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[upbeat music] If you're trying to build a high-end fashion brand, that's not where you're gonna win. I mean, Jeff Bezos was famously saying, you know, "Your margin is my opportunity."

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I can hardly see that as a very attractive proposition if you're, if you're at the high end of the market. And- Yeah, that's a brand-building promise. [chuckles] What is? That? Yeah, exactly.

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But then look at also, like, Shein and Temu again. Like, how Shein actually succeeded is, like, looking at those microtrends brewing. It's a pure data play.

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So again, your company wins because it has superior data, and you have a crazy nimble network of your suppliers, so you can see what microtrends are bubbling up, and then you respond very quickly with your product to those microtrends.

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That's also, like, capturing demand, but it's also building the demand as at the same time.

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So I think we do need to have to talk about demand-building strategies today versus before, where the- where, where you had brand and performance. Brands build demand, performance captures demand.

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[upbeat music] Welcome to "The Rebooting Show." I'm Brian Morrissey.

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On this week's episode, I was joined by Ana Andjelic, a veteran brand executive and the writer of the Sociology of Business newsletter, which focuses on modern brand building.

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Ana's someone I often turn to for insight into how brands are built now because, well, she's my wife. But I figured we'd try an episode to share one of those conversations, and Ana luckily was game to do it.

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The impetus to this conversation is my own thinking about whether the crack-up we're seeing in mass media will inevitably impact mass brands. After all, these two things are opposite sides of the same coin.

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And I think across all aspects of society, we're seeing decentralization from one size fits all and centralized approaches to focusing on narrow niches.

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Advertising, long a critical tool for brand building, has mostly been subsumed by performance marketing, an obsession with narrow audience segments rather than a single message for large groups.

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And as media decentralizes into millions of these niches, it makes it harder than ever to build mass brands, in my view, and maintain the growth of legacy mass brands.

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I mean, publishing has seen the decline of its own legacy brands, and I think the same pressures are going to exert themselves on these mass brands, particularly as they see their competitive advantages eroded in a world of Amazon, Instagram, and Temu instant gratification.

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Brands take time to build, and the world is operating on one point five x speed and accelerating.

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Among the issues Ana and I discuss are the internet's impact on brand building and why you have to compete on so many different levels beyond brand, what product-led branding looks like, and why DTC brands were really performance marketing companies at their heart, and finally, what the limits of performance marketing are if you're taking a longer view.

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Hope you enjoy this conversation. Let me know with any feedback. My email is bmorrissey@therebooting.com. And if you like this episode, please leave a rating and review on Apple, Spotify, or any other podcast platform.

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[upbeat music] Okay, Ana, welcome to the podcast.

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I wanna, I wanna talk today because I wrote recently about, about Nike, and it's in a bit of a pickle right now with how it's performing, and a lot of it is being tracked back to some of the decisions it made as far as brand advertising versus performance advertising and how it's organized, and these things are all a mess, but I want to, I wanna unpack that.

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I wanna get your insights because this is your field. It's m-more so than mine. Does that sound good?

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That sounds great, and thank you for having me and delighted to be talking about it because I find that above all, it goes beyond all of those issues.

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It's not brand marketing versus performance marketing, reorganization, a CEO that didn't grow up in that industry, and so on.

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And I just think that, look, Nike is a 40-year-old company, if not longer, and when you're at that massive scale and when the retail environment changes so much, then interaction between your strategy and the market is just sometimes not gonna be aligned.

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Yeah, I wrote about it, and thank you for allowing me to do it as a guest post on your, in your newsletter. I mean, look, Nike right now, year to date, is down about thirty percent in the market, right?

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And this is partly a product problem. It is partly an organization issue. They changed how they were organized, and they went away from sort of breaking it down by sport. They were always very narrow and deep.

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And whether they did this because of McKinsey or not, I'm, I'm, I'm unclear, but a former Nike executive, uh, Massimo Giunco, did a fairly unsparing semi-viral, if not completely viral, LinkedIn post where, you know, he really took the current m-management to task for a lot of these missteps, including, you know, going too hard into direct to consumer at the expense of wholesale relationships.

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And this was a trend, you know, this go direct thing was a, was a trend. And then when you do go into DTC, you're going to be very heavily into performance marketing, and that is, that is a reality. I mean, he...

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another Nike executive had, had predicted earlier in July that Nike would die a death of a thousand paper cuts.

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So I'm not sure if that's the case exactly, but I wanna sort of break it down from, you know, your perspective of having been an executive in these organizations and having been sort of on the brand side.

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What to you ends up being the sort of tension, if there is any, between, you know, brand and performance when the, the world has moved into digital m-media, right?

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And digital marketing, to me, for the most part, has been about direct marketing. It hasn't been about building brands.Yes, and I'll get to that. I wanna take a step back first, and there's two things happening here.

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First, every time that organization goes through certain transformation, they underestimate the amount of time and investment needed for the transformation.

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So if you're gonna say, "Hey, we are gonna severe relationship with wholesalers, we're gonna move from mostly wholesale to DTC first," that's not gonna happen in a year, in two years, in three years.

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That strategy is gonna show results five years in, because that is a fundamental change of a business model and the organization around it.

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So it's almost like for a ship to move, are you seeing a ship that's moving or are you seeing all ships par- all ship parts moving in the same direction at the same speed?

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And when it's not, then it- things start falling apart. And I do think that there are very few organizations, if any, who are capable making all parts move at the same pace in the same direction. So that's number one.

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That's, that's a big picture. Because I don't think this is unique to Nike.

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Yes, it's very visible right now, and yes, it's very easy for a LinkedIn post to go viral when someone who worked there was- is very unhappy where things are going, and maybe they left after twenty years, and maybe they didn't wanna leave, and so on, you know?

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So I would take that with a grain of salt overall, and I would use this as actually an example of how to do... really unpack organizationally, operationally, brand-wise, product-wise, how transformation happens.

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So it's a great case study. It's not necessarily cautionary tale, it's a case study. Nike is still billion- five billion-plus dollar brand.

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Yes, they made some wrong decisions, but I don't know if we can say these are wrong decisions at this time horizon that we-- that they're being given. Okay, so that's the big picture. So- Right.

