Marketing Matters CMO Spotlight: Start-Up Mentality

Aired May 6, 2015

On the most recent edition of Marketing Matters, WFoA Executive Director Catharine Hays welcomed back Jenny Roony, editor of Forbes CMO network, to co-host the show. Jenny, who helps connect Marketing Matters with a wealth of CMOs through the Forbes network, will now be a monthly co-host for “CMO Spotlight” sessions, of which this episode was the first. This week, Catharine and Jenny talked to four guests about the start-up mentality, and how a start-up approach informs the marketing ethos of a company

Their first guest was Peter McGuinness, CMO of Chobani. Chobani started producing all natural Greek yogurt seven years ago, and, with a great product and no direct competitors on the market, experienced incredible growth. “Speed is a natural outcome of being in a start-up position,” explains McGuinness. Other companies quickly caught on to the Greek yogurt market, and Chobani had to realign its marketing to address the increasingly competitive and congested space. “We launched with ‘Nothing but Good,’ meaning, nothing but good ingredients, attitude, taste,” explains McGuinness. But after a few years, Chobani switched its campaign to ‘Go Real.’ “That campaign was designed to ratchet up competitiveness,” says McGuinness, “it was designed to lay a claim to our authenticity in contrast to the newcomers.”

Peter McGuinness, CMO, Chobani.
Peter McGuinness, CMO, Chobani.

The next campaign, “How Matters,” launched in 2013, coincided with a mold recall on Chobani products. “The recall was a huge setback and a very important growing experience,” says McGuinness. “How Matters’ is about how we make a product, how we treat our consumers, how we treat the community,” he explains. “We could have started adding preservatives after the mold recall, but we didn’t: our food is natural, and always will be. That campaign pushed that. It was authentic.”

Chobani sees being a natural product as crucial to its brand identity. “Better food for more people is central to Chobani, and is the future of food,” says McGuinness. “We call this our DNNNA: Delicious, nutritious, natural, and affordable. Chobani wants to be good quality, and available to all—not an elitist product.” This emphasis on authenticity, and the clarity of Chobani’s founding values, clearly contributes to the company’s start-up outlook.

Innovation is another staple start-up quality. Chobani has a café in SOHO, “Or what I call our inspiration incubation center,” explains McGuinness. The company is always working to produce innovative new ideas, many of which come from the SOHO location. Chobani’s Executive chef and flavor scientists are working not just to develop new flavors, but to “think creatively about what can be done with yogurt.” A final ingredient to the start-up mentality is trust in instinct. “At the end of the day, if the three or four top people sit down and say ‘this is beautiful food that’s better than what’s on offer out there,’ we go for it,” says McGuinness. “We only make things we’re proud of, and we trust our gut. If we lose the gut, we lose the competitive advantage—its what our customers love and expect from Chobani.”

Catharine and Jenny next welcomed Liza Landsman, Chief Customer Officer at Jet.com. Jet.com is a start up in the purest sense—it is still in the process of starting. “I always say that if Costco and Amazon had a baby, it would be Jet.com,” explains Landsman. “It uses the great insights around the membership model, and matches them with the ease and accessibility Amazon is known for.” Jet.com is set to launch this summer, and, as Landsman explains, will disrupt and innovate the retail space. “At Jet.com, we are deconstructing all the places where inefficiencies sit today, and imagining how things could be done totally differently.”

Liza Landsman, Chief Customer Officer, Jet.com.
Liza Landsman, Chief Customer Officer, Jet.com.

Central to Jet.com’s business model—and a mentality that reflects a start-up approach—is a focus on the value of the customer. “At Jet.com, customer’s aren’t just along for the ride, they help drive,” says Landsman. “We can have the best marketing in the world, but if the experience isn’t right, if the savings aren’t there, if brand personality and customer service aren’t excellent, customers will know really quickly.” Going through the process of developing and planning this customer-focused experience, Landsman sees the start-up mentality as hugely beneficial. “The great luxury of being in a real start-up is you can fail fast, iterate, and try interesting new things pretty quickly,” she says. “You can sit down to brainstorm an idea, and two hours later have an working prototype in front of you.”

