do what you want me to do. I don't want to become a household name and be famous. I just want to put a dollar in it and get $50 back.'" So she described that situation where it's like this perception of the money machine. It's a little like a slot machine. You put your money in, but you're guaranteed those bells are going to go off and that money's going to come pouring out. And I understand I live in these dashboards for Amazon search and Google search and Facebook performance advertising. And you can get this sense that it's as easy as that, just throw a couple dollars in, why do you need to be famous? Why do people have to remember you? Just go with the performance machine.
Lauren Livak:
So John, you must have a really interesting perspective working with all these brands to focus on D to C and E-commerce. Are you seeing that this shift out of branding and into the money machine is the right solution? Is that the best direction? What are you thinking here?
John Denny:
Yeah, so it's interesting. We talked about this a little bit before. So over the course of four years, I'm able to see what teams are doing early on, and then ultimately what happens three or four years later. And so I began to over the last couple years, a troubling pattern. You would see these brands growing explosively, and I would talk to them at the earliest stages and say, okay, what are you doing? And they'd be pouring all their money into performance platforms. And I'd say, well, do you want to be looking at anything mid and upper funnel? Anything about driving awareness? And they'd be like, "No, like we don't believe in that, we're accountable. Like we account for every dollar that we invest in our marketing."
John Denny:
And lo and behold three and four years later, you see this growth stall. The cost per acquisition has skyrocketed. And the company's growth is stopping. And I joke that the CMO is yelling at the digital guy. The CEO is yelling at the CMO. The investors are yelling at the CEO. Everybody's panicking and saying like, and Grace talks about this. "Oh, everybody says, well, marketing doesn't work anymore. Like, marketing just is broken. It stopped working." And so here we are, it doesn't work.
Peter Crosby:
Wow.
John Denny:
And so it was literally, I was having this thought and I was thinking I was the only human on the planet seeing this. And then I saw Dr. Grace Kite do webinars talking about this, David Tillman from Warrick Research and James Herman, of Brand Strategies based out of New Zealand, who's worked with Coke, Unilever, Heineken. They released an amazing white paper that I think you're going to share in the program notes with our listeners.
Peter Crosby:
Yeah, we're going to.
John Denny:
All about this issue of does brand matter in a performance era? In the era of digital commerce?
Peter Crosby:
Yeah. And when I read that report, this quote jumped out of me. This move to performance has led a growing number of companies to optimize themselves out of effectiveness as they efficiently convert all available market demand with conversion tactics, then see their performance metrics decline as that demand is exhausted.
John Denny:
Exactly. And I've always thought of a really good analogy, and I've tried to use this with the brands that I talk to, which is about a farmer who is harvesting a field. So if you think about it, he's got this field and he's got mature crops and he's doing demand capture and he's harvesting those crops over and over again over time. And so years passed as he's harvesting those crops. And then the challenge is things like competitors come in and the finite demand that exists in that field starts to get less and less and less. If you think about it, a real world example might be a consumer who's searching for protein powder. They're working out and they're saying things like, "I'm looking for something to add to my morning shake to improve my muscle building."
John Denny:
So they go on to Amazon, they do a search for protein powder. And it returns all of the search results in Amazon search or Google search. But the reality is there's only a small proportion of the people who are in the market who are actively searching. And then there are a whole lot of people beyond that, I've seen data from Amazon showing consideration set versus people who are just doing demand capture. And there's obviously exponentially more market than there is just in the demand capture. But it's like, eventually if you are complete... If you're harvesting that field over and over again, eventually you're just left with a lot of dried stalk and it looks a little dusty. Like those depression photos we see of Nebraska in the dust bowl. So it gets pretty sad.
Lauren Livak:
And John, I really like that analogy because I feel like...
Peter Crosby:
It's a sad analogy. How can you like it?
John Denny:
It's sad.
Lauren Livak:
No, but the reason why I like it is because it is sad.
Peter Crosby:
I love that.
Lauren Livak:
But I think it shows that you can't just, especially in a fast paced E-commerce world, you can't just attach to the thing that everyone's talking about that's really exciting that's in that moment. And you need to remember that you have to go back to the fundamentals and understand what you need to pick and choose to be successful in addition to all of the new trends that you need to stay on top of and all of the new ways of thinking about E-commerce.