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But, but that's a- also a point that's, you know, been, been made a lot is, you know, I think and Jordan Rodgers, who had done a, a different... He actually did a YouTube video that I thought was pretty good.

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You know, he talked about g- shifting from, and this is just sort of reality, of serving athletes to serving shareholders, and there's always sort of short, short-term pressures, right? And if you are the- Yes...

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CEO of a publicly traded company, you have a fiduciary responsibility to, to raise, to basically to shareholders, not to athletes or, or anyone, right? Yeah.

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I'm, I'm really glad you brought it up because that's exactly the fundamental tension here. You have a brand wh- whose founder is still alive and is sort of a legend, not just in corporate America, but also in culture.

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So that-- there is that. And there is that idea of brand stewardship, which has become very popular, which is kind of how do you protect the brand? How do you leave it better than you found it?

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How do you treat it as your own, and so on. And then you have publicly traded companies that operate on quarterly results.

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So yeah, if we have that big picture happening, the fundamental tension between interests of brand customers and brand shareholders and executives, there are many competing interests.

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It's a, it's a political minefield, so to speak. So then you kind of go get the media side of it. So that means how do you allocate media budgets? Mm-hmm. How do you build demand?

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That is the challenge that Nike has because at the end of the day, you can build demand through performance marketing very successfully.

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That's one way of doing it, which means spending a lot of money- But wait, can I jump in here? Absolutely. I'm not really clear if performance marketing does not, in my mind, build demand. It harvests demand.

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One of the things that I think about, like when it was very popular to do this shift to DTC, right? There was an entire industry that was popping up that was, you know, there were gonna be DTC brands.

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They weren't really gonna win for the most part on product. They were gonna win on being really good at performance marketing. And performance marketing is not about creating demand, really.

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It's about harvesting demand that exists on these platforms.

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So I think one of the reasons that a lot of these DTC models did not work is because they could only work at a time when you could harvest an excess amount of demand that was existing on these platforms, and that the costs of acquisitions were low enough to make, to make it all work.

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And when, when the costs went up because of a whole bunch of different issues with targeting and whatnot, then their models didn't work. And I think it seems to me like Nike went into this direct... That sounds great.

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I mean, people love to, to say, "Oh, we're gonna go direct. We're gonna cut out middlemen. Who wants to be a, who wants to be a wholesale?" Et cetera.

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But the problem ends up being that they were built off of storytelling and, and having a deep connection to the consumer, right?

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I mean, they were, you know, when you talk about Phil Knight, I mean, he was, he was a runner. You know? [chuckles] Mike, Mike Parker was a runner, right? And they were built off running.

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And then, you know, they reorganized where it's just men, women, and the CEO is from ServiceNow and Cloud Company or something.

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And I, I understand why they would do that, but I think one of the things that I ended up wondering, that's why I was asking you about the tension, because to me there, there is, there, there is a tension between performance and brand because performance does not build brands.

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To- what is a brand that's been built off performance marketing? That's it. Yes, and so absolutely. At the same time, it's kind of more complex than that, and I'll explain to you.

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Because brand like Nike was built around the iconic product, their, their waffle shoe. You know, that kind of started.

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And popularity of that shoe, which was made really well first time around-Is what allowed Nike to spin out from running to other categories.

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And today, running is a small part of Nike's entire portfolio, but really the, it was the superior product that allowed that brand to emerge. And then the brand itself built, grew sort of through, through culture.

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But I don't wanna say monolithic culture. It was actually the culture of basketball, for example, with Air Jordans forty years ago. One of Nike's problems is that's forty years ago. The kids don't know about it. Yeah.

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And then you had, I don't know, soccer, and they had women's, and then they had, like, go-golf, swimming, like other sports. It's the quality of the product that was at the core.

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That's why people originally bought Nikes. And then identity and significance and, and, and just do it. It became sort of product, cultural product in itself. So now, how do you build demand for that?

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And you're a hundred percent right, it's a harvesting demand, not building demand. Performance marketing is not going to build you demand. There needs to be something else that- Yeah...

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that, that, that says, that tells people, "Oh, I'm gonna search for it," or, "I'm gonna click on this ad," or so on.

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But I do think that a lot of brands, especially in DTC era, when money was, was, was free, they're like, "Oh no, we are gonna actually build demand by, by buying Facebook ads, Instagram ads, search and so on."

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So it's possible to, to build demand through performance marketing. It's just not durable. And that's a key difference. Yeah.

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So- I mean, I guess what I end up, like, thinking about it is the demand that exists on these platforms is not demand for specific brands. It's, it's demand for something.

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If you're not there, then someone else is just gonna fill your place, right? And that's why these platforms love performance marketing, right? They get, they get everyone hooked. They're like fentanyl dealers, right?

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They get everyone hooked on the idea of performance.

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The, the idea that nobody brings out that wanna maker quote anymore because they're just dumping their money into performance marketing, and they've been convinced that they don't really have to do marketing.

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They just can feed money into a customer machine. Customers spit out at the bottom, and CFOs love this stuff, right? Who wouldn't love that? They, they never trusted marketing in the first place.

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CMOs also love that stuff because that allows them to get budgets again and again and again.

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You know, like, that's, that's, that's the Holy Grail because you know, like, how, how tricky CMO job is overall, and especially chief brand officer job, is it's kind of like when stuff is not going well for a minute, you're the first to be blamed, you know?

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So everyone loves performance marketing. And perfor- I do, I'm not defending it. I think there is a time and place for it and a role in the funnel, thousand percent.

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And what I, where I was going with those DTC that use mostly performance marketing, those were not real brands, and those were not real products because you're not gonna convince me that the Way luggage is better than Moody luggage, you know?

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It's, it's n- it's a knockoff. You're not gonna convince me that some d- that Casper mattresses are bad. You know what I mean?

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So in that sense, it was really, like, shortening that funnel overall from a brand that ex- that, that, that, that started creating amazing products, that, that kind of built identity around everyone who wore those products, that, that started telling sto- their stories around that, the stories of running endurance.

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And, like, Nike was really, really good while it was capturing those human stories around people who wear those products, they have stories, and i- identity of the brand, Nike brand, was built around those wear stories.

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Yeah. And that takes time to build. So the question really here is, it's how much time do you have, and what kind of brand are you building? Well, you can't, uh, you can't just keep kicking do- the can down the road.

