Future of Marketing: Part Two

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0:00:34 Welcome to the second and final episode of the PropG’s podcast special series,
0:00:39 “Future of Marketing,” where we answer questions about all things marketing.
0:00:39 Hey, Prof. G.
0:00:40 Hey, Scott and team.
0:00:41 Hey, Scott.
0:00:42 Hi, Prof. G.
0:00:42 Hey, Prof. G.
0:00:43 Hey, Prof. G.
0:00:44 Hi, Professor G.
0:00:47 In last week’s episode, we answered questions around a common marketing
0:00:50 misconceptions, the power of community-driven marketing,
0:00:52 and what the future holds for the industry.
0:00:55 I think the CMO is kind of already dead.
0:00:56 They just don’t know it.
0:00:59 Our first three clients have to be just fanatical about us.
0:01:00 We have to over-serve them.
0:01:01 I don’t care if we lose money.
0:01:03 I don’t care if you have to go on vacation with them.
0:01:04 I don’t care what it is.
0:01:05 They have to be evangelists.
0:01:09 How do I produce something of 80% of the quality
0:01:12 that I have produced in the past for 20% of the price?
0:01:14 That should be your goal.
0:01:17 Today, we’ll answer your questions surrounding Nike’s value destruction,
0:01:22 the power of rebranding, and how to build brand awareness outside of advertising.
0:01:25 So with that, first question.
0:01:31 I wanted to get your thoughts on an article that was written by a former Nike CMO,
0:01:34 where he talks about Nike’s value destruction and the decisions
0:01:39 that led up to their recent quarterly earnings.
0:01:42 I’m curious what your thoughts are on the author’s sake and how a leader
0:01:46 in any organization can avoid making similar mistakes.
0:01:48 Thanks for your time, and I hope you have a great summer.
0:01:49 Go Arsenal.
0:01:52 That’s right, the Gunners.
0:01:56 So former Nike branding executive Masimo Junco, I believe his name is Junco,
0:02:00 published a viral article back in July that focused on Nike’s significant losses
0:02:05 and market value following the release of its Q2 2024 financial results,
0:02:09 which saw the company lose $25 billion in a single day in market cap
0:02:13 and $70 billion over nine months, hitting its lowest stock price since 2018.
0:02:14 So think about this.
0:02:19 It’s at a six-year low, and I think the stock’s been cut in half in the last three years.
0:02:21 Here’s what Masimo had to say about Nike.
0:02:25 CEO John Donahoe’s tenure has been an epic saga of value destruction
0:02:27 that might take years to undo.
0:02:29 That’s hard to argue with.
0:02:32 From a shareholder perspective, the CEO has been a disaster.
0:02:36 Nike is losing its cool factor that came from limited edition releases
0:02:39 by retreating from independent retailers and focusing on its online stores.
0:02:42 Nike has reorganized its product by gender rather than sport,
0:02:46 making it feel more like generic fashion brands, including Zara, H&M.
0:02:49 This has contributed to a lack of innovation in energy and product creation.
0:02:52 Nike’s decision to scale back its wholesale business
0:02:56 and focus on its direct consumer model has distanced it from its niche boutiques
0:02:59 and skate shops that help build its cultural credibility.
0:03:02 And although the swoosh remains in market leader,
0:03:04 Nike’s brand has suffered culturally with more consumers
0:03:07 turning to competitors for cool footwear.
0:03:08 So I love Nike.
0:03:09 I’ve worked with a lot of people.
0:03:14 There are some of the brightest people at L2 that we worked with now work there.
0:03:16 And I’m part of the shift away from Nike.
0:03:19 I wear on running shoes, and I love them. They’re on brand for me.
0:03:22 I like the way they feel. Are my feet that smart?
0:03:23 Can I tell any difference? Probably not.
0:03:24 I just like what it says about me.
0:03:28 I think your shoes, your watch, your car and your smartphone
0:03:29 are kind of the ultimate self-expressive benefit.
