Breaking Through the Digital Wall

(This is a keynote talk that Samuel Scott delivered today in Tel Aviv, Israel, at D-Summit 2017. Learn more and hire him as a speaker at his marketing speaker page.)

Shalom, everyone. After a year of speaking throughout the world, it is a pleasure to end 2017 here in the Startup Nation and give my first talk in Israel.

At this time of year, countless people are giving speeches and writing articles saying how marketing will change in 2018 and how everything will be different. Most of it will include cliches such as “millennials” or “content” or “engagement” — and all of it will be as useless as Jared Kushner’s attempts to broker peace in the Middle East.

Marketing does not change that much. Anyone who says differently is selling something.

Ladies and gentlemen, I have nothing to sell. In my career, I was first a journalist and newspaper editor who later moved into various marketing roles. Today, I write a column on marketing and media for The Drum and travel around the world to speak about what I report. Essentially, I cover the marketing industry with the mindset of a neutral journalist.

Today, I will make the argument that marketing has not changed as much as we think it has and that this delusion has led the digital world to wall itself off from the rest of the marketing industry. To do our jobs effectively in 2018, we will need to break through that wall. And I will do that by ignoring the assumptions that many of you have and revealing what the objective data actually says.

To break through the wall, we should look beyond what is called content marketing, inbound marketing, and social media marketing to integrate traditional and digital marketing in a real way.

Let’s begin in the 1990s — the decade before the Internet took off. Note: This is not yet another summary of how marketing has changed. What it is, is something that you will have to hear.

The 1990s were the best of times and the worst of times.

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We had some of the best music.

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And some of the worst music.

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In the United States, at least, we had some of the best advertising and some of the worst advertising.

In the 1990s, most marketers who created such advertising knew traditional theory. I assume that everyone here already knows this. But for those here who are students or otherwise new to the industry, I’ll take a few minutes to give an introduction because it is important to understand the fundamentals.

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Marketing begins with the 4 Ps Marketing Mix of product marketing. Product is what you will sell. Price is how much you will charge. Place is how you will deliver the product to the customer. Promotion is how you will increase awareness and build the brand of the product.

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Under Promotion, you have the promotion mix. This is a set of five tactics: advertising, direct marketing, public relations, personal selling, and sales promotions. Advertising creates mass awareness and builds brands. Direct marketing gets immediate, trackable responses from a specific group of people. PR is the maintenance of a favorable public image through activities such as media relations and community relations. Personal selling is what salespeople do. Sales promotions are the use of coupons or discounts.

I will not go into more detail here, but these tactics work together to achieve various marketing goals.

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These tactics are then executed over one or more mediums. Marketing is the decisions that you make in terms of customer segmentation, the 4 Ps, and what promotional tactics and mediums you will use. Marketing communications is the act of creating and transmitting collateral over those mediums. In the 1990s, we had the mediums of direct mail, print, outdoor, TV, and radio.

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And then, in the 2000s, everything changed. Supposedly.

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In 1998, we had the birth of Google search. In 2000, SMS and Google AdWords. In 2005, Google Analytics. In 2006, Facebook ads. In 2007, the first iPhone. In 2014, mobile apps.

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And then, in one of the big marketing stories of 2017 that I will include today, we saw that total ad spend over digital surpassed that of television this year for the first time.

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But what happened in the 2000s? The marketing world built a wall. We had directors of marketing and directors of online marketing. We had marketing teams and digital marketing teams.

What did traditional marketing departments think about? Communications strategies. SWOT analyses. The five forces. Building brands. And what did digital marketing teams think about? High Google rankings and more website traffic. Getting Facebook “likes” and Twitter followers. Quick hacks. Two completely different departments were doing two completely different things.

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Well, as I will argue today, we need to break down the wall. There is no such thing as “traditional marketing.” There is no such thing as “digital marketing.” There is only marketing.

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But first, it is crucial to understand what NOT to do and what gets in the way of effective integrated marketing.

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The first thing to remember is that artificial intelligence is not some miracle cure-all sent by the marketing gods. Take a look at this clip from the 2002 Tom Cruise film “Minority Report.”

[Watch Video]

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Now, a lot of marketers probably watched that and thought, “Shit! When can we do that?” But remember, the 99.9% of people who are not marketers saw Tom Cruise getting scanned for ads and were horrified. It sounds cool to us, but people would hate it. Remember, the world in Minority Report is a dystopia and a fantasy. The ads would really be as effective as Bougie Herzog’s election campaign in 2015.

This example of AI is just another way of doing good, old-fashioned direct response marketing — albeit over a new medium. It is another attempt to deliver the right ad to the right person at the right time. It is the use of targeting to return trackable results.