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You can't just be like, "There's more time. We need more time, we need more time." I mean, that's just not reality, I don't think, in, in this, in this world. And that's why I don't know if the internet...

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I think the internet's been a disaster for brands. [chuckles] Like, do you, do you think that's a fair, like- Yes...

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'cause it literally just- It really is because then it literally forces you to compete on everything else than on brand.

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You, you compete on price, you compete on convenience, you compete on your product recognizability, you, uh, compete on speed of your supply chain. I mean, look at Temu or Shein. I mean, bye bye, fashion, you know?

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Right. I mean, that's why, like, Amazon Fashion never made sense to me, right? The entire point of Amazon is cheaper, faster, et cetera. That is the opposite if you're trying to build, particularly a high-end.

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Maybe if you're, you're, you're not high-end, but if you're trying to build a high-end fashion brand, that's not where you're gonna win. I mean, Jeff Bezos was famously saying, you know, "Your margin is my opportunity."

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I can hardly see that as a very attractive proposition if you're, if you're at the high end of the market. And- Yeah, that's a brand building promise. [chuckles] What is? That? Yeah, exactly.

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But then look at also, like, Shein and Temu again. Like, how Shein actually succeeded is, like, looking at those micro trends brewing. It's a pure data play.

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So again, your company wins because it has superior data, and you have a crazy nimble network of your suppliers, so you can see what micro trends are bubbling up, and then you respond very quickly with your product to those micro trends.

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That's also, like, capturing demand, but it's also building the demand as at the same time.

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So I think we do need to have to talk about demand building strategies today versus before, where the, where, where you had brand and performance. Brands build demand. Performance captures demand. No. Yeah.

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So you wrote your, your, your PhD dissertation, like, on building brands, basically, in digital media.

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I think we called it the internet back then, but I don't know, if you were to write it, what, first of all, what, what, remind me again, what was the thesis of it?The thesis was from brands to behaviors, which actually unpacked means how design of decision-making of the environments where we make purchasing decisions actually builds brands.

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So I'll give you an example. It's like how a website design, how modern brands are actually based on those experiences.

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It's like IKEA store design is IKEA's brand, but you're very carefully shepherded throughout that entire experience. Back then, where brand websites were a big deal. By the way, I think brand websites are dead.

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Like, don't even bother. Like, marketplaces won, deal with it. And how website design communicates the brand.

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So the entire premise was like, "Don't tell me in this beautiful advertising thirty-second spots what your brand is about. Deliver it." Yeah. And then how it's delivered, then it- that's what's the brand. Yeah.

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So if you were to rewrite it today, I guess you would do it as a book, right? What, what would, what would the thesis be? 'Cause I mean, this is, this is a little bit down the road now, and I think a lot of...

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'Cause again, I keep going back to, I know mostly from the publishing and the media angle, right? And the internet has been, for the most part, an unmitigated disaster for brand publishers, right?

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Because the internet is a tremendous commoditizer. When anyone can publish, you're competing with... Y- y- it's impossible, right?

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So the only people who realize the value out of it, for the most part, were those who are able to aggregate all of the fractured audiences and were able to shift to basically audience-based targeting, which is just the heart of performance marketing, which is actually direct marketing.

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I'm sorry, one-to-one targeting is the same thing that direct marketers have been doing for generations. They just did it through different channels. This is just an update on direct mail at the end of the day.

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I just wonder, like, how would you update that? Because I don't know if you're gonna build an incredibly strong brand. I think that the internet is working against you just about all the time there, isn't it?

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But again, I think this question is the old model that you, that you touched upon, that you said, "Oh, no, no, no, it's not demand creation, it's demand harvesting."

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I'm telling, I believe it has collapsed, and I'll give you an example. Even Brunello Cucinelli is one of the top luxury brands. Their, their T-shirts cost two thousand dollars.

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They're made, like, wonderfully in Solome- Should I get some of these?... can make you... No, and I'll tell you why. Because first of all, you don't need a thousand dollar T-shirt. It's like a hundred dollar one.

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It's, it's gonna, like, just, you know, in life.

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But then the second thing is, when you put that in Google, you get Brunello, then you have Brunello on sale at some marketplace, then you get Hince T-shirt, then you have a Lacoste T-shirt, then you have...

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And you have all of that. So, so what builds demand? Is it, like, price? Is it the brand? No one is gonna know that you're...

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You're gonna know that you're gonna have a Brunello T-shirt, and that's the psychological effect of luxury. But yet, at the end of the day, you're gonna be like, "Oh, you know, like, it's a T-shirt."

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You know, as, as, as, as a consumer, and I'm not talking about one percent of the most discerning ones, I'm talking about the ninety-nine percent of people who just want a really, really, really high quality white T-shirt.

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So even the best brands, even the top brands, when you say Jacquemus, who he has amazing content on Instagram, you go, you put in hot pink short, like biker shorts, and you get something from Lorna Jane.

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I have no idea what or who Lorna Jane is, but they're like ten times cheaper and look exactly the same.

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And when you have that in retail, in combination with that retail environment, when, when, when it's so accelerated, the trends change all the time.

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Are you gonna spend a thousand dollars for something that you're gonna wear three times and it's n- and it's gonna become obsolete? No. Enter Shein, enter Temu.

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That is the fundamental collapse between demand creation and demand harvesting. And I do think that what the problem with Nike was, it again goes back to the product. The brand is not the problem.

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The product is the problem. They stop being innovative. They stop being one step ahead.

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Like, look, now the accelerated Pegasus release for a year, and everybody's raving about Pegasus, but you don't need one Pegasus, you need hundreds of those to stay that competitive.

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Yeah, I mean- Why do you let Hoka in or, you know, whatever.

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Yeah, I mean, there's, there's obvious, like, product issues that, that are always at the, the heart of, of these, and, you know, we can sort of hang a lot on, on marketing when oftentimes it just comes back [chuckles] to, you know, the product hasn't kept up, hasn't been innovative, and, you know, anytime you're gonna try to be all things to all people, you're, there's trade-offs to that, right?

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I mean, you know, Nike is a, is a f- is trying to be a fashion brand. It's being a per- performance brand. It wants to...