John Denny:
Exactly Lauren, and I've got to tell you, it's almost for the young people I talk to today. I'm saying young, under 30, maybe. It appears like there was generations of knowledge about the way consumers purchased things. And the mindset today has evolved to the money machine. And there's really no... It's disappearing. That generational knowledge of decades of consumer research about how a consumer actually purchased something. We were talking before the podcast about Daniel Kahneman, who is a behavioral economist. He won the Nobel prize in 2002. And he studied this, how humans make decisions. And he basically came up with this idea of system one and system two. System one is instinctual. It's your core brain. And it's basically a habit. So if you're driving down the highway in your car to work every day and you suddenly look up and say, I haven't focused on driving for the last 10 minutes. Well, that's system one. It is taking care of everything that you do so that you do it automatically.
John Denny:
System two is using your brain. It's using more energy, so brains don't like to do it as much, but it's considered rational thought. I will tell you that most marketers today believe that consumers make decisions with system two, considered rational thought. But the reality as Daniel Kahneman said, 95% of our decisions are made by system one. They're made instinctually and they're made powered by emotion. Emotion is the fuel that basically decides the decision that you are going to make. And a lot of times they're subconscious. So when I'm influenced by an apple ad or a Nike ad a lot of times I don't even know it and it's an emotional response that helps me choose. But today that seems to be lost knowledge.
Peter Crosby:
Well, it's also, when I think about John, like the meaning, the purpose, the energy of the brand, the first question that comes to my mind, or the first thought that comes to my mind is it's where your margin comes from.
John Denny:
Yes.
Peter Crosby:
Like, and when I think about the future of D to C brands and really any of the brands that are out there connecting with consumers or B2B buyers for that matter, what you want ultimately is the economics of loyalty.
John Denny:
Yes.
Peter Crosby:
You want somebody deciding to look for you, deciding to stick with you over all the other noise that's in front of them, because you built a relationship with them. And performance marketing does not do that.
John Denny:
Exactly.
Peter Crosby:
It's a combination, right?
John Denny:
Exactly. And as you think about it, so Peter Fields and Les Bennet are advert researchers in the UK, and they talk about this, they've studied in the IPA database, which is essentially the forays of the UK. And they've looked at decades of the most successful brands. What their strategies were, what they invested in, what ultimately were the outcomes. And they talk about the importance of balancing demand capture with this idea of future demand, of building brand. And the reason is just as you said, it involves building memories and building structures in the brain so that when I'm thinking protein powder, I'm thinking, like Vital Proteins is one of our brands. So I'm thinking Vital Proteins, I'm doing a brand search as opposed to a general search. But that takes time, that it does happen instantly. The analogy that I've used is this idea of planting a new field.
John Denny:
If you're that farmer, you've been harvesting that field over and over again and you just got a bunch of dried stocks now, you have to look over there a hundred yards to your east, and you've got to plant seeds and you got to water those seeds. And you've got to fertilize that, and you've got to keep the animals away. And you've got to let those tender plants grow because you can't harvest it in a day or a week or a month. It's going to take many months to build those brand associations, those memory structures so that when the moment comes up, I remember your brand.
John Denny:
So we talk about this idea of... And it's interesting, like when I'm talking to a lot of our brands and portfolio brands and other marketers, if I mention the word brand, they're going to run from me because they know their CEO and their CMO is going to be like... And the CEO, CFO is like, "Brand, that fluffy stuff. We don't do that here." But when I frame it in terms of future demand.
Peter Crosby:
Yeah.
John Denny:
That you have to create future demand. And then you've got to balance demand capture with that creation of future demand. You can't wait, because if you run out, if you're looking at dried stocks and you harvest that field so there's nothing left, you can't instantly turn to future demand. They have to be done concurrently. So, and in a balanced way.
Lauren Livak:
And more brands are talking about community too. And I think that really ties into all of this as well. If you're building a community that's talking about your brand, that's being loyal, Peter, to your point, they're planting the seeds for you in the fields you can't even see, right?
