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While everyone discusses the importance of growth and companies continue to spend millions on marketing, they are often neglecting the biggest shift in product success in the past one hundred years, quality. Most understand the benefit of good online product reviews and its impact on sales, but this understanding usually generates efforts to game the review system. In truth, the underlying quality of the product is now the key driver of success and growth.

Fifty years ago, it was the gurus of Madison Avenue, glamorized in Mad Men, that meant the difference between failure and success. Pan Am became a leading airline through great marketing rather than a differentiated product, General Motors dominated the global automotive market through great promotions and ads, Crest became the top toothpaste through fantastic branding, etc.

Now, regardless of how brilliants your growth team is and how often they post on growthacker.com, your success will largely come down to the quality of your product. More accurately, you will not be successful without a great product (you can still fail with a great product and poor growth/marketing).

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Why product quality has become paramount

The need for a great product is the result of virtually unlimited online product and service reviews. When people are considering a purchase, not only do they see the messaging from the vendor but they cannot avoid feedback from other users. If you are considering buying a new razor, the cool new features and catch jingle are likely to get you interested, but if the razor has 1.5 stars with a glut of negative reviews saying the product is worse than a razor half the price, you most likely will not try the razor. This effect is not only present with a consumer good but any product. Why buy a book that everyone says is filled with plot holes or a car that most people say they would not buy again. Again, the marketing message is less powerful than the actual experience of users.

Not only physical products

Not only does the principle of paramount product quality apply to physical goods but it is even more important with digital goods. While growth marketing for apps has become an art and science, if the underlying app has two or three stars even Chamath Palihapitiya (the brains behind Facebook’s growth team) would not be able to gain traction. All the great virals and cool apps may drive people to the app page, but then when they see the rating and reviews they are unlikely to download.

Even the retail environment has been rocked by this change to having a great product. Years ago, restaurants could survive by having a terrific location or being in a central tourist area. If they were in the right place, they could always attract new customers even if they had poor food and were over-priced. They would not get return customers but there would always be new ones. Hence the term tourist trap.

Now, if a restaurant aims to take advantage of customers, it will be punished by poor reviews on Yelp and TripAdvisor. Thus, the naïve new customers they have counted on will not materialize. Anecdotally, whenever I see a restaurant with three or less stars, I assume they will not survive. When I check back, most of them are gone within six months.

Changes who is important

The principle of paramount product quality also changes who your key partners are. In the past, many companies succeeded by focusing on the distribution layer. Having salesman in retailers promote your product over competitors was one of the strongest “growth” strategies. Carmakers spent more on their dealerships than on their product development. Even video game companies devoted the same resources to creating a great box as they did to create a good game.

Those strategies no longer work. A salesperson trying to drive a customer to the big new game that is actually not very good will have no credibility, as the customer is likely to check online and see the awful reviews. The car salesman who tries to sell the pre-owned Yugo will get laughed at when the little old man pulls out his phone and sees that the car should have been junked ten years ago. Even the retailer who charges for an end-cap display will not be able to convince retailers of bad products to invest in the marketing when people scan the bar code of the product and learn it is over-priced and does not work well.

Only the good shall survive

If you look at the companies that are thriving and growing, it is the ones that customers love. Tesla cars have universally great reviews, compare them with the reviews for Jaguars. Clash Royale from Supercell, the newest billion dollar game, has over 89,000 reviews averaging 4.5 stars. Airbnb, which has changed the hotel industry and is worth well in excess of $1 billion, also rates at 4 stars. The challenge is finding a successful product or service that does not enjoy great reviews.

Build a great product

While most acknowledge the importance of building a strong product, the necessity of having a great product to success is not yet understood universally. Building a great product should no longer be one slide on your Powerpoint or a nice to have element of your strategy, it needs to be the central focus. You need to devote the same or more time and resources to your product, not just at launch but continually keeping it great, if the other elements of your strategy are to succeed.

Key takeaways

  1. The plethora of user reviews of all products and services has the formula for success, no longer can you rely on great marketing, distribution or branding.
  2. The fastest growing and best performing products now are also best of breed, whether Clash Royale in the game category or Tesla in the car category.
  3. From the start, you need to dedicate sufficient resources to product development, rather than just ensuring you have enough for marketing or distribution.

While many companies, both in the tech space and traditional companies, have invested billions in building their brand via social media, success stories are about as rare as a user acquisition company that does not promise better users for less money. While many companies have spent, and continue to spend, millions trying to tell stories and connect directly with their customers on social media, brands now seem less significant. An article in the Harvard Business Review, Branding in the Age of Social Media by Douglas Holt, shows that branding has been replaced by crowdculture. Holt writes that “Crowdculture changes the rules of branding—which techniques work and which do not.”

The history of branded content

Holt first points out that branded content is an outdated concept rather than an innovative marketing technique. Advertising campaigns like American Express’ Don’t Leave Home Without It (1975) and Nike’s Just Do It (1988) became part of popular culture by entertaining audiences. These campaigns worked because the entertainment media were oligopolies, limiting cultural competition. Only a few television networks and movie companies distributed content, so consumer marketing companies could buy their way to success by paying to place their brands in this tightly controlled cultural arena.

Technology has allowed people to opt out of ads, first with cable and satellite television then to DVRs and finally the Internet. For the first time, advertisers had to compete with real entertainment. Companies adjusted by creating entertainment content, such as BMW’s short movies for the Internet. These early (pre-social-media) digital efforts led companies to believe that if they delivered Hollywood-level creative, they could gather huge engaged audiences around their brands. Thus was born the great push toward branded content. But its champions did not think about, or at least discuss, new competition. This new competition was not from existing big media companies but from the crowd.