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It decided it was always for, you know, the athlete, and all of a sudden the athlete became any human being, [chuckles] like literally any human being. But it's all-- Right. And then- Yes...

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their Olympics campaign is that winning isn't for everyone, which I'm like, "Okay, wait a second. You just told me that athletes are everyone, so literally you're for everyone." And then, but then what?

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Some people are athletes, but they're, they're not winners, I guess? I thought everyone was a winner. But that is the thing, because they veered away from the very stories.

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Do you know that what Wieden+Kennedy geniusly did, what, what they as, as a team really well did, they really captured the human experience of all that, all those sports.

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Like, "Just do it" is actually capturing, how do you call the internal pig dog of-Oh, I wanna run, but like I'm lazy, but I'm gonna feel so much better, and so on.

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So that, that struggle, that, that, that, that human struggle, those wear stories of their products, wear what build the Nike brand and culture, and this campaign, I don't even, like, I don't know, it's, it's literally slapping the brand in the face.

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So what do you, you, you've written about like- But I think that's a small thing. So you, you've written about, like, product-led branding.

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Explain what, what that is, and is that like a way out of this, this trap in some ways?

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'Cause I really do believe that performance marketing can become a trap because it, it looks great on a spreadsheet, and it's very short term, and like you said, this...

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the purchase funnel has, is, is collapsed on the internet, right? And then I think that I look at it with internet advertising in that it's, it's all becoming commerce. Like, it's, it's...

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they're, they're collapsing, the platforms have collapsed the entire funnel, and they're gonna use AI as the front to shove through, yet again, these systems that they want. They've wanted this for a generation.

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They want companies to feed all their assets into their system, to give them a pot of money, and let them come back with customers. No questions asked, [chuckles] no, no reporting, nothing.

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It's, it's saying, "We're gonna... We'll do the work for you. Oh, by the way, most of the ads ended up, like, on our properties," but le-leave that aside. Yes.

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Explain to me, like, what product-led branding is and if that is, is an alternative to this. Because right now, you know, I, I just think, I think performance has eaten all of media. I- it's eaten all of retail as well.

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So it's, it's literally what, when I say product-led branding, is literally what I explained with, with Nike, which is like starting from that iconic original product, using different wear stories, wear scenarios, different subcultures, different people who over years used it to tell, to build a brand, to give it identity.

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Because in fashion, in retail, there is inherent tension between functionality and identity. The example of a white T-shirt.

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Brunello is all identity, and then Hanes is all functionality, no, no identity, if you, if you will. So those pr- product-led brands actually managed to combine both.

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So through functionality and wear and use, identity was born, and that's the story of Nike, of Levi's, of Birkenstocks, or Crocs, if you will, of all those iconic product brands.

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So what happens, which you touched upon before, is when you're all things to all people, everyone is athlete, we are gonna do everything for you, just, not just shoes, but, you know, sweatpants and, and tracksuits, and that-that's all great.

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However, what I do think that these days, more than ever, is needed to have that product pyramid that says, "These are the..." It's like imagine it is a Marvel cinematic universe, you have product universe.

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So you have superheroes, and how are those superheroes connected? How do they win individually and together? And then those superheroes are centers of galaxies around them. So who are your money makers?

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Who are your volume drivers? Who are your margin drivers? Really, really, really, really be clear about that. And then not all channels are created equal.

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Then you look, which of those superheroes perform really well in which ones? Who is your audience for those? And then you target your ma- or not target, but then you build for those people.

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Like, those guys who have, like, original Dunks or something like that, who are the collectors, who are, who know exactly, like, when one shoe was released b- because it was a prototype, and you can have it.

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So I think in that sense, yes, you may wanna be for everyone, but you don't talk in the same way to everyone. That, that, that, that segmentation of not just products, but also communication around it.

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So that is number one. Be very clear. Don't put all your products, or don't for- on your website, or don't do, don't use your website just for members.

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Just kind of understand, what do you have on different marketplaces, on resale, on your, on your website? Like, use it strategically. Do you have a s- a drops?

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Do you have something you can get only there and nowhere else? It's like, I'm sure they're thinking about it, but it kind of got lost along the way. Like, really, what do you really wanna stand for product-wise?

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Who are your superheroes in your product universe? And then build around them. Build your marketing around them. That's number one.

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Second important part of who the pro- or, or what the product universe is, is that cultural products are pa- equal part as the physical products of the brand, and which is archive reissue, merch, collaborations, reboots, and sequels of products, experiences, retail experiences, events, and all of that now is interconnected.

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Okay. So i- in that world, I'm trying to unpack this from a media perspective, right? [chuckles] So in that world, what, what... how does that change the role of, you know, advertising?

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'Cause I think one of the things that I notice from, I notice all the time in, in the media industry is that, you know, the money has shifted dramatically to, to platforms that, that are able to give the appearance of, of delivering customers.

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I mean, a lot of the game of, you know, the internet media landscape has been, how do you, how do you get as close to the transaction as possible to claim credit for it, right? All the action is that way.

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That's why, that's why Google makes so much money. That's why Meta makes so much money. That's why Amazon has a massive ad business. That's why retail media is the fastest growing channel.

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Because they've got data, but they also have-Quote, unquote, "closed loop attribution," because all this talk about the third-party cookie is not about targeting, it is about measurement.

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It is about sh- it is about giving the appearance that you're, that what you are delivering is working because, you know, everyone... nobody wants to be on the wrong side of that, you know, John Wanamaker quote.

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So, like, how does that... I'm, I'm always, I'm always wondering then what exactly will be the role of advertising i-in that? Be-because most times, you know...

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Joe Marchese made this point, like, on this podcast, on another podcast that I do a couple weeks ago, where he's saying, you know, "The decision to buy a Porsche is not made when you, when, when you're, like, 40 and going through a midlife crisis.

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It, it started when you were 13 as a kid, before you became a sad middle-aged person, got the divorce." Absolutely. But that's for that status signaling aspirational luxury goods.

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And Nike's business is not that business. It's part of their business. Nike makes money as a mass apparel, sports apparel brand, right?

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So that is, you don't start building the demand for just, like, regular sneakers when someone is 14. Like, no one cares. That's, again, demand building, demand harvesting collapse.

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But I will-- I understand what you're asking, and unfortunately, this means that media need to become way, way, way more strategic.