John Denny:
Exactly.
Lauren Livak:
Like, if we continue the analogy. That's why I think you can see how brands are thinking, going towards community. It's different worlds potentially.
John Denny:
Yes.
Lauren Livak:
But they're starting to realize that they need to think about that kind of future forward planning.
John Denny:
Exactly. Future demand, and building something entirely different than just what I'm doing in the search engines and demand captures.
Peter Crosby:
And they're different marketing approaches, right? Future management is different, yeah...
John Denny:
Exactly. So this is the challenge, just like a muscle. Like I have these brands who are focused all on performance marketing, or I'm talking to them across the US. And they've been exercising this muscle that's all about performance. And when you think about it, we talked about system one and system two. If I'm a consumer and I'm doing a product search and I see a search ad pop up, you can get away with very rational product forward feature benefit focus, like it's completely drive. If you look at, ever do a search for protein powders, you'll see exactly what I mean.
Peter Crosby:
Yeah.
John Denny:
It's like 1800 electrolytes build this.
Peter Crosby:
Right.
John Denny:
Like, blah, blah, blah, blah, blah, blah.
Peter Crosby:
We used to call that feeds and speeds in this technology.
John Denny:
Feeds and speeds. I was just going to say, Dell Computer, what did Dell computer focus on? Michael Dell? Speeds and feeds.
Peter Crosby:
Yeah.
John Denny:
Where Steve Jobs was about, no, I want to talk about why we exist. What's our purpose? What are we doing? Why are we here? Emotions. So if you're doing performance based advertising, you can get away with very dry, product driven approaches. But if you're exercising and building this new muscle that is all about building future demand, think about it. You're talking, you're using much wider reach because you're trying to reach wider than the consumer who is just actively searching. So you might be looking at media like a programmatic video or a OTT or streaming television, which I think there is a revolution happening there.
Peter Crosby:
Yeah.
John Denny:
And yet the consumer is in a lean back mode where it's like, they're not focused on searching for exactly what you're selling. They're thinking about something else, like they're watching a program or thinking about the weather. So you have to come up with a creative approach that is much more engaging and engages them on an emotional level. And you've got to be distinctive. If you're boring and you do exactly what everybody else is doing and you focus on your product and you do speeds and feeds, nobody is ever going to notice you in this new world of future demand.
John Denny:
So we find it's an entirely new set of experiences that we often have to take them through. And this is our brand so we have an internal agency called Uncommon act Cavu Venture Partners that partners directly with our brand. And this is what we specialize in. It's like this dual demand capture, but you've got to build future demand at the same time. And the unique skill set of building the right creative, the right voice, being distinctive to connect with consumers. And it's those brands who get it right, are the explosive brands over the long haul.
Lauren Livak:
Now, if you're investing in building the future demand, are you still able to track the effectiveness of that spend in a way that your CFO will be happy about?
John Denny:
Yeah. So it's a great question. And so obviously for people addicted to the crack of performance measures and highly flawed short-term measures, there's some challenges there. Now I'm just going to take a second to talk about why it's flawed. Essentially, like let's say 2017, I ran a Super Bowl ad. Spent 4.22 million to run this ad with Christopher and Justin Timberlake. At the same time, I was running hundreds of thousands on Amazon search and Google search. Well, that Superbowl ad hit. What do you guess happens?
Peter Crosby:
There is a lot of demand.
John Denny:
A lot of debate, a lot of searching.
Peter Crosby:
Yeah.
John Denny:
People are searching. They're seeing this new beverage and all of a sudden they're searching. My searches for Google exploded, my Amazon searches exploded. And so when my CFO looked at the return on ad spend for those channels, what do you think he saw? For a 4.2 million Super Bowl ad spot or for television, he said, "That stuff doesn't work. But look at this search stuff, right? It returns, it works like crazy. It's awesome. Put that same money at the bottom of the funnel search." So attribution is broken, the crack that everybody's addicted to, turns out it's like the wrong drug baby. You're reading the wrong signals. So what we first try to wean people off is a complete reliance on the crack of short term growth ads, it's all the language that you hear from addicts.