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And in another big marketing story of 2017, brand marketers were horrified when ad tech platforms placed their products on terrorist, racist, and pornographic websites and YouTube channels. Those companies, in effect, were funding those organizations. And we saw the effectiveness of letting machines determine our ad placements.

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Next, the second thing to remember is that so-called content marketing is not some new, ingenious tactic.

On the left, you have a classic direct response advertisement that was made by David Ogilvy. Headline, informative text and graphics, and a call to action. On the right, you have the standard format of a blog post. Headline, informative text and graphics, and a call to action. It’s the same, exact thing.

Now, why is it that if we put this in a newspaper, we’re doing ‘direct response advertising’, but if we put this on a company blog, we’re doing ‘content marketing’? The channel and the medium do not determine the creative. The marketing tactic does not change simply because the channel changes.

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In the end, the phrase “content marketing” means nothing because the word “content” means nothing. Content is just whatever you put inside something else. In marketing, it refers to anything and everything that we put on the Internet — and that is useless from a strategic and tactical viewpoint.

In my career, I once worked at an agency with a client that thought “content” was a tactic. They spent a lot of money to produce, publish, and distribute a lot of “content.” And you know what? Almost all of the business leads came from 5% of the posts. The other 95% were complete wastes of time and money. And what did those 5% have in common? They were published in line with a campaign based on one of the tactics of the promotion mix — things like ranking in Google search for specific terms, announcing new features, or promoting a publicity campaign. Every time that they published something just to publish something, it was a failure. “Content” is not a tactic.

The promotion mix exists for a reason. As we break through the digital wall, we need to remember that.

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As Martin Bryant, the former editor of The Next Web, has written, “‘Content’ is a word for people who don’t really care what’s produced as long as they can sell it, or put ads against it, or use it as part of their marketing strategy.”

As Greg Satell wrote in the Harvard Business Review, ““We never call anything that’s good “content.” Nobody walks out of a movie they loved and says, “Wow! What great content!” Nobody listens to “content” on their way to work in the morning. Do you think anybody ever called Ernest Hemingway a “content creator”?” The quickest way to annoy me is to call my columns for The Drum “content.” I am not a content creator. I am a columnist. That word means something.

Still, in Econsultancy, Mark Higginson published a study finding that “Reviewing any major brand publishing effort reveals that, barring a few outliers, the majority of content published to these sites receives next to no links and goes nowhere, receiving few shares.”

So-called content marketing is simply the production and distribution of marketing collateral. But that is what marketing communications has always been in the first place. We need to be more strategic and tactical. A company’s owned channels are merely mediums that we can use in our promotional tactics.

And in another big marketing story of 2017, Pepsi ditched advertising and created an in-house “content” studio. And what did it produce?

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Just the single worst ad of the entire year.

If you’re going to create an advertisement, then call it an advertisement and learn the best practices in advertising. Don’t invent a new, meaningless buzzword just because Hubspot lied to you ten years ago by saying that advertising is dead — all in order just to sell the company’s platform.

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Next, the third thing to remember is that so-called inbound marketing is a faulty model.

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Inbound marketing is loved by software engineers who run marketing departments because it is all about left-brained metrics. If a number goes up, good. If a number goes down, bad. But that is a fallacy.

Not everything that is important in marketing can be measured or quantified. Just as not everything in marketing is about getting people directly and immediately to a store, so is not everything in the digital world about getting people directly and immediately to a website. Not everything in marketing can or should register in an analytics platform. That idea is as crazy as Oren Chazan’s speeches to the Knesset.

Take media relations and publicity. Inbound marketers will tell you that you can judge the effectiveness by the people who click on links to you in articles and become customers. But 99% of the people who see a link in an article will not click. The point of publicity is not website traffic directly. The point is to increase share of voice against competitors, which you can measure, and credibility, which you cannot measure.

Take community relations. The value of improving your image and building a loyal army of supporters is invaluable, whether you do it live in person or online on a forum or in a Facebook group. The point is not always to get people to a website and convert. Direct, immediate ROI is not the goal of every marketing tactic. It is the goal only of direct response.

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But the worst part of the inbound marketing model is that it advocates that we fill the Internet with clickbait crap in an effort to maximize website traffic no matter what long-term damage it does to the brand.

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And in another big marketing story of 2017, Revenue & Associates in Boston found that even Hubspot itself cannot sustain the model. The company’s customer acquisition cost has skyrocketed from $7,000 in 2011 to $16,000 in 2016. Inbound marketing is not viable for the long-term, especially since Hubspot, according to the report, has not had a profitable quarter in a decade and relies on investor funding to stay in business. In more ways than one, Hubspot is the Uber of the marketing software world.

So, in 2018, the question will be: “Can you afford to do inbound marketing?”