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And the room for what you're saying absolutely exists for probably ninety percent of any brand that's Nike's scale products, unremarkable products, commodities.

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Yes, you're gonna sell them if you put them on sale, if you bombard people with super, super, super targeted ads, and if you do that repeatedly and consistently. Yes.

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At the same time, the real results, something that allows you to sell your product at the full price, is happening through the cultural product, through the hero products, through brand marketing, if you will, but I'm looking what is the product-led branding ecosystem that you are creating.

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But at the end of the day, if someone is gonna buy a thousand dollar pair of Nike shoes, they're doing that as a Porsche, as that status signaling, and that has a halo effect. And that's where Nike really felt it. Yeah.

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I, I wonder, like, how...

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'Cause to me, like, for, like, publishers, like, to try to compete on performance marketing tends to not make sense, and because they don't have as much data, they don't have as much reach, and in direct marketing, you know, that's what it is about.

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And, and they're gonna lose, like, nine times out of ten. And it's sort of worrying because of this collapsed funnel because that sort of relegates them to an uncertain role with advertising, right?

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I mean, what, what is their role in, in brand building really?

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I mean, that's why I think a lot, you see a lot of, a lot of publishing brands moving into, like, events because, I don't know, like, the retailers aren't gonna do that.

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The Google has no interest in putting on, you know, parties and cultural influence events. So I don't know. I, I wonder, like, what...

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I mean, you've been part of these, these organizations, like, and how they determine where the, the media budgets go.

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Like, what, what do you think is gonna be the role of sort of publications to try to hold on to some of those advertising budgets that have shifted so much towards performance? Content.

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I, I, I, and I know this is just a massive, like, I didn't say anything really, but it's that sponsored content.

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When you kind of like, as a brand, you wanna capture part of a lifestyle by a part of that human experience, part of those

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rare stories from, from people and, and, and publishers are really good, especially their social properties in that intersection to create high quality content that interweaves the brand through a specific aspect of culture, not necessarily through...

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You know, like, you have, like, how to spend it, you have... You sometimes buy ads there just to show off.

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If you are doing a rebrand or if you're, like, doing a repositioning, you wanna say, "Hey, this is really tangible form," the, what, what our brand vision is.

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So in that sense, that's useful, but how often does that come around? Not very often. Right.

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So I think a lot of the other content strategy done in conjunction with the publisher is something I would always spend money on as a CMO. Yeah. Right. And a lot of it is offline.

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It's interesting to me, like, um, when I go through the spending reports, you know, traditional media, it's all, like, down, down, down. Like, I mean, they're just, like, looking...

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Even the digital extensions of, for instance, like, Group M had, you know, digital magazines, which is a strange thing, but, you know, they're basically just the, the digital operations of magazine brands.

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And, you know, they're forecasting that to grow under inflation. You know, that's shrinking, right?

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And that, that tells me, you know, that it's really difficult to translate what works in, in offline to, to, to, to o- well, we used to call online, right?

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And, and so I, I just end up, like, wondering what that means for these businesses when, you know, they can't compete on performance and the internet has proven inhospitable to the kind of brand activities.

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I mean, you talk about sponsored content, that's one thing, but, you know, there's just not a lot of culture that seems to being, being created or, or at least in, in the, with, with these publications, with their digital assets.

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But then I look at, like, where spending is growing, and a lot of tech companies do it. It's in things like out of home, right? I mean, billboards.

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I, I can't square this because I'm like, these same companies who are bleeding on that, you know, that their customers should only spend on the most measurableMedia with one-to-one targeting are themselves spending on billboards along like ninety-five Miami.

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[laughs] I mean, it's just crazy to me. There's a disconnect there. There is, but I, I think the price dropped, and then you do have some sort of idea what the foot traffic in locations are.

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And again, you don't do billboards to say, "Hey, I did the billboard, this is what my sales came out of it." You do it purely, uh, to show off, you know. And that is... You do-- That's why I say strategic.

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So you say, "Hey, we're gonna do a billboard on Lafayette Street, and the same time, we're gonna spend arm and leg on driving traffic to our site."

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So people who may notice it, all of a sudden are gonna also end up being, being like hyper-targeted to, to go and buy a pair of pants or something like that.

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I mean, at the end of the day, look how Calvin Klein's Jeremy Allen White campaign went viral.

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It was a gigantic-- You know, Calvin Klein has a billboard on Houston Street in New York, a standing billboard for like decades.

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And there was g-- you know, it was a giant billboard of Jeremy Allen White on that, on that rooftop. And people started taking photos with it and tagging themselves on TikTok and Instagram.

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And that was coinci-- that coincided with the award season, where The Bear won like a lot of awards, where Jeremy Allen White won a lot of awards.

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And then Calvin Klein, in between those two things, released a social post. It was, uh, it was an Instagram video.

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But it, it's conjunction of all those different signals that are happening at the same time, that at the end of the day, allowed interest and engagement of, of, on Instagram to go up.

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In terms of sales, no, they were down eighteen percent at the same time. I don't-- [laughs] Okay, so let's say an example, but I don't know.

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I mean, if a CFO would look at that, they would, they would be like, "Yeah, j- let's just put the money into Google and, and Facebook and call it a day. This is not working. This is..."

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I, I just-- I don't know if, if that, if that changes, right? Because, you know, look, you, you remember the Internet from like the earliest days, has always been trying to figure out the brand side, right?

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It has always been trying to figure out. I mean, I always say the, the click was like the original sin of the Internet because it doomed it to be a direct response channel. It just doomed it.

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And just the way that banner ads were made, they just, they were, they were supposed to be like magazine ads. They're not the same as magazine ads. Give me a break. Like, you're talking about, like, how to spend it.

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You know, you leaf through eight full, full-page spreads before you even get to the table of contents there. You don't have the equivalent i- on, on the Internet at all. People thought it was gonna be those...

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Remember the microsite era? You know, it was like, "Oh, we're gonna immerse people and engage them in, in these things." And of course, they were total wastes of money, right? Elf Yourself? [laughs] Uh, not Elf Yourself.

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Elf Yourself was very effective, [laughs] but th- there's an exception to every, every rule. What was that ad for? You see, like, but the problem with Elf Yourself is that it became a meme in its...