The birth of Crowdculture

Holt writes, “historically, cultural innovation flowed from the margins of society—from fringe groups, social movements, and artistic circles that challenged mainstream norms and conventions. Companies and the mass media acted as intermediaries, diffusing these new ideas into the mass market. But social media has changed everything. Social media binds together communities that once were geographically isolated, greatly increasing the pace and intensity of collaboration. Now that these once-remote communities are densely networked, their cultural influence has become direct and substantial. These new crowdcultures come in two flavors: subcultures, which incubate new ideologies and practices, and art worlds, which break new ground in entertainment.”

First, social media has democratized and expanded subculture. Previously, people had to gather physically with limited ways to communicate on niche topics, maybe magazines or newsletters, or small meetings. Now there are now crowdcultures around virtually every topic: ice cream, bacon, poker, tarot reading, etc. Now these groups stretch the world, allowing people to interact and share ideas, products, practices, news and aesthetics, and most importantly bypass the mass-culture gatekeepers. Social media has made cultural innovators and early adopters the same.

Second, producing innovative popular entertainment requires a distinctive mode of organization, sociologists describe it as an art world. In art worlds, artists gather in collaborative competition, working together they learn from one another, play off ideas, and push each other. The collective efforts of participants generate creative breakthroughs. Before the rise of social media, the mass-culture entertainment industries would take these innovations and repurpose them (thus the moniker of something becoming commercial).

Crowdculture has turbocharged art worlds, vastly increasing the number of participants and the speed and quality of their interactions. Holt writes, “no longer do you need to be part of a local scene; no longer do you need to work for a year to get funding and distribution for your short film. Now millions of nimble cultural entrepreneurs come together online to hone their craft, exchange ideas, fine-tune their content, and compete to produce hits. The net effect is a new mode of rapid cultural prototyping, in which you can get instant data on the market’s reception of ideas, have them critiqued, and then rework them so that the most resonant content quickly surfaces. In the process, new talent emerges and new genres form….These art-world Crowdcultures are the main reason why branded content has failed.”

Proof branded content is dead

Slide1If the theoretical arguments that branded content is no longer working do not convince you, let’s go to the data. Despite the billions spent on creating content, only three brands are in the YouTube Top 500. McDonald’s has 204,000 YouTube subscribers, PewDiePie has 41 million subscribers. Even Red Bull, considered the biggest branded content success stories with a $2 billion annual branded content budget, only has 4.9 million subscribers, way behind dozens of crowdculture start-ups with production budgets under $100,000. Dude Perfect, started by five Texas university athletes who make videos of trick shots and goofy athletic feats, has 8 million subscribers (3 million more than Red Bull).

It turns out that consumers have little interest in the content that brands churn out. Very few people want it in their feed. Most view it as clutter—as brand spam. When Facebook realized this, it began charging companies to get “sponsored” content into the feeds of people who were supposed to be their fans.

The alternative to content marketing

Given the emergence of Crowdculture, you can either abandon branded content or follow a strategy of what Holt calls “Cultural Branding.” There are five principals to cultural branding that can help your company succeed in social media.

  1. Map the cultural orthodoxy. In cultural branding, the brand promotes an innovative ideology that breaks with category conventions. To do that, it first needs to identify which conventions to leapfrog, the cultural orthodoxy. Thus the first step is to understand what is currently considered “common sense.”
  2. Locate the cultural opportunity. Over time, cultural orthodoxy begins to lose traction as people understand alternatives. Before social media, the influence of these alternatives would have been marginal, as the mainstream controlled the conversation. Social media, however, allows the crowd to convert a niche conversation into mainstream beliefs. One example would be travel, where for generations people thought about certain destinations (Florida, London, the Bahamas) as the places to vacation. Then with people sharing pictures and stories of the Maldives, Patagonia, Seychelles, etc., the travel industry changed dramatically. Thus, people were not only open but looking for alternatives to traditional destinations.
  3. Target the crowdculture. Once you understand the cultural opportunity, target the crowdculture. If it is adventure travel, build an offering/company around it.
  4. Diffuse the new ideology. Rather than just create branded content, create entertainment that leverages the identified cultural opportunity. The entertainment does not need to be great, it needs to tap into the Crowdculture vein.
  5. Innovate continually, using cultural flashpoints. A brand can sustain its cultural relevance by playing off particularly intriguing or contentious issues that dominate social media conversations related to an ideology. That’s what Ben & Jerry’s does in championing its sustainable business philosophy. The company uses new-product introductions to show its ideology on a range of political issues.

By following the above five steps, you can create a product or company that taps into the Crowdculture. To brand effectively with social media, companies should target crowdcultures.

In pursuit of relevance, most brands chase after trends. But this is a commodity approach to branding as thousands are doing exactly the same thing with the same generic list of trends. Thus, consumers do not pay attention. By targeting novel ideologies flowing out of Crowdcultures, brands can assert a point of view that stands out in the overstuffed media environment. The key is rather than trying to force a story on a captive audience, you need to build a story and product that is consistent with the desires of the social media crowd.

Key takeaways

 

  • Most social media marketing is failing because of the outdated notion of creating branded content. Huge social advertisers, like Red Bull and Coke, fail to get a fraction of the mindshare of social media celebrities like PewDiePie.
  • Crowdculture brings together enthusiasts and advocates of certain beliefs and interests through social media, disintermediating traditional entertainment.
  • To brand effectively with social media, companies should target crowdcultures.
  • Most brands chase after trends but hundreds of companies are doing exactly the same. By targeting novel ideologies flowing out of Crowdcultures, brands can assert a point of view that stands out in the overstuffed environment.