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And still.

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Even being “digital-first” or “digital-only” is not the answer.

The most ambitious attempt at social media marketing was the Pepsi Refresh Project in the US. Pepsi moved millions of dollars in ad spend from TV to social media. What was the result? A loss of $350m in sales, a decrease of 5% in market share, and a fall to the #3 brand in the United States behind Diet Coke. Diet Coke.

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Here is the most recent data from Nielsen’s US Total Audience report. The light purple on the left is the average person’s live TV consumption on a given day. The light blue in the middle is live AM/FM radio. On average, people spend the majority of their media consumption on live TV and radio. Even today.

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Here is Thinkbox data from the UK. 79% of daily video advertising spend — the part in red — is on live TV. Similar data also shows that people consume that vast majority of video on live TV and not online. Contrary to popular opinion, TV is nowhere close to dying — but that’s a topic for another time.

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Karen Nelson-Field, a professor at the University of Adelaide and the founder of Media Intelligence Company, found that advertising on TV is far more effective than on Facebook or YouTube for two reasons: active viewing and coverage.

More people actively view an advertisement on television compared to the same ad on YouTube or Facebook. Facebook is the king of passive viewing. Many people on YouTube are not viewing at all because they listen only to the audio while doing something else.

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Advertisements on television take up the entire screen. Ads on YouTube and Facebook take up 30% and 10% of the screen respectively.

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In the end, Nelson-Field found that advertising on TV is 28% more profitable than YouTube and 26% more profitable than Facebook.

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So, what should we do? Obviously, my point is not that digital mediums are useless. My point is that we should look at digital the same way that we do traditional marketing. Again, there is only marketing. We should just do the same tactics over online or offline channels.

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Marketing has always come down to three things: strategy, tactics, and mediums.

First, create a marcom strategy comprised of what tactics and mediums you will use and not use. Today, too many people make assumptions and think that “Facebook” or “Twitter” or “content” or “engagement” or what-have-you is the solution to any marketing problem.

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But because the digital world has walled itself off into a separate world, marketers have fallen victim to believing buzzwords at the expense of doing real strategy. It is important to understand marketing fundamentals because most things in digital marketing are just new buzzwords for things that have always existed. The use of buzzwords has caused a new generation of marketers to enter the field without knowing even the basic terms and practices that underpin our industry.

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Again, “content” is not a tactic. Within the promotion mix, content is that collateral that you create when you execute the tactics of advertising, direct marketing, PR, sales promotions, personal sales, or today, SEO.

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“Engagement” is also not an effective tactic. I do not remember what I liked and shared five minutes ago. I remember ads that I saw twenty years ago.

“Social media marketing” or “doing social media” is not a tactic. “Social media” is a collection of mediums over which specific tactics can be executed.

Say you have one PR person doing community relations and another “doing social media.” Well, if you want to grow a community on Facebook, which one should do it? The PR person or the social media person? If you have someone running online direct response campaigns — or “paid campaigns,” as we call them today — who should do those on social networks? The paid campaign person or the social media person?

In the staffing of marketing teams, too many confuse tactics and mediums.

When I have seen companies hiring “social media teams,” the goal is always to maximize “engagement.” Which basically means throwing whatever crap online that gets the most likes and retweets. But does that actually have an effect and increase sales?

Take the famous Oreo Super Bowl tweet. Marketing professor Mark Ritson ran the numbers and saw that less than 1% of the target market even saw the glorified advertisement.

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And in another big marketing story of 2017, the Ehrenberg-Bass Institute for Marketing Science at the University of South Australia studied what characteristics of ads correlate with most sales. “Engagement” ranked eleventh. Eleventh.

The only tactics that are worth a damn are those in the promotion mix that have always existed and will always exist. The marketing process does not change because people do not change. Only the messages, products, and mediums change. Engagement is a non-existent tactic for a useless goal. Vanity engagement metrics are as fake as Bibi’s peace plan.

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So, once we discard all of the digital buzzwords, what remains is a set of traditional tactics and a set of online and offline mediums. And that strategy comes in choosing what to use and not use from the columns on the left and right.

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And this is where digital comes in today. Digital is simply a new set of mediums over which we can execute — or not execute — the tactics within the promotion mix. And some mediums work best with certain tactics and not others.

Here are some examples. We can do advertising over TV or Facebook. We can do direct response marketing over direct mail or Google AdWords. Within the PR umbrella, community relations staff can do that at live events or in online social media communities. Media relations people can contact reporters over the phone, e-mail, or Twitter. Salespeople can sell over the phone or e-mail. Sales promotions can be done over billboards or e-mail.

People should do the same tactics, as warranted, over online and offline media.