0:03:32 They say something or you think they say something about them.
0:03:35 So let me let me be clear.
0:03:37 I would have done the same thing.
0:03:39 I would have doubled down on the direct to consumer.
0:03:42 As a matter of fact, I preach that to Nike
0:03:47 that they needed to get from 10% to 50% of their sales and direct to consumer.
0:03:48 And they bought that.
0:03:50 And I think quite frankly, I think that was the right move.
0:03:55 They have suffered because what we didn’t anticipate coming out of COVID
0:04:00 was that there would be such an aggressive, violent return to shopping and stores.
0:04:04 And Nike was not well prepared or well positioned to capture those gains.
0:04:08 And a lot of the cooler stores felt a little bit, I guess, overlooked or ignored
0:04:14 because they had basically totally focused their priorities on direct to consumer.
0:04:16 And I will say that going into a Nike town,
0:04:20 it does feel not as fresh or as cool as it used to the Nike controlled
0:04:24 or vertically controlled, vertically integrated stores.
0:04:25 But I don’t fault them for that.
0:04:30 I think that given the information they had at the time about the future of online,
0:04:31 I think that was the right decision.
0:04:35 And also the market trumps individual performance.
0:04:38 And Nike was on the wrong end of China.
0:04:44 And that is if you look at the S&P 500 companies that have really gotten kicked in the nuts.
0:04:51 Estee Lauder, Starbucks, Nike, quite frankly, it’s exposure to China.
0:04:52 China was the gift that kept on giving.
0:04:57 Just as everyone says AI, every other word in the earnings call, go back seven, eight years.
0:05:00 It was the same thing where everyone just said China over and over.
0:05:03 And these companies really massively invested in China,
0:05:06 including I think a one point Starbucks was opening a store every two hours.
0:05:07 And guess what?
0:05:11 They are now paying the price for what appears now to be overinvestment
0:05:13 that hasn’t been justified by the growth.
0:05:17 And anyone with a large presence or made a big bet on China is getting absolutely killed.
0:05:22 Anyways, I don’t know, what would I advise Nike to do?
0:05:24 Quite frankly, I would replace the CEO.
0:05:25 I think they need a fresh start.
0:05:27 I think they need a more product centric CEO.
0:05:30 I think they’re probably going to need to and I don’t know this.
0:05:32 I don’t know the revenue per employee.
0:05:35 I think they’re probably going to need to use this as cloud cover to do some cost cutting.
0:05:37 I know they’ve already started this.
0:05:40 But for me, it comes down to merchandising.
0:05:43 And I think the brand is still super cool.
0:05:46 I think they did a good job with the Olympics.
0:05:49 But I don’t think there is anything wrong with the Nike brand.
0:05:52 They can’t be fixed with what is right with the Nike brand.
0:05:54 Thanks so much for the question.
0:05:57 Question number two.
0:06:03 It’s been a hot minute since Facebook rebranded to Meta and Square rebranded to Block.
0:06:10 I thought it would be nice to do a then and now retro on your thoughts at the time of
0:06:14 those rebrands and how those rebrands have aged over time.
0:06:15 Thanks for the question.
0:06:18 I don’t know much about the Block rebranding.
0:06:23 I thought the rebrand of Meta, typically speaking, rebrands don’t work very well because
0:06:26 when you say there’s so many problems here, we need to change the name of the company.
0:06:29 And granted, they didn’t change the name of the core products.
0:06:32 They just changed the name of the corporate entity.
0:06:34 So it didn’t really matter that much.
0:06:38 But I would call it sort of indifferent or nothing, not that big a deal.
0:06:43 It does kind of mark the age and that is, keeping my marks at Zuckerberg, rebranded the whole
0:06:47 company Meta, thinking that the Metaverse was the future and began shifting the business
0:06:48 model towards the future.
0:06:52 And the wonderful thing about sitting on literally cash volcanoes is even when you make a mistake,
0:06:55 which the Metaverse was, makes no fucking sense.