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I don't remember what the brand it was advertising. Elf Yourself? Well, I mean, it was a long time ago, so I don't, I don't remember. I think it was, was it Skittles? See? You don't even remember. Chase the Rainbow?

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Elf Yourself. I, I don't know. I don't remember what Elf Yourself. Because you know, see, that, that is the problem. Subservient Chicken.

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The ad became con- All [laughs] those things that were being- I know, that's right, actually... that were being done.

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And that was sort of the antidote to the fact that internet advertising had failed to come up with anything that could resemble what the analog media world did to build brands.

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And the problem was, nobody engaged in these things, and they were, for the most part, there was, of course, exceptions like Subservient Chicken and stuff that became, you know, case studies.

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But for the most part, you know, I remember writing about Pepperidge Farm starting like a cookie social network. [laughs] I mean, like, who, who in their right mind would join like a cookie social network?

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It's just, it's just, on the, on the face of it, this is an absurd, an absurd notion. Coca-Cola tried to, to do a social network.

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So yeah, no, thousand percent, and that's why it was, my dissertation was exactly about, is like, you really can't win through advertising on the Internet. It makes no sense.

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Where you can win is to start designing those environments where, where, where people actually are gonna make decisions. However, that was back, whatever, fourteen years ago, that that website's very important.

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So basically, how functional it is and how creative it was actually mattered. Now it doesn't matter at all. Like, just look, go to StockX, go to Depop, go to eBay. These are the most po- Amazon, most popular sites ever.

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That's how people buy. They buy based on price, they buy based on reviews, and they buy based on sponsored results on advertising. That is, that is it.

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So that's what led me to product-led branding in the end of the day, where your product act- actually is forced to be the brand, to tell that story, to be so differentiated that you're gonna say, "Oh, no, no, I want Levi's 501.

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I don't want Target jeans. I don't want Runello jeans. I don't want Balenciaga jeans. I want Levi's 501." But you see, like, it, again, I'm going back and back and back and back.

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People think i- uh, on Internet, everything is immediate. So for whatever re-- like, for that reason, time horizons became un- unbelievably compressed. Yeah.

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And in the absence of having those very stories that are layered, 501, I wore it in the nineties, or cowboys wore it in like 1800s or 1900s and so on. These are the layers of it. Th- those products have meaning.

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Ninety-nine percent of products have no meaning whatsoever. So go compete on price, go compete on search results, go compete offline. On Internet, you're not gonna win with the brand. Yeah.

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So is that, is that why, like, luxury brands, like, just have always kind of found the Internet a difficult place? Because it just seems like it's not really made for them.

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I mean, I can just see, you know, if, if you're not like mass and you can't compete on, on price, I don't know. I mean, does it really make that much- Or advertising budgets. Luxury brands don't have any budgets.Yeah.

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Well, I guess that's, that's part of it. I don't know. I, I just... I guess what I end up thinking is, is how this relates to how the media ecosystem will evolve.

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And I, I think there's already, like, a pretty profound bifurcation where pretty much all of it has moved towards you know, mass and, and very performance driven.

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And you know, there really, there really haven't been many digital brands that have achieved, like, luxury status, right? Like, I always wonder that, why is there not, like, a luxury version?

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Like, in the o- in, in the offline world, in the real world, there's luxury versions of almost everything, right? I mean, we have a, a society that, you know, has a lot of people with a lot of money, ri- right?

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And that makes sense. But on, on online, th- there's not, there aren't, like, luxury digital [chuckles] services, are there? Or di- digital products.

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It's just, it's really interesting to me, is I just think that the internet hates brands. I, I agree with that. I think that the internet loves products, but hates brands.

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Internet also likes supply chains, distribution- Oh, yeah, data... sales, convenience, anything that's, that can provide you competitive advantage, but not brand. Yeah.

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So, I mean, is the idea that you will inc- I mean, I guess to, to me it's like you end up, like, building a brand a lot of times, like, in the real world, and you, you harvest a lot of that demand on the internet.

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I don't know if the internet is truly a great place to be, to be generating that, that brand demand, you know? Like, I just don't know if it is.

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I'll tell you, it, it is, and I think that, that, that that's really important because, like, I always talk, oh, society of spectacle.

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Pharrell Williams' debut collection for Louis Vuitton Men's Pont Neuf in Paris, Rihanna, Jay-Z, all his friends, that was the spectacle on par with the Olympics.

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That spectacle created, oof, I'm gonna misspeak, like, maybe two billion impressions on YouTube, like, some crazy number, broke the internet.

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So see, you need to create a spectacle in real life in order for a scale of peop- no, no, actually, it was seen by two billion people, which is, I don't know, one third of how many billion people are on the earth.

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It's unbelievable exposure. That was a mass event in a true sense of the world when mass events don't exist anymore. But it became mass thanks to the internet.

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And that YouTube videos, Instagram photos, TikToks, everything, built the demand for Louis Vuitton for everyone who was not there.

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So it is possible to build demand, but you need event, you need a spectacle, you need the real world content. Hmm.

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But I wonder how that fits with your product-led branding thesis, because I think what I've seen is, is- Oh, it's the opposite of it. Well, right, like the- The opposite of it...

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'cause the, the, the pendulum always swings too far. So in internet advertising, basically, it's swung completely to audience targeting versus context, right?

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And it's gonna come back because it's like everyone on just goes overboard with everything.

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And I think overall, when it comes to brands and products, like, and the digitals in digital media, the, the pendulum swung too far to distribution, right?

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And it's just, if you have distribution, you put distribution first and then product second. And again, I go back to the DTC brands. No- very few, if any of them, in my view, were trying to win on product.

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They were trying to win on distribution. They were, they were basically saying, they were at their heart, performance marketing companies masquerading as product companies. Absolutely. A thousand percent agreed.

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They were VC money companies because, you know, like, there was so much money that anyone with any idea, like before, market would tell you if your idea was good or not good. Now, VCs told you if it's good or not good.

255
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And by VCs, I mean a guy in whatever, fleece vest, you know? Oh, I know them. That's the fundamental problem. I see them around the financial- No one had a really good-... district all the time. There you go.

256
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I've got a vest. And no one has had... Did you see? No. It, product didn't matter, really. I don't know what mattered. Nothing matters. That's why they all collapsed.