Using data to understand what customers will respond to has played a big part in building Jet.com. “The true gift is we are getting to build this company, and service, from scratch,” says Landsman. “Of course, that means that we don’t have years of customer data to draw on.” This limitation is, however, something Landsman sees as liberating—her team can focus on very specific aspects of data and not get carried away with the density of information. “The focus is very freeing,” says Landsman. “I always say data gets you to the two doors, but it’s up to your gut to figure out which one is the lady and which one the tiger.” By being able to see clearly, and to trust your instinct, more creative decisions can be made.

The next guest on Marketing Matters was Alan Gellman, CMO at Esurance. “Esurance is 15 years old, which is young in the insurance world,’ says Gellman.“When Esurance was founded the question was ‘what would it mean to build a business in the insurance world and change the nature of it?’ The company was formed specifically from an innovative technology perspective. That is very much the start-up mentality.”

Alan Gellman, CMO, Esurance.
Alan Gellman, CMO, Esurance.

Today, the start-up mentality persists at Esurance. Gellman described this year’s April Fools marketing campaign, which was developed six days before April 1. “The idea was Presurance—coverage that protects you from what we predict will happen,” says Gellman. “The advertising firm came in, we loved the idea, and we said, ‘ok, lets do this!’ Thinking you can pull off something like that in six days is certainly start-up mentality.”

Esurance has just announced a partnership with Major League Baseball, the biggest partnership it has made to date. “MLB is intent on modernizing the sport of baseball, make the game go faster, and engaging in digital. That’s where we’re helping them,” says Gellman. “What makes it such a good fit for us is that MLB is human and passionate but increasingly digital-centric.” Esurance, which runs campaigns that appeal to the individuality of each person and offers very individualized digital insurance, also straddles that boundary.

“The ‘aha’ moment for me was realizing the MLB knows that people don’t have time to watch three hour games, and that baseball is a sport where moments really matter,” Gellman explains. “Moments—the unbelievable catch, this walk off home run—are amazing to engage in, and only take a couple minutes, and that’s what we’re now part of.” The MLB app provides these moments: each of the 7 million times it is opened a day, users want to see highlights. Now Esurance is part of the app, and helped MLB develop what the user experience should look like. “After watching a cool clip, users are prompted to vote for the Esurance All Star Ballot,” explains Gellman. “Our sponsorship is interactive, we’re partnering with baseball in ways no one has before. That’s what it means to be a modern, innovative brand.”

When asked what larger brands could do to embrace a start-up mentality, Gellman replied, “Be as nimble as you can within your environment. Have ideas, launch them, then optimize and innovate. Don’t try to profess before you move.”

The final guest on Marketing Matters was Robert McDowell, SVP of Marketing and Distribution at Choice Hotels International. ChoiceHotels is the largest lodging franchise in the world, with more than 6,300 hotels globally. Over the past year, Choice Hotels have been working to create a positioning statement, and push Choice Hotels as an iconic brand. “If you look at hospitality marketing campaigns, everyone was focused on marketing amenities, on price, Wi-Fi, or free breakfast. We stepped back and did a lot of research of why people were travelling, and realized it was more about connecting with people,” explains McDowell. “Customers aren’t travelling to a hotel or a destination, they’re travelling to a business meeting or to see family and friends: hotels are about the people they are going to see.”

Robert McDowell, SVP, Marketing and Distribution, Choice Hotels International.
Robert McDowell, SVP, Marketing and Distribution, Choice Hotels International.

Based on this observation, Choice Hotels re-developed its brand identity, produced an advertising campaigns for television and internet, and updated its website. “By approaching all three facets of the brand together, we aim to create a break out in the sea of sameness of the advertising is out there,” explains McDowell.

Embracing a more digital world—a key feature of the start-up mentality—also played an important role in the recent Chase Hotels campaign. “The modern day device explosion means you customers expect the same experience in a range of formats,” says McDowell. “If you’re trying to tell them something, the look and feel always has to be the same, no matter what screen they’re looking at. We had to adapt our aesthetic and service to meet that need.”

That McDowell sees his data analysis team and his IT organization as crucial to the new Choice Hotel image is no surprise. “The relationship with IT just gets more and more important,” he says. When Choice Hotel’s partner Trip Advisor was looking to develop a mobile app, Choice Hotel’s IT team were able to do just that. “We sat down together, and they actually crafted a program called Instant Book,” he says. “They saw what was needed, and were able to produce it.”