0:06:56 No one wants to put that thing on their head.
0:06:58 Come on, enough already.
0:07:00 When can we declare headsets dead?
0:07:01 Right?
0:07:08 I’m going to get on my segue and head down to the town square and I’m going to jump on
0:07:12 my space and let everyone know that headsets are dead.
0:07:17 Anyways, and if I need to relax, I’ll go home and spend time with my pet rocks.
0:07:18 Okay, that’s pretty good.
0:07:21 Some pretty good cultural references there on the fly.
0:07:26 Facebook hoped to become more than just a social network and that the rebrand would
0:07:31 move the company away from the negative attention it was getting for issues, including misinformation.
0:07:37 So this just, quite frankly, has not worked, said, you know, said captain fucking obvious
0:07:38 here.
0:07:43 According to 2024 Axios Harris poll, a hundred of a hundred reputation rankings, meta ranks
0:07:47 number 97 and overall reputation with a very poor score of 59.6.
0:07:50 I think I’ve played a role in that.
0:07:53 It’s just three spots above the Trump Organization, look at that.
0:07:59 The Trump Organization and Facebook or meta are neck and neck, two spots above X and one
0:08:01 spot above spirit airlines.
0:08:07 Spirit the Trump Organization, Twitter, I refuse to call it X, and meta.
0:08:10 That’s like, that’s literally the shittiest neighborhood in the world.
0:08:13 That’s your parents come to visit you in that neighborhood and they’re like, okay, we fucked
0:08:14 up.
0:08:15 Something’s gone wrong.
0:08:20 And just in case you’re curious, NVIDIA is ranked number one, followed by 3M and Fidelity.
0:08:23 I wouldn’t have guessed any of that.
0:08:25 That’s fucking fascinating.
0:08:28 Anyways, this made no sense, but it didn’t really hurt them that much.
0:08:33 And to meta and Mark Zuckerberg’s credit, it doesn’t seem to have distracted them for
0:08:34 very long.
0:08:38 The stock, I think, dove to about 80 or 90 bucks when everyone said this makes no sense
0:08:40 and he refuses to acknowledge it.
0:08:46 But meanwhile, they’re incorporating AI into their ad stacks such that if you’re spending
0:08:50 money trying to reach people, there’s just very few ways to spend it better than on a
0:08:52 meta platform.
0:08:56 And as a result, the stock and I saw it to motor, my colleague at NYU said, don’t be
0:08:58 ridiculous, this stock’s wildly undervalued.
0:09:04 I think it’s gone from a low of 80 or 90 to where it is now, which is somewhere between,
0:09:06 I think, let’s look this up real quick.
0:09:14 The stock is at 537 and just literally, it was at 90 bucks, oh my God, it was at 90 bucks
0:09:16 less than three years ago.
0:09:20 So in the last three years, it’s up, it’s basically tripled.
0:09:21 So what do I think?
0:09:23 I don’t know anything about the block rebrand.
0:09:26 I think the meta rebrand was a distraction.
0:09:28 I don’t think it helped them, it obviously didn’t help them.
0:09:33 It’ll mark the age of what was one of the stupidest decisions around technology, but
0:09:38 the incredible management, adoption of technology, and Cash Volcanoes, this company sits on
0:09:44 overwhelmed or basically gave them a free get out of jail card that no other company
0:09:48 could probably survive spending this kind of money in this kind of lack of focus.
0:09:49 So what was it?
0:09:53 It’s kind of a big nothing burger.
0:09:58 We have one quick break before our final question, stay with us.
0:10:02 When Kamala Harris and Donald Trump met on the debate stage, it was obvious that these
0:10:08 were two very different people, but JD Vance and Tim Walz actually have a lot in common.
0:10:10 They’re both white men from the Midwest.
0:10:14 They’re both family men and they were both in the service, but they disagree on what
0:10:15 it means to be a man.
0:10:20 I heard my life hack, surround yourself with smart women and listen to them and you’ll
0:10:21 do just fine.
