Don’t Read This Before Dinner
There are some things that can’t be unseen. Chief among them, a Whopper decomposing in high definition to demonstrate that Burger King plans to remove artificial colors, flavors, and preservatives from the burger. Industry pundits are all abuzz with opinion (ahem!), and Burger King is the toast of media town, posed for ad award glory. But will it help Burger King sell more burgers? So far, Burger King’s brand of controversial and distinctive marketing hasn’t moved the needle much: It reported a fourth-quarter 0.6% uplift in US same-store sales versus expectations of 3.1%. In contrast, McDonald’s quarterly earnings topped analysts’ expectations. Further, only a tiny fraction of Burger King stores have these, so you probably couldn’t get them if you wanted to. A strong, but putrid, reminder to ensure that your brand promise and customer experience (CX) don’t inhabit different universes. Salad, anyone?
Facing Competition From Just About Everyone, Publishers Change Course
It seems these days that every company thinks it is an advertising publisher: Marriott has its own magazine, Mattel is ramping up its video offering, and Red Bull creates over 600 pieces of media content each year. Throw in evolving consumer expectations and media consumption behaviors, and traditional publishers — such as The New York Times, Meredith, and Tribune Publishing — are feeling the squeeze. We’re seeing signs that they are starting to pivot their focus away from advertisers and toward consumers. They see an upside in delivering a valuable experience that customers will pay for rather than dealing with the headaches of the adtech landscape. It’s a fascinating evolution for an industry tasked with appeasing both consumers and advertisers. We’re tracking this trend and will be publishing research soon with potential solutions for media businesses.
The Federal Trade Commission Affirms The Significance Of The DTC Trend
Earlier this month, the Federal Trade Commission (FTC) filed suit to block the acquisition of direct-to-consumer (DTC) shaving company Harry’s by Edgewell (owner of legacy razor brands Schick and Wilkinson). In its complaint, the FTC acknowledged the impact DTC brands have on the market: “The loss of Harry’s as an independent competitor would remove a critical disruptive rival that has driven down prices and spurred innovation in an industry that was previously dominated by two main suppliers, one of whom is the acquirer.” In other words, DTC brings such benefit to consumers that they deserve federal protection. Legacy brands, take note: You must innovate. Your size and incumbent status don’t protect you from DTC disruptors. This FTC move demonstrates that watching and then buying a competitor when it gets big enough to be a real threat won’t save you. In the age of the customer, the safest route is to obsess over your customers’ needs, create your own direct-to-value strategy to serve those needs, and disrupt your own business. A tough prescription to take, but we have a framework for you to follow here.
Collective Bargaining: Fundraising Edition
Last week, over 2,000 Oracle employees signed a petition demanding that CEO Larry Ellison cancel a fundraiser for Donald Trump because it did not align with their own values. This is the new normal in Silicon Valley — employees engaging in collective bargaining on social media to negotiate ethics and inclusion, not salaries and healthcare. But Oracle has a real reason to support the deregulation strategy embraced by the current administration: It owns over 80 data brokers that boast 30,000 data points on 300 million people worldwide. Federal regulation of that data could collapse the data broker market, cutting into Oracle’s revenue and potentially the employment of those making values-based demands. This puts companies like Oracle in a bind. They must remediate risks to their internal reputation with their employees who have Twitter and aren’t afraid to use it.
Speaking of risk remediation for current events . . .
Risk Management: Coronavirus Edition
The industry fallout of coronavirus presents an injurious indictment of world supply chain readiness and resiliency in the face of a pandemic. Over 400 companies (390 of which are US-based) have said that the virus has impacted their bottom line and that they will miss their Q1 numbers. Yum China, the fast food company, mentioned the virus 45 times on its earnings call. Wynn Resorts is losing $2.5 million dollars a day after the Chinese government ordered a shutdown of casinos in Macau. Our takeaway? Companies think that they have a long time to worry about these kinds of risks. But they are not so rare an occurrence — see H1N1, SARS, MERS, and Ebola. Don’t let your mitigation strategy default to incident management rather than risk management. We still don’t know what the total cost of the coronavirus will be to the world economy, but you can review and update your risk management and business continuity practices right now.