John Denny:
The addicts are people running these companies, the investors investing in them, because they don't even know what they're talking about... They're just asking, what's your tech?. They don't even know what they're asking for. So we are trying to develop this upper funnel and we're telling them to put in place scoreboards that accompany the short term. So demand capture, put in future demand scoreboards. So these can be things like brand tracking. We still find brand tracking to be very, very effective. Tracking how many consumers are aware of my brand? How many are aware of the competitor brands in my category? How many are converting? Meaning that they're actually purchasing me, who are aware. So the and version ratio there. How many are repeating that have tried me for the first time, those conversion metrics. So those need to be tracked over time because those are lead measures as to what the lag measure is going to be down the line in terms of sales and conversion.
John Denny:
We also find commercial mix modeling multi touch attribution solutions. They were expensive several years ago, the prices are coming down. And I would rather invest for one of our brands, a couple hundred thousand in a platform that gives them richer insight into multi touch and the full funnel than have them invest hundreds of thousands of dollars in advertising and bottom of the funnel and ultimately not go anywhere for years later.
John Denny:
So those are two metrics, poor man's metric that I love is Amazon brand search. It's the number one product search engine in the US. Track your brand search over time, it is a cheap proxy for awareness. When I ran brand tracking I could see my Amazon brand searches and my Google trends. You can also see what's going on. If your brand, I had a brand that was completely reliant on bottom of funnel performance advertising, and I could show them Google trends and Amazon search going straight into the ground. And I said, this is not going to work. This is going to end badly for you unless you start building future demand that can be then harvested.
Peter Crosby:
Are you finding the characteristics of the human being that's willing to make this shift? Like, is there a difference or do you know what I mean?
John Denny:
Yes.
Peter Crosby:
Like ultimately human beings have to decide to get off the pipe, sorry to extend your drug analogy. What are you finding? Like what does it take to be the person that's going to do this fight?
John Denny:
I mean, you definitely have to have someone open to listening. The challenge is what we all, Peter and Lauren, it is like 30 years ago it seemed to be more straightforward and people could grasp it. But today, you know what? It is rocket science.
Peter Crosby:
Yeah.
John Denny:
It's incredibly complex. The way the consumer works to make decisions is incredibly complicated. You've got to read Daniel Kahneman Thinking Fast and Slow to understand how the brain works. And it's not intuitive to understand that 95% of our decisions are made on the system, one on a subconscious level, without us ever even bringing rational thought in. Explaining that to a CFO is difficult. I would find the best leadership teams are open. You can present this data, these concepts, these understandings, and I literally have taken this work research report about balancing the creation of future demand with demand capture to almost every one of my portfolio companies. I introduce it to them and I say, let's just take a pause to what you are doing right now and I want to introduce a new idea.
John Denny:
So there's openness and humility that we all have to have in this business.
Peter Crosby:
Yeah.
John Denny:
What you thought you knew yesterday, if you think you know everything, that thought is the problem. You have to be humble that things are changing and that you've got to be able to adapt. So it's that adaptive mindset being open to new concepts and ideas.
Lauren Livak:
And humility. I really like that too.
John Denny:
Humility, yes.
Lauren Livak:
Like, nobody knows everything. Like even if you've been doing it for 20 years, it's changed in the past month. Right?
John Denny:
Everyday, and you guys have talked about that previous podcast.
Lauren Livak:
Yeah.
John Denny:
You were just talking about that with Terry Masters on your podcast. Where it's that humility, all of us in this business know if you think you thought you knew everything, then that is a problem. And you are in trouble.
Lauren Livak:
Exactly. So John, you clearly haven't been thinking about this at all.
John Denny:
Oh, no.
Lauren Livak:
[inaudible 00:27:28] Job.
John Denny:
Yeah. I don't care much about it either. So.
Lauren Livak:
So how is it affecting how you're giving brands advice and telling them how to partner and move forward?
John Denny:
So, again, we know we have to, we look at the signals, we look for that addiction to the bottom of the line performance metrics. We look for the language that they're using. And a lot of times we just have to have conversations and talk to them about, and present to our point of view in the world. And we do find we get responses that way. Unfortunately, as I mentioned, and James Herman has talked about in his white paper that often if you wait till too late and that platform is already burning, that your crops are looking like they're, they're dusty and dried stocks, then it's too late. So you really have to present the data to them and help them understand. It's education, exactly what you guys are doing.