0:10:30 Today explained every weekday wherever you get your podcasts.
0:10:31 Welcome back.
0:10:32 Question number three.
0:10:34 Hi, I’m Rob from Astrea here.
0:10:40 I recently co-founded and launched a new automotive website, thebeep.com.au.
0:10:43 And whilst our growth has been rapid, we still face the challenge of increasing our brand
0:10:45 visibility in the market.
0:10:49 You previously mentioned if your product is strong enough, you don’t need to rely on
0:10:50 advertising.
0:10:54 So I’d like to ask, what are your top tips to build brand awareness in the digital space
0:10:56 if you don’t advertise?
0:11:00 If you think about the marketing funnel, it’s awareness, then it becomes intent, then it
0:11:03 becomes purchase, and then post-purchase kind of loyalty.
0:11:07 And without awareness, it used to be if you had a great product and you weren’t advertising,
0:11:09 you might as well have a product on Mars.
0:11:11 People needed to hear about it.
0:11:13 And as a result, advertising kind of ruled the day.
0:11:17 People spent less money on the product itself because manufacturing was pretty easy to reverse
0:11:18 engineers.
0:11:21 So it got harder and harder to differentiate on manufacturing.
0:11:25 And then the digital world just unlocked all sorts of product innovation and also unlocked
0:11:30 all sorts of different means of communicating or sharing great products such that you became
0:11:35 less reliant on broadcast advertising, which concurrently was getting less and less effective
0:11:38 with the fragmentation of media.
0:11:43 The result was what was an incredible means and a more important means of communicating
0:11:48 the top of the funnel became not only less effective, but more expensive.
0:11:53 And you’ve just seen basically this giant sucking sound of oxygen out of the room from
0:11:57 all broadcasts and ad-supported media to a small number of ad-supported media companies
0:12:03 that are direct to consumers specifically, specifically Alphabet, Meta, TikTok, and also
0:12:07 actually Amazon, which is one of the biggest media companies in the world.
0:12:11 People just don’t talk about it because they’ve done a great job of basically shop or marketing.
0:12:15 When you go in and you see an end cap, a cardboard cutout of Tom Brady selling you Bud Light or
0:12:19 whatever, more money is spent on that type of marketing than actual advertising.
0:12:24 And the mother of all shop or marketing is Amazon, Amazon media group that senses if
0:12:29 you put huggies in your shopping cart, “Hey, loves,” or Kimberly Clark or whoever makes
0:12:33 lugs loves, “Would you like to advertise to that new mom?”
0:12:35 And they say, “Yeah, we’d really like that.”
0:12:36 So the targeting is unbelievable.
0:12:39 Anyways, how do you get awareness?
0:12:41 I think it depends in the digital media space.
0:12:45 I think a limited amount of testing on these platforms is really important.
0:12:47 I would embrace new mediums.
0:12:52 I think unfortunately in digital media, if you don’t have a command of social media platforms,
0:12:53 you’re kind of fucked.
0:12:57 And a lot of people say, “Oh, I don’t like social media and we don’t do it that way.”
0:13:00 Well, okay, good luck with that.
0:13:02 Some tricks that I tried that worked actually really well.
0:13:05 L2, I wanted a reverse inquiry model.
0:13:08 I used to go out and sell consulting when I was in the ’90s.
0:13:11 My first firm was a firm called Profit Brand Strategy.
0:13:15 And my job was to go out every dinner, every meeting where there might be important and
0:13:19 powerful people, introduce myself to them, follow up with an email, get them out to
0:13:24 dinner, get them out to the golf course, and then establish all these proxy kind of father-son
0:13:27 relationships with the CMO and CEO of all these great brands.
0:13:30 I found it fucking exhausting.
0:13:34 And the next time I started, what was essentially a strategy consulting firm called L2, I said,
0:13:35 “I’m just done.
0:13:40 I just don’t have the skills, the patience to go and make a lot of new friends any longer.”