As a franchise business, convincing franchisees to adapt to the new marketing approach may have been difficult, but McDowell explained that this was not the case. “Everything we’ve done, from our corporate logo and identity, to our ad campaign, to our website, is truly backed by research,” he says. “We screened our ad campaign to over 4,000 customers. Doing this bestows ownership of the changes and new ideas to the customers. It’s what appeals to them.” With such rigorous data, presenting changes as valuable becomes easier. “The customer was really the voice at the table that helped us guide where we were going,” says McDowell. And, as each of the guests on the show reiterated, the guiding principle of all successful start-ups is that the customer must always be respected.

“How To” With Havas Media on “Marketing Matters”

Aired April 29, 2015

On Marketing Matters this week, the Wharton Future of Advertising leadership team—Executive Director Catharine Hays and Academic Director Professor Jerry Wind—talked to Havas Media, one of the world’s largest global communication groups. Started in 1835, Havas has witnessed the development and diversification of the media landscape, adapting quickly to each new challenge. Tom Goodwin, SVP of Strategy and Innovation; Greg James, Chief Strategy and Development Officer; and Peter Sedlarcik, VP of Analytics and Research were on air to discuss the present, and future, of media management and advertising in the post-digital age.

Tom Goodwin, a recent addition to Havas, made his career by posing difficult questions to the marketing world. An accomplished writer, Goodwin has published articles on the current state of marketing in The Guardian, Tech Crunch, and Adage, to name a few. “There were a lot of people noting the change in the media market place, and a lot of conferences were being held to discuss the changes,” explains Goodwin. “But very few people were doing anything responsive. Consensus within the industry seemed to just maintain the status quo.” Goodwin’s observations caught Havas’ attention. “The way I was thinking, and the questions I was asking aligned perfectly with the way Havas saw the industry, and resonated with their goal to really change an old model.”

Tom Goodwin, SVP of Strategy and Innovation
Tom Goodwin, SVP of Strategy and Innovation

As the SVP of Strategy and Innovation, Goodwin focuses on driving this change. “We are rethinking how our clients can make meaningful connections in the ever-developing media landscape,” explains Goodwin. “So much old terminology no longer makes sense, and creates unnecessary constraints. If we think of media for “TV,” we’ve already constrained ourselves to thinking about a big screen that people sit back from, having a one-way, immersive experience. But if we re-conceive of things around “video,” everything changes.”

Video, as we all know, is not limited to television. “TV is one context for a video, and phones are another,” explains Goodwin. “With a phone, you know where the person is, what the weather is like, and that the user has access to their social network. Increasingly, our phones are also our wallets.” A video should be responsive to this changing context: when played on a phone, a video could conclude with a downloadable coupon, or the option to save a local retailer to your address book, or to share the content on Facebook. “By refusing to constrain ourselves to outdated terminology like “TV,” we can recognize that new contexts have new meanings, and we can reimagine what’s possible” says Goodwin.

Goodwin is also working to reimagine re-targeting—the process through which ads are targeted based on browser history. “Retargeting is like a clock running slowly,” he says. When people have searched for something, they’ve often already found it. By using information from predictive technology, Goodwin thinks we can move from re-, to pre-, targeting. “By making fairly sensible guesses about what people are likely to do, we can give the right message to the right person at the right time. Offering someone an Uber when it’s about to start raining will be really powerful.”

Catharine and Jerry’s next guest was Greg James, Chief Strategy and Development Officer at Havas Media. James’ role has a heavily client-facing component to it: it is his job to present media strategies to clients, explaining how the media landscape is changing, and how best their company can engage with it. “With such a diverse range of clients, from highly visible brands like Dior and Hennessy, to big financial brands like Fidelity, to smaller, more boutique brands with less to spend, each strategy is unique,” says James. “But there is one consistency: all media depends on people, on empathy, and on psychology.”

How marketing psychology is being understood, and how empathy is generated, is changing. “Today, millennials, or post-millennials, have a very different relationship with the media,” says James. “They are far more aware of paid advertising, and understand the dynamic behind it. What this generation responds to is authenticity, and what creates authenticity is a human pathway.” Earned media is thus a particularly important area of contemporary advertising, and a place to get creative.

