Where are the customers’ yachts?

May 1, 2012

One of these stories is true; the other is not.

(1) A couple of entrepreneurs from Silicon Valley created a company to develop an iPhone social-media app. Eighteen months later, they sold t

he company to Facebook for $1 billion in cash and stock.

(2) A couple of entrepreneurs from Newark, New Jersey, created a company to develop a household product and promoted the brand exclusively with social media. Eighteen months later, they sold the company to Procter & Gamble for $1 billion in cash and stock.

The answers are: (1) Instagram and (2) No chance in hell.

Years ago, an out-of-town visitor was being shown the wonders of New York’s financial district. His guide pointed out the handsome ships riding at anchor in the waters off Wall Street. “Look at those brokers’ yachts,” said the guide.

“But,” asked the visitor, “where are the customers’ yachts?”

A billion dollars is enough to buy a dozen yachts for Instagram investors. But what about the companies that advertise on the Internet and are heavy users of social media. Where are their yachts?

The Subservient Chicken.

I’ve been collecting social-media success stories for many years. And the number of truly-successful stories is rather thin. One story, mentioned by dozens of marketing pundits, is the “Subservient Chicken.” Here’s what one marketing professor had to say:

“An early, hugely-successful viral video campaign was Burger King’s “Subservient Chicken,” a website used to introduce the BK Broiler chicken sandwich. It attracted millions of visitors, who shared the site with millions of their friends. The site generated hundreds of news stories and blog entries, and, oh yes, a nice sales lift for Burger King.”

The first year, per-unit sales at Burger King restaurants in the U.S. went up 7.2 percent. And the second year, 2.9 percent. But over at McDonald’s the equivalent numbers were 9.5 percent and 4.7 percent.

So one could ask, Was it the Subservient Chicken or a rising fast-food market that provided a “nice sales lift?”

The man your man could smell like.

Old Spice launched its Isaiah Mustafa campaign with a 30-second commercial on the 2010 Super Bowl. The spot was a hit on video-sharing websites, such as YouTube where it has received more than 41 million views. (In June 2010 the ad won the Grand Prix for film at the Cannes Lions International Advertising Festival.)

Old Spice capitalized on the notoriety of the campaign by producing a number of online videos featuring Mustafa.

In 2011, Procter & Gamble announced that Fabio would become the Old Spice spokesman, leading to criticism from Mustafa fans. This led to a poll as to which spokesman viewers preferred. A “Mano a Mano” video was produced featuring a confrontation between the two.

The Mustafa campaign obviously increased Old Spice sales. The real question is, By how much? Furthermore, how much of the increase was due to the TV spots and how much to the social-media follow-up?

The Hunger Games.

It just passed the $600-million mark, which makes it by far the highest-grossing film of the year. What accounts for its success?

“A digital blitz for Hunger Games,” according to a headline in the March 19, New York Times, “rewrites Hollywood’s marketing script.”

According to the Times: “The dark art of movie promotion increasingly lives on the Web, where studios are playing a wilier game, using social media and a blizzard of other inexpensive yet effective online techniques to pull off what may be the marketer’s ultimate trick: persuading fans to persuade each other.”

“The campaign’s centerpiece,” according to the Times, “has been a phased, yearlong digital effort built around the content platforms cherished by young audiences: near-constant use of Facebook and Twitter, a YouTube channel, a Tumblr blog, iPhone games and live Yahoo streaming from the premiere.

It wasn’t until ten paragraphs into the story that the Times got around to mentioning that when the movie opened there were more than 24-million copies of The Hunger Games trilogy in print.

(I wonder what might happened to John Carter if there had been 24-million copies of a book in print the day the movie opened.)

So was it the books or the Web that made The Hunger Games successful? Obviously both, but would the movie have been nearly as successful without the book?

Brands built on the Web.

What the Web is exceptionally good at promoting is not physical brands, but Web brands.

The entrepreneurs that launched Amazon, Google, Facebook, YouTube, Groupon, Pinterest, Linked-In, and dozens of other sites (and the venture capitalists that backed them) can afford a sizeable number of yachts. But what about their customers? What about the advertisers using the Web and social media to build their businesses?

Where are the customers’ yachts?

It’s hard to find customer success stories that match the success stories of Instagram and other Web brands. Yet social media has so captured the imagination of the marketing   community that no one seems to want to talk about anything else.

Like all media (radio, television, print, outdoor), social media is a tactic. Is it important? Sure, but not as important as strategy.

Strategy first. Tactics second. If you don’t have the right strategy, then good tactics, whether they include social media or not, won’t help you very much.

What concerns me is that too many marketing people have elevated tactics to the level of strategy, especially the tactics of social media.

Or even worse.

The death of strategy.

Here is what Kevin Roberts, CEO of Saatchi & Saatchi, said recently: “We don’t just live in a VUCA world – a volatile, uncertain, ambiguous and complex world – we live in a super VUCA world. We live in a vibrant world where our kids are connecting to each other and to brands across the world with no money involved.”

“Strategy is dead,” he proclaimed. “Who really knows what is going to happen anymore in this super VUCA world? The more time and money you spend devising strategies the more time you are giving your rivals to start eating your lunch.”

This is not a new idea. When I worked at Needham, an ad agency that later became part of DDB, strategy was an afterthought. What was important was “creativity.”

You first created the advertising you thought was going to knock the socks off the judges at the creative awards contests. Then you “backed down” the strategy.

That is, you started with the advertising and then asked yourself, What possible strategy can I invent to justify this advertising? So you designed a client presentation that focused on a problem your advertising was going to solve.

If social media is the solution, what’s the problem?

That’s the question everyone seems to be asking. But is that the right question? Shouldn’t you reverse the order of things and first ask yourself, (1) What’s the problem? Then (2) What’s the strategy?   Then (3) What tactics can I use to executive the strategy?

Tactics shouldn’t dictate strategy. Strategy should dictate tactics. And frankly, coming up with a good strategy is a lot more difficult than it seems.

Take Burger King. After decades of copying McDonald’s line extensions with little success, you might think the fast-food chain would have reversed direction and focused on burgers instead of chicken.

But, no. A subservient cow just isn’t as funny as a subservient chicken.