257
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But I'm talking about product-led branding is probably the o- the last bastion of existing brands to succeed on the internet because their product has such a strong identity that people are gonna wanna buy it even if something else is cheaper, even if something else is more convenient.

258
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They're gonna seek it out. If you go on eBay, there are literally twenty thousand dollars Levi's jackets from the '60s or something. That is sort of that product-led branding exclusivity that product gives you.

259
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Everyone else is effed. Yeah. I kinda like the idea of bringing back scarcity in a lot of different ways. I think too, I think people, products, I'm just coming up with this on the fly, so w- fair warning.

260
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But like, I think everyone needs to be less available. That's what I think.

261
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[chuckles] It's because everything is ubiquitously available, and, and everyone is seemingly trying to win on, on convenience and in the moment, and I think there's probably going to be a counter-reaction to that.

262
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'Cause I just, I get this sense that, like, the world is moving too fast for a lot of people. Maybe it's me getting older, but like, I think it's moving too fast for a lot of people.

263
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And I think overall, there will be, and it might be a smaller part, but there will be a lane for, for people who take a longer term approach and who take a slower approach and who are a little bit less always available and, and particularly, 'cause I, I look at, like, publishing, right?

264
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It's moving from thisYou know, mass, try to accumulate tons of traffic from platforms, try to be everything to everyone, to really valuing niches and expertise and, and authentic, quote unquote, "connections" to individuals versus just faceless institutions.

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And I don't know, I-- that seems to me like almost like a societal thing that would, that would cross over to the sort of marketing side. I don't know, what do you think? Absolutely.

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And I think the universe is made of a lot of micro galaxies, and that is exactly the product-led approach, that product pyramid that you know who are superheroes in that galaxy. And that is it. It's, it's niches.

267
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There is no such thing as being everything to everyone. Yeah, you can do that, but it has to be like a portfolio of niches. You're not gonna do that with the same products going to 55 different customer groups.

268
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It's just not gonna happen. You, you're gonna have a tailored products to different customer groups. And that's why I think that probably it was not the best of ideas to collapse Nike into men's, women's, and- Yeah...

269
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and children because they did have the belief of the niches, the wear of the niches, the performance of the, of, of the niches. So they almost...

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I, I know they brought it back, so it's almost kind of like you already had it right the first time, just dial it up on that.

271
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And then overall, absolutely, you can have a mass brand still, but those mass, mass brands are c- uh, are universe- Right... made of micro galaxies. And media needs to respond to that.

272
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Media buying and planning then goes. Right. It's the same in media because, you know, building like an all-in-one media brand is, is just yesterday's game.

273
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And instead it's at, at the most, if you're gonna build one, it's gonna be a collection of niches. Think about Puck, right? Like, Puck has Lauren Sherman doing fashion. She is super deep in fashion, right?

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You have Dylan Byers, who's super deep- She's the best thing happening in fashion right now, and I'm not-- I'm just saying that- Wow... because maybe that is the right approach. Okay.

275
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To have one tone of voice, to have one vertical, and really, really, really, really deep.

276
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Well, I think what Puck is trying to do is square that by having a bunch of different verticals rather than, I mean, John says the days of the, John Kelly, who is, was one of the founders, he says the days of trying to own the waterfront are over.

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And I think in some case, in some ways, look, Nike owns the waterfront to bring it back there, right?

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Like, it's, running is just one, one category of many categories, and they might have started there- One micro galaxy in the universe of Nike. Absolutely.

279
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And it's just hard, I think, in this, in this environment to be all things to all people.

280
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And I, I suspect that we'll see a lot of, a lot of brands sort of struggle with that because everyone-- I feel like everyone pretends that, that the way things are are the way things will always be, but that clearly is not the case, right?

281
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[chuckles] I mean, it's not-- and that's what I always think with, with publishing. Yea-yeah, there's a lot of, like, traditional brands who have kind of peaked, and now they're in decline.

282
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And there's those brands, I mean, you know them, like in, in fashion and retail, that, you know, their heyday was at a, in a different time, in a different era, and now they've moved on to a different phase of their existence.

283
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And I don't know, you can be dignified about it, and s- there's always a way to make money.

284
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But let's be real, I mean, the, the way of the world is, is creative destruction, and, and it's, it's new brands coming to replace old ones, right? Maybe not in, like, luxury. Always. But- I mean, even in luxury.

285
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Remember in Christian Lacroix, he had, like, licensing model of it, like carpets and whatever, coffee makers, I don't know. So yeah, there are definitely stages in lives of the brands. Not every brand is meant to go on.

286
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There is a time and place because at the end of a bra- a day, brand is part of culture and reflects, if it's a successful brand, it re-reflects perfectly, captures the zeitgeists at that time perfectly.

287
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And by definition, a brand who captures perfect zeitgeists at one time is not necessarily that zeitgeists changes.

288
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So if the brand doesn't evolve with it and constantly change, it's just gonna get stuck and become, you know, like a licensing brand or- Yeah. Yeah. So that is the big difference between brands and commodities.

289
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You can be all things to all people if you're gonna turn commodities, no problem. Yeah. I think of, just to bring it back to Nike, and then we'll wrap up, is I like to run a lot, you know.

290
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I've been a little injured, but I do like to run a lot. And I think about Nike with running, and I've thought about this for many years, right?

291
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Because, like, I always thought that they kinda got away from their running roots, and they sort of brought it back a little bit. But I think of a brand like Tracksmith, very niche, right? They're not the biggest brand.

292
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They have great, they have great quality products, great quality products, and they marry the great quality of, of products with a really acute understanding of what, what it is to be a runner.

293
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And when you compare the way they sort of approach that category to how a mass brand like Nike approaches that category, it is night and day.

294
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And, you know, this is something that guy Jordan Rogers mentioned that I thought was, like, super smart because with, with Tracksmith, they get-- they're basically trying to bring people along to become, quote unquote, "real runners," right?

295
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They're using, like, not everyone is a real runner. Just because, like, you put on, like, running shoes to, like, go to the supermarket doesn't make you a runner, right?

296
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Now, Nike, because they've got to r-r- they've got a massive business, and they, they've got angry shareholders, they have toThey have to make everyone a runner, right?