Greg James, Chief Strategy and Development Officer
Greg James, Chief Strategy and Development Officer

Whereas owned media is advertising the brand creates themselves—such as branding on trucks, and shared media is a venture with another entity—such as sponsorship at an event, earned media is advertising that comes from the brand’s story, and isn’t necessarily paid for. “A blogger writing about a product is a good example of earned media,” James explains.

Earned media—where a real person praises the authentic story of a brand—thus holds far more value, and creates more engagement, for the younger, more media-savvy audience. James gave the example of Hennessy, the world’s largest cognac producer, which has legendary rapper Nas as a brand ambassador. “When we thought about how to capitalize on Nas, the answer wasn’t a sponsorship model that would have existed 10 years ago,” says James. “We thought about what Nas has in common with his fans that mean they all drink Hennessy on a Friday night.” Finding this commonality—an authentic shared value—“makes you realize you don’t need a 30 second ad for Hennessy, you need something that tells that story, that touches that authenticity,” he explains. Having Nas talk about Hennessy in an interview does just that.

When asked what Havas was doing to push marketing models even further, James described a “dynamic partnership with Universal Records.” By aligning with a company that holds 40 percent of the music market share, Havas gained some powerful assets—major artists brands want to be associated with. But working with Universal has another value. “This partnership gives us access to a lot of fascinating data,” says James. “When you think about how consumers listen to music today—through iTunes, Spotify, or downloads—you realize music is a digital interaction. And digital interactions can tell us something about somebody.” This knowledge can help Havas respond to the market in a highly specific way.

Marketing Matters’ final guest was Peter Sedlarcik, EVP and Director of Analytics and Research, who shared research Havas has been doing on brand meaningfulness. Starting seven years ago, Havas has undertaken a global survey to establish which brands the public considers meaningful, and feel a deep commitment to. “As a company, we spend so much time with our clients thinking about strategies to connect brands with consumers, how to intersect in their daily lives, which media channels that will get their attention, and how we can impact their behavior,” says Sedlarcik. “This research really gives us an additional layer of insight into how consumers are engaging with brands, and what their perceptions and attitudes are.” The results, as Sedlarcik explained, are rather surprising. “In many markets, particularly more developed markets, consumers are kind of apathetic about brands; there aren’t too many brands they feel passionate about.”

Peter Sedlarcik, VP of Analytics and Research
Peter Sedlarcik, VP of Analytics and Research

The level of attachments to brands was significantly lower in North America and Western Europe—sitting in the single digits, compared to the emerging markets in Asia, which sat above 50 percent. Similarly, brand meaningfulness was split along age lines. “Looking at millennials, there is simply less meaningfulness in the vast majority of products across categories,” says Sedlarcik. “There’s just not a connection to brands.” How to create a media strategy across these dramatically varying demographics, that is, how to develop meaningfulness, is therefore complex.

“When we look at meaningfulness, we’re focusing on three core components that make up a brand,” says Sedlarcik. The first is marketplace attributes, such as the quality of the product and its price point. The second is personal wellbeing, how a product can make you smarter or fitter, how it can improve you life. And the third is the collective dimension: What is the brand or company contributing to the community in terms of business practices. Evaluating on these three arenas allows for very fine-tuning when developing a marketing strategy.

“Moving the second component, personal wellbeing, has been the most successful,” says Sedlarcik, as he described a recent project with a food storage brand based out of Chicago. “There’s only so much money you can invest in online or TV marketing to spur people to buy a product they only need a limited amount of,” he explains. “Through the meaningful brands research, we found that people were looking for ways to be healthier, and to be more efficient in the way they were preparing and storing their food.” Through different social platforms, Havas then developed programs that presented the product as a means to achieve both these things. “We gave people inspiration on how the product could extend beyond what they’d been using it traditionally,” says Sedlarcik. And the data reflected success: “there was an improvement in overall usage, and a bump in sales,” he explains. “We were able to increase their business results and improve their meaningfulness.”

Finding ways to make a brand more meaningful is therefore not necessarily limited to highly utilitarian products like Uber. “By thinking about how a brand can help someone organize their life, we can improve meaningfulness,” says Sedlarcik. And by tapping into the way consumers evaluate meaningfulness, Havas is able to provide a more meaningful—and valuable—media strategy.