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But how can we do this with maximum efficiency and effectiveness?

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Keep the traditional marketing principles in mind that the online marketing world seems to have forgotten. First, market orientation. Market orientation is the awareness that we, the marketers, are not the customers.

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It’s not about us. It’s about the market. As Ad Contrarian Bob Hoffman has noted, too many digital marketers have shiny object syndrome and hop on the latest marketing trend. Remember when everyone wanted a Pokemon Go strategy for about a week? But, as he states, “marketers overestimate the attraction of new things and underestimate the power of traditional consumer behavior.” And consumer behavior does not change that much because people do not change.

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The second principle is channel-neutrality.

We make too many assumptions. When people work in “digital” marketing, they limit themselves to digital mediums. But that’s life behind the wall. We need marketing without walls and without limits.

Digital is just one set of tools in the toolbox.

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Here’s an example. We talk about social media all the time. There are entire conferences devoted to it. We’re all probably on social media constantly – and people in this room are probably tweeting comments about our presentations as we are talking. And we assume that everyone uses social media as much as we do.

But here’s a secret: we marketers are not normal people. According to Thinkbox in the UK, 93% of marketers have used LinkedIn in the past three months. Among all other people, it’s 14%. 81% marketers have used Twitter. Among others, 22%. My favorite statistic: 47% of marketers read BuzzFeed (and I have no idea why), but only 5% of normal people do. We are not the audience for most of our products and services, but our choices of media mixes all-too-often imply that we are.

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Here’s more. 49% of people in Germany use the Internet but not social media. 40% in Greece use neither.

Too many digital marketers assume that some online medium or another will be effective without bothering to do the market orientation research and determining what mediums will actually be the most effective.

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In the digital marketing world, people live in an echo chamber and develop the “false consensus effect,” which leads to bad campaigns.

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Our biases in terms of mediums cause us to become bad marketers. Marketers of all types should tear down the digital wall and be able to execute any tactic over any channel.

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The third principle is targeting versus signaling. Everyone talks about targeting, but I never hear anyone in the digital world talking about signaling.

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Signaling is the idea that the manner in which you market your product affects how people perceive your product. The cheaper the campaign, the worse the signaling. If I target you and send junk mail or hit you over the head and then drag you to shop at Sam’s store, you’re going to think that Sam is an asshole. But if I produce a provocative, creative TV advertisement, then I will signal to you that my brand is credible. Clickbait might get a lot of traffic, but it results in few sales in the end because it signals low quality to the world. It hurts the brand.

Too many people in the digital world think that targeting is all that matters. That we should target people and then bombard them with sales messages as cheaply and efficiently as possible. But that is terrible signaling.

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So, in light of everything that I have said here, what does it mean in practical terms? I’ve separated some recommendations here for students, agencies, and in-house marketers.

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Students, you should learn a tactic. Think about tactics and do not rush towards social media or Google or TV or anything else. Learn how to do creative ad campaigns. Or learn direct marketing and how to write crisp, clear copy that sells. Or how to do PR and build positive public images. Or learn sales, which is the hardest job of all. Or SEO and the technical part of marketing. These are all tactics today.

Here’s the reason: Once you learn a tactic, it becomes much easier to break down the wall and do that tactic over any medium — online or offline. And once you learn a tactic, learn another one. And build from there.

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Agencies, you must know where you fit. To be a “digital agency” makes no sense. In terms of the 4 Ps, are you great at advising on how to build a product, or how to price something? Are you great at media relations or direct response marketing? Or something else? Whatever your speciality, you need to break down the wall and be able to do it online and offline.

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In-house teams, you should break down the wall and hire based on tactics and not mediums. Hire advertising teams who can do creative campaigns online and offline. Hire direct marketers who can do direct response online and offline. Hire PR people who can manage appearances online and offline. Don’t hire someone “to do social media.” After all, that makes as much sense as the phrase “to do television.” Social media mediums should be used, as warranted, by every individual or team that is responsible for a tactic. And so on.

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Now, I do not want everyone to get the wrong idea. I do see the marketing industry moving in the right direction as we see that more and more of our sacred cows have been nothing more than false idols. I just hope that with the right perspective, we can do it even better and be more prepared to face future changes.

So, after the 1990s and early 2000s, my hope is that we have finally come to understand the right place for digital. Take the Gartner Hype Cycle. Digital rose to the Peak of Inflated Expectations when marketers thought that everything had changed. Then, digital fell into the Trough of Disillusionment when we realized that everything did not change and that the buzzwords were full of crap. My hope is that digital will enter the Plateau of Productivity in 2018 once we understand that little as changed and that digital is just a new set of mediums over which we can do the same marketing tactics.

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Thank you and happy holidays!

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