297
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And I think you're just gonna inevitably dilute yourself, and I think DTC overall was a massive disappointment, but I hope that there was more brands that end up evolving that I think are, are, are very modern, that are, that are very niche, like Tracksmith, you know, that don't try to be these massive diffuse brands.

298
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It's fine. I don't know why it's a very American thing that we have to make everything, like, scaled and massive. I think it's very capitalism thing, and then without going into- Oh my God... Marx's theory.

299
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We're pro-capitalism in this house. [laughs] So there are a couple of things that I wanna comment on what you just said. I think that it's...

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what Nike moved on was not running, it moved from runner obsession, from product obsession. Phil Knight was a runner. He created the perfect product for a runner. When I say perfect, the best- Yeah...

301
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for runners, but it, it could have been other sports.

302
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So if you extrapolate really, because again, running is a small, very, very, very small part of what Nike entire portfolio is, they moved from that athletes obs- the real athletes, the real passion people obsession, and instead, they should have used that passion to market to everyone else as aspirational product.

303
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So that is what they moved away from, from product o- obsession, from innovation obsession, from that person who is gonna get up at four AM and go running. So that is or swimming or biking or whatnot. Mm.

304
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Play basketball, one of a kind, and so on. So that is very astute, what they moved away from.

305
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But you can actually have a gigantic delusion under that if you have a very strong halo of those amazing, innovative, best-in-class products that go into the soul, in the human soul, which they had before, which made it successful.

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Again, going back to product.

307
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And then the second thing is, absolutely on Tracksmith, they have a very, very, very defined product aesthetic rooted in the '70s long distance runners, when long distance runners were weirdos, and they lost their- Whoa...

308
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toenails, and they ran for thirty-seven hours, and you know what I mean? They had no family, and so on. So that's a very clear- Get some respect on that... that's a very clear niche.

309
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That's a very clear sentiment, a very clear emotion that Tracksmith actually captures in their product. The way they communicate is through their running clubs and their, you know, their, their, their running schedule.

310
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And if you go to their site online on Tuesday, New York, there is this, on Wednesday is this, and so on. But they're tiny. Tiny, tiny, tiny, tiny.

311
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And God bless, they should continue doing what they're doing because they're doing an amazing job. What's wrong with being small? But in order to s- absolutely nothing.

312
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I just said, "God bless, continue doing what you're doing."

313
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If you're a galaxy like Nike, the strategy is to create a lot of little tiny Tracksmith galaxies that are gonna give a halo effect to someone who's gonna go to Foot Locker and buy a pair of Nike sneakers to go to the city.

314
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Okay, just...

315
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I'm actually gonna go longer than this because I, I think when you look at HOKA and On, you know, to me, it's like inevitable, if you're going to stretch yourself super thin, you're gonna leave yourself open to really focused competitors, and that's how, that is how the marketplace works.

316
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Like, you're inevitably going to be overstretched, and you're gonna inevitably be diluted, and that is just the way of the world, and then you're...

317
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and then a bunch of competitors are gonna find those weak points, and they're gonna ruthlessly attack them. So that's what I think is going on right now. I think that's, that's a great way to sort of re...

318
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Yes, but you have to choose what you're gonna dilute yourself on. And also, talk to me about On and HOKA in ten years. Come on. Like, yeah, it's so good to be a hot brand for a minute.

319
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No disrespect, but it's like being hot day after day, week after week, month after month, for forty years.

320
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And I don't know if anyone can do that anymore for the reasons, fragmentation reasons that we, that we, that we talked about.

321
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And I don't know anyone, if any, if that's even a strategy, that right strategy to go about it, and it's, it's really, again, build a gazillion Tracksmith stars in your galaxy, you'll be fine. Yeah. Okay.

322
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I just don't know if it's possible to, to build a, a, a bunch of, you know...

323
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That's why I always say it in, in publishing, people say, "Oh, well, we're just gonna create, you know, a hundred and fifty niches and be like amazing at a hundred and fifty niches." And I'm like, "The...

324
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you, you're never gonna be able to do that." It, it reminds me of the agencies that would say that they were great at every single discipline versus, like, a specialist agency.

325
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I'm like, some clients will wanna go with just a mass because they don't wanna deal with that, but you're gonna, you're gonna lose specialization. So I don't know.

326
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It'll be interesting to see how all that- I mean, it is interesting to see because Nike did have... it, it was a performance brand. It did have specialization in all of these categories.

327
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Number one in all of this golf, swimming, blah, blah. You know what I mean? Mm-hmm. They did have that, and they moved away from that in order to achieve scale by how... You know what I mean?

328
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It's kind of like, no, no, no, actually, it is probably a collection of niches that you're best in. And yes, maybe an agency that was large enough would be able to be best in everything or maybe not. Okay.

329
01:01:18.976 --> 01:01:26.396
Or maybe it's not a good analogy. They were never [laughs] they were never the best at all the things they claimed they were best at. I know, but maybe it's not a good analogy.

330
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Maybe it's in with physical good, it, it is. When you're so big, you can actually have an R&D in all of these areas that is, like, the best. Yeah, you got a bunch of them.

331
01:01:34.556 --> 01:01:48.976
But then act- it- There, there was a- actually a good point in that, in that guy's LinkedIn post about how, you know, Nike used to have a competitive advantage with that, you know, with their, their Asia supply chain and that then it became a g- it, it [laughs] like everything.

332
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Everything becomes commoditized, and then that become commoditized. It became, well, he called it democratized. Basically, anyone can, like, hook into, you know, the supply chains there, and so, yeah.

333
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But that's, again, a question of strategy. Where are you gonna find a side of brand where you can be the be- where you can actually capture competitive advantage and be, and build it, that moat?

334
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And maybe you can't anymore, so then you have like, okay, so how am I gonna compete? How am I gonna meet my numbers? And that's a different strategy. So that's probably what they concluded.

335
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They were like, "Hey, let's, let's try doing this because we lost all these competitive advantages in supply and distribution and, and everything else." Got it. All right.

336
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This is a, this has been a fun special crossover episode. Thank you for doing it, Ana. Yes. Thanks. Thanks for having me. Great conversation. All right. Thanks, Brian. Bye. Bye. [outro music]