15 Years On the Marketing Front Lines
“Marketing?” I know some of you are asking. “What does that have to do with engineering?”
Well, not much. But, like I said, I’m confused. In addition to an engineering major, I also took enough English classes to be an English minor—and my GPA in English was higher than for my summa cum laude engineering degree. So that’s a bit of foreshadowing right there.
Also, back in the Sumo days, when I did the first brochure for our speaker company, Odeon—which is an odyssey in itself, from getting kicked out of Vasquez Rocks for the photo shoot (we didn’t know about things like “permits” and “insurance” back then) to the Cretaceous-era desktop publishing software—the first dealer said, “Well if you can’t make it in speakers, you definitely have a future in advertising.”
At the time, I brushed off the comment. I wanted to make audio stuffs, not brochures!
But I kept coming back to marketing. At Sumo, when the VP exited, I ended up doing the copy, layout, photo art direction, etc for their brochures and print ads. Theta counted on me to do the brochure for the Cobalt 307 (which I’ll post if I can find one, because the copy there really is the first expression of the balls-out attitude that is a hallmark of Schiit—we even made fun of the gold-plated audiophilia that was starting to take over at the time, proudly saying the Cobalt 307 was cheap because of mass production, rather than being “handcrafted by happy elves in Wichita.”)
Fun Fact: the Cobalt 307 had blue LEDs for one reason only: to thumb our nose at Krell. Until the Cobalt 307, blue LEDS were astoundingly expensive (about $10) but we were able to get some of the first inexpensive ones around (less than $1.)
And now I should add a disclaimer: we’re still not talking about Schiit for a while. This is still the run-up to the company. If you want to read about Schiit and Only Schiit, you’ll have to wait to the next chapter.
This is the tale of Centric (centric.com), a company I am still involved with. Centric is a company that does marketing for tech companies, food companies, and many other kinds of organizations, including some high-end audio firms. Centric just passed its 20th anniversary a few weeks ago.
But First, Let’s Talk About the Marketing Industry
If you’re expecting this to read like the boozy exploits you see on Mad Men, prepare to be disappointed. The top-tier, multi-billion-dollar ad agencies are working with clients who are the corporate equivalent of the Rockefellers, Rothschilds, and the Sultan of Brunei—companies with so much money they could buy your town as a joke.
We didn’t work in that rarefied realm. Consider this: the cost of an average 30 second Superbowl ad is $10 million. This counts $4 million for the airtime, and $6 million for production, logistics, pre- and post-distribution, social media, online media, etc, etc.
Consider just two facts:
• $10 million is 6-10X higher than a typical annual marketing budget for an $50-100 million tech company—and this includes marketing salaries
• $10 million is larger than the annual revenue of all but a handful (literal handful) of audio companies
So yes. Rothschilds. Rockefellers. Sultans. That’s what we’re talking, when we’re talking Superbowl ads. And more. Did you know that Toyota spends $100-150 million in advertising to launch a new car—and this is not a full year of advertising, this is during the launch months? Did you know that a single brand at P&G, such as Tide, can have a $50-100 million annual advertising budget, every year, for decades? That’s why when your agency starts trotting out “branding examples” from the big names, and suggest you emulate them, you run. Fast. They have nothing to do with the reality of a by-the-bootstraps company.
But I’m getting ahead of myself. Let’s disambiguate this whole “marketing biz” thing a bit. I’m sure some of you are sitting there, wondering:
a. What the heck is the difference between marketing agencies, advertising agencies, PR, social media, etc?
b. Why the heck companies think they need marketing—shouldn’t the best product win?
Okay, so let’s break down the difference between agencies, circa 2013:
Advertising Agency. Primarily develops and places advertising. Many agencies identify themselves as a “creative agency” (thems the dudes that drink a lot) or “media agency” (thems the guys who buy the ads and make a profit on them), or both. But today, it’s more complicated. Are they primarily broadcast? Primarily online? Both? Do they do print? Outdoor? In-store? Native? Social? Ad agencies can do all of that.
Interactive Agency. An ad agency, but subtract the print, broadcast, and outdoor, and add web and mobile development.
Social Agency. An ad agency, but one that annoys your friends where they hang out online, like a crazed cybernetic door-to-door salesman.
Design Agency. An ad agency, but subtract the focus on persuasion and turn up the emphasis on great art and visual communication.
PR Agency. In the past, this was your conduit to the press. They knew the editors and could help you get placements. Today, that’s evolving rapidly as conventional media (like magazines, newspapers, etc) crumble and online media/blogging/social rises.
Marketing Agency. Like all the agencies above, with different strengths in different areas. Usually focused on one or more niches. May drink less. May drink more. Centric is a marketing agency.
“Well, hell,” you’re saying. “Do I need all those agencies to succeed?”
No. Not at all. You may not need a single one of them. I’ll get to that. But for the moment, let’s cut back to the birth of Centric, and why marketing?
The Centric Rationale
My rationale for starting a marketing company was something like this:
1. Hey, I did this for Sumo and Theta and my own company, so I have some experience.
2. It’s not a manufacturing company, where you have inventory, overhead, labor, distribution, etc—it’s a lot easier to get started.
3. The products usually don’t ever catch anything on fire.
In retrospect, not the best reasoning. But hey, I was 28. Leaving a VP of Engineering job to start a business in a field I knew nothing about seemed perfectly sensible at the time. So, as audio went into exponential price expansion, I jumped ship and started Centric in January of 1994.
Now, if you’re a LA resident, you might be thinking, “Hmm, wait, isn’t that when the 1994 Northridge Earthquake hit?”
Right. I started the company exactly one week before the earthquake, and I was living about 10 miles away from Northridge when it hit. I was renting a house on a hill above the San Fernando Valley, and I clearly remember waking up in the early morning, sitting up in bed to look out the window at the valley, and watching them shut down the whole starry mess of it, grid by grid, as shelves toppled inside the house and the fires began outside.
And I remember thinking, Holy crap, if this just hit downtown LA, kiss this business goodbye. Because there ain’t no downtown no more.
In earthquakes, what matters is how far away you are from the epicenter. If the epicenter was Sylmar, where I was living, OK, that’s bad, but not the end of the world. If the epicenter was downtown, and it was strong enough to knock over nearly everything in a house 40 miles away, that was, like, The Big One. End story. Full stop.
And again, remember—no internet. And I didn’t have TV. Didn’t believe in it. I was into audio, remember? So I had no idea where the epicenter was. I sprinted over the crap on the floor and went out to the car to listen to the radio. And the first thing they said: LA. It was in LA.
Yep. Done. Pack it up.
And that’s what I did. I got in the car and went up to Valencia to see if some friends were all right. It was like driving in a zombie apocalyptic horror movie, with trailer parks burning on one side, toppled phone poles and smoldering transformers, and nobody, nobody on the road.
Later, we found out the epicenter was Northridge, and that LA itself was still intact. While tragic for Northridge, it turned out not to be the end of the world. It just made driving to the service bureau to get film output monumentally sucky, due to the downed freeways. Remember. No internet. No FTP. Big file mean sneakernet, man.
And two days after the quake, I was driving to see a new prospect for Centric, XLO Audio, in Rancho Cucamonga.
Proving that it’s never the end of the world.
And, over the next few years, we added companies like Threshold, Infinity, 3D Systems, Pioneer, Veeco, Compaq Capital, HP, and a whole bunch of other tech, industrial, and consumer electronics companies to the list.
And for a while, everything was glorious. We rode the wave of