Peter Crosby:
And then a test and learn. Like you're not saying go spend every bit of your money over the... Do you know what I mean?
John Denny:
Exactly.
Peter Crosby:
I would imagine you set up a program that can start to give a sense that this can work.
John Denny:
And exactly, and what I'll tell you I'm most excited about is the evolution of new tools, particularly with Amazon giving us more insight. So we all know that Amazon has been a great repository. Amazon knows beyond what the short term attribution. I ran a sponsored search ad, a consumer clicked on it and converted. Amazon knows that was not the only path that consumer has taken, but it's been a while in terms of development to release that data. So Amazon just in October released something called Amazon Brand Analytics. It was announced that Amazon Unboxed in October, and this is some pretty incredible metrics. So essentially Amazon is giving you data points and they can show you for example, a consumer who clicked and went only to your detail page by clicking on a sponsored search ad might be worth X. But a consumer who actually conducted a search and showed brand intent, remembered a brand like Vital Proteins in the protein space, and then went to a detail page and converted. Amazon is now showing us the 12 month lifetime value.
John Denny:
What is that consumer worth, not on the initial transaction, but over a 12 month period? And surprise, surprise the consumer who clicked on a performance ad and converted is worth X. Well, we found for one of our brands that a consumer who did a search, showed brand intent, and then converted was worth three to four times more over 12 months than the consumer who just clicked on a performance ad.
Peter Crosby:
Wow.
John Denny:
So Amazon is presenting that data. They also have Amazon Marketing Cloud, which is giving us data now and a view into, for example, a consumer who saw an OTT ad and then clicked on a sponsored search ad. And they're showing us that that consumer is worth two to three times, two to three times more likely to convert, and worth more as an outcome. And all it's these upper funnel ad tools that the CFO has always looked at and said, "Ah, it's fluffy. There's no data." Well, Amazon Market Cloud and Advanced Brand Analytics are now giving us some insight into the long term. It's almost like, I describe it as the iceberg beneath the surface and this iceberg beneath the surface is in play on platforms like Instacart, getting a consumer to convert once is just the tip of the iceberg particularly if you get to buy it again on Instacart and the consumer purchases again and again.
John Denny:
And then purchases in store, and because that's what my wife uses, Instacart. She'll buy Oatly, click on it and buy there. But guess what, when she goes into Wegmans and Costco and Target and Whole Foods, she's also buying Oatly. Because that's the way she works.
Peter Crosby:
Right.
John Denny:
So she's buying holistically in an omnichannel way.
Peter Crosby:
Wow. It just makes me think that in these retail ad platform wars and sort of... You have a retail advert, you have a retail advert, that the thing that's going to drive a brand to decide where they're going to put their ad dollars probably has more to do with, maybe even less than the side of the audience that the retailer is providing. But instead the data that they're providing on what's working and what's not.
John Denny:
Exactly. And it's the retail platforms who are closest to the point of purchase.
Peter Crosby:
Yeah.
John Denny:
They are developing these made and upper funnel tools. Like Amazon obviously has developed over the last decade, their programmatic tools for display and online video. And now it's all about streaming, look at what Amazon is investing in in terms of Amazon Prime, NFL Thursday Night Football. They're vastly expanding the streaming because they ain't no dummies, they know this is where this is moving. They're marrying the purchase data with these upper funnel tools. And you look at Instacart, there are amazing advances happening with Instacart ad tools right now. I know a number of folks who have moved from the Amazon advertising ecosystem over to Instacart, and they're now rapidly developing these more consideration and awareness level tools to display ads. And they're opening up this ability to influence consumers with much richer units that can allow for emotional resonance, not just a product forward ad, but that can allow you to do storytelling. And that's really where the magic happens is combining these lower funnels with the magic of storytelling, conveying emotion, and then seeing purchase data and then tying it all together with something like Amazon Marketing Cloud and Brand Analytics.