0:13:43 So I said, “I need a reverse inquiry model.”
0:13:45 I don’t need to go to subscription, but that’s another talk show.
0:13:48 We did membership as opposed to consulting fees.
0:13:50 And so some of the things we did was the following.
0:13:52 We created our own distinct IP with a ranking.
0:13:56 I figured out consumers and the press, especially the press loves rankings.
0:14:00 So we started something called the L2 Digital IQ Index, where I came up with 1,200 data
0:14:06 points across social, mobile, digital marketing, segmented it into five categories, Genius
0:14:08 Gifted, Average Challenge, and Feeble.
0:14:12 I’m especially fond of the term feeble.
0:14:17 And the press just went ape shit with these rankings, to see some huge iconic companies
0:14:18 ranked as feeble digitally.
0:14:21 And then they call me and I kind of had the receipts.
0:14:26 I just had so much data that they said, “Wow, this firm, you know, Ford Motor really does
0:14:29 have a weak website or whatever it was.”
0:14:32 And that got a ton of attention and a ton of press.
0:14:37 And the reason why comms executives have gone up six-fold in the last 30 years, and while
0:14:42 journalists have decreased, is that a really good comms person who can get you ink is obviously
0:14:44 very, very important.
0:14:49 The other thing I did is I tried to weaponize these mediums, not in addition to social,
0:14:52 but I started doing weekly videos called Winners and Losers.
0:14:57 And if one got 40, 50, 100,000 views on its own organically, I’d pour a little bit of
0:15:02 fuel on it, a little bit of juice, a little bit of secret sauce, a little bit of Tabasco,
0:15:06 a little bit, all salts and notes shit, and you can do that on YouTube.
0:15:09 And that would get it to three, four, 500,000 views.
0:15:14 And then I would release that in conjunction with these rankings I put out, would create
0:15:19 a reverse inquiry model where somewhere between three and 10 emails a day of people inquiring
0:15:21 about membership.
0:15:25 That changes the conversation, it changes the tone of the negotiation, it increases your
0:15:28 margin because, “Hey, boss, you bought us.”
0:15:34 Anyways, I would say try to come up with interesting IP, thought leadership, weaponize the platforms,
0:15:38 gotta be good on social media and see if there’s something interesting you can do that leverages
0:15:43 your strengths and creativity because the stuff that doesn’t work or that’s just really
0:15:48 fucking expensive is conferences, B2B marketing, advertising for a small company, that shit
0:15:49 is just really hard.
0:15:54 And at the end of the day, you have seen a reallocation of resources out of marketing
0:15:57 into the actual product itself because at the end of the day, if you can figure out a
0:16:02 way to have a 10x better product, word is gonna get out.
0:16:07 So it sounds passe, it sounds like table stakes, but the brightest people in the company need
0:16:10 to be focused on making a better widget whereas before the brightest people in the company
0:16:13 were just hiring Don Draper.
0:16:15 Appreciate the question.
0:16:16 That’s all for this episode.
0:16:20 If you’d like to submit a question, please email a voice recording to OfficeHours@PropertyMedia.com.
0:16:23 Again, that’s OfficeHours@PropertyMedia.com.
0:16:35 This episode was produced by Caroline Shagren.
0:16:39 Jennifer Sanchez is our associate producer and Drew Burroughs is our technical director.
0:16:43 Thank you for listening to the PropG pod from the Fox Media Podcast Network.
0:16:47 We will catch you on Saturday for No Mercy, No Malice as read by George Hahn.
0:16:52 And please follow our PropG Markets pod wherever you get your pods for new episodes and every
0:16:53 Monday and Thursday.
0:17:02 And by the way, our new brand extension Raging Moderates, oh my god, 200,000 views, 200,000
0:17:03 downloads.
0:17:04 That’s right.
0:17:05 That’s right.
0:17:06 Spreading the word.
0:17:07 The dog is everywhere.
0:17:09 The dog is ping on everything.