New marketing has been hailed as a miracle worker. So why do we see so many multi-million dollar flops? Because new marketing doesn't work when applied to old ways of doing business, says Seth Godin, author of the new book Meatball Sundae.
If the title sounds unappetizing, well, that's the point. For decades, says Godin, companies have prospered by selling "meatballs"—average stuff for average people, branded products of decent quality with little differentiation and marketed with TV ads in a model that hasn't changed much since the 1960s. New marketing appeals to niche communities using the "sundae toppings" like web sites, YouTube, permission marketing and viral techniques.
Young organizations naturally integrate these new techniques into the ethos of the business. They engage with customers, understand niche audiences and let marketing shape the product. But old school companies tend to spend lots of money on the flashy new media without changing the underlying organization or their "interruption" style of one way communication with the customer. Thus the yucky meatball sundae.
You say companies don't fail because new marketing doesn't work but because they don't change their underlying organization. Can you explain?
One after the other, we're seeing big organizations that have reputations for being great at marketing fail when they try to work in new media. The question is why? The problem is their organization is the wrong organization for the tactics. Like all industrial revolutions, this industrial revolution is changing not just the fancy stuff on top—the sundae, whipped cream, and marshmallows—but it's changing the stuff down below. An organization that isn't organized around the principles can't possibly leverage them.
Can you give me an example?
Here's an easy one—Bud TV. They've spent more than $40 million on it so far, yet if we look at their traffic numbers they do worse than a site on sheet rubber sales. What happened? Budweiser had a top down, we-speak-to-the-public mindset when it comes to commercials. They buy Super Bowl commercials for $2 million or $3 million each because they can. Bud TV was all about "let's send messages straight to consumers." Hold that up next to YouTube, which was built from the ground up around individuals sharing with each other, and Bud TV lost. Wouldn't it have been better if they had just embraced YouTube and used it for what it was good at, rather than trying to build their own channel and invent their own form of new media?
So how do you turn an old organization into the right kind of organization without giving up the structure and culture that made you successful in the first place?
I'm not certain you can. You're going to have to become a different kind of company if you want this medium to work.
Can you give an example of a company that's doing it right?
Take a look at Jones Soda, which is now worth hundreds of million of dollars and competes with Coca Cola. The whole company from top to bottom is built around allowing people to participate and have sense of humor about the product. They have flavors like mashed potatoes and gravy. They put pictures of their big fans on the labels. People own the Jones brand the way they have never owned Frutopia or Powerade. Compare that to Coke, which basically wants to stay in the Coke business by putting clever colors on new brands. Yeah, it works because they're Coke and they spend a lot of money on it. But it would work a lot better if they realized they could approach the market the way Jones does.
You say new marketing is lousy at selling so-called meatballs. What's wrong with selling Purina Dog Chow on Facebook?
Facebook is bad for selling everything. No goes to Facebook to see ads or buy stuff. They go to Facebook to make friends, see who still likes them or go on a date. When you're busy doing those things, you're not interested in dog chow.
But the biggest reason is this: Mass media rewards average people. TV shows are for the masses. They get comfort knowing they're doing what everyone else is doing and therefore you need commercials that appeal to average people. The internet isn't three TV channels, it's three million, 30 million, or 300 million. You're not going to tune into any channel that doesn't offer you an extraordinary compelling experience that's worth watching. Average stuff gets ignored.
All the people who already know they want dog chow are buying it. It's harder to make new sales because those people already know about you. My message is if you want to grow, and grow by 10 or 20 percent, you're not going to be able to do it by selling meatballs.
Ok, so you're Purina. How do you market dog chow?
That's the million dollar question. If you insist on making Purina Dog Chow, please do yourself a favor and don't do new marketing. But if you want to thrive, realize you have the opportunity to make parrot chow. If no one else is currently making parrot chow, you have the opportunity to make the one and only best food for parrots, and you can find people online who will be looking desperately for you. You can engage with them and sell a fair amount of parrot chow. That's not a meatball.
What's the worst example of marketing you've seen in the last year?
The presidential primaries. All you need to do is watch the candidates try to tell different stories to different people. The mistake they make is that now YouTube prevents you from telling different stories to different people. When someone stands up and announces on one day that they're open minded and secular and the next day they announce that God himself made him the leader in the polls, people notice the discrepancy, right?
What would you do if you were in charge of marketing Mitt Romney?
The future lies in politicians who can always tell the same story no matter who they're talking to. The challenge for Mitt Romney is, like all politicians, he wants to cater to the people in the room at that moment. The memory of the public keeps getting longer and the record of history keeps getting better, so it's getting harder to get away with that.
What would you do if you were in charge of marketing toys made in china?
China staked out the position of "we are cheaper." That's a great position—90 percent of the people in this country will do anything to save a dollar. The problem is someone can always try to be a little cheaper. It's not a particularly loyal position. The marketing they started with isn't long term. Someone is going to be cheaper than China tomorrow—Sri Lanka, Vietnam, Nigeria or somebody. Marketing is not about the tactic of today, it's about the long-term strategy.
I would start by saying, "We made a big mistake by claiming we were cheaper, we need to be something else—faster, more flexible, more innovative." That's what you need to sell people on, because very few people are willing to poison their kids for a dollar.