Peter Crosby:
And that's when marketing is fun.
John Denny:
Yes.
Peter Crosby:
If your whole day is spent trying to tweak little buttons all day long, and I'm not denigrating that work. That's super important work, but it is that sprint and marathon that you want to be on in the long run and you want to stand out and earn your margin. And I love this future demand thinking, John.
John Denny:
Yeah.
Peter Crosby:
It's really great.
John Denny:
Yeah, and it's great and it's been a real help to us and our brands in terms of reframing their thinking about long term sustainable growth to become some of the legendary brands. You don't stall out after three or four years, you really hit that hyper growth that really drives long term revenue generation.
Peter Crosby:
So to close out. Oh, sorry, go ahead, Lauren.
Lauren Livak:
I was just going to say, I think it also goes to the point of when you're a marketer, you are a marketer across all of your channels. A lot of times we talk about digital marketers or just a traditional marketer. No, you are a marketer now, you need to worry about...
John Denny:
Lauren you were talking, we could talk for hours on this one.
Lauren Livak:
Yes.
John Denny:
I know we don't have a ton of time, but that's all about, I believe the future of marketing is more this hybrid person.
Lauren Livak:
Agreed.
John Denny:
They understand retail channels. They understand building brands. You know, I was in charge of all advertising and media buying. I was building a brand at the same time I was in charge of Amazon and I understood that ecosystem. The best and most innovative brands are hybridizing this approach. It is like the one unit and they are the Seal Team Six understanding demand capture, demand generation, future demand. They've got all the pieces of the puzzle and they're executing quickly, which is why if you're a large brand, you want to be afraid of the Seal Team Six that's developing out there.
Peter Crosby:
And that's where careers come from.
John Denny:
Exactly.
Peter Crosby:
And it doesn't stop at E-commerce, that goes up to the C-suite. If you get this right and you understand this stuff, it's the future leaders of this industry.
John Denny:
Exactly.
Peter Crosby:
Yeah, yeah.
John Denny:
And it's training and it's teaching that this is where it's all moving and it's moving fast.
Peter Crosby:
Yeah. Well, thank you for teaching us and for just this amazing conversation and all the way along, I've been taking notes about all these resources that you mentioned. So just to close, if you were to pick your top two reading list that will inspire sort of future demand thinking, where would you point people?
John Denny:
So, as we've talked about, start with this white paper Rethinking Brand For The Rise in Digital Commerce, you're going to have the link in the program notes.
Peter Crosby:
Yeah.
John Denny:
It's from Warc Research, W-A-R-C. It's a division of essential. So you could go to Warc.com and download that research paper. So start with that reading. Also I've found Analytic Partners, they do commercial mix modeling multi-touch attribution. It's a mouthful, but they're essentially looking at the effectiveness of advertising. When I spend a dollar, what does it return in terms of sales? They have something called the ROI Geno, which they've studied billions in ad spend over the last two decades. And Mike Menkes is one of the lead analysts there. He's done some great webinars, we actually brought him in to speak to our portfolio brands on our own internal Cavu Webinar. And he is great at articulating this idea of balancing future demand capture with generation of future demand. The ratio of that, showing hard data from commercial mix modeling about the effects of this and why your CFO can be happy because here's the data proving what you're doing is the right step. So I would go to those two sources first.
Peter Crosby:
So we'll have the links in the show notes. That sounds like someone we should have on a podcast someday, so.
John Denny:
I would recommend it. And I think Mike Menkes would love it.
Peter Crosby:
Oh my gosh. Well, so look forward to that. Hopefully we can convince Mike to come on and pile on top of this new movement. John, always a pleasure, your work with the Digital Shelf Institute Executive Forum, your kindness in sharing back with the community all the way along is, it just speaks to who you are as a person and as a member of the industry. But I'm super excited about this. Thank you so much. We're grateful.
John Denny:
Great. Great conversation and thank you very much, guys.
Lauren Livak:
Thank you, John.
Peter Crosby:
Wow, what a conversation. Reading list in the show notes. We're working on future guests around this, and so grateful to John for lighting this fire with us. Spread the word, share the episode, and thanks for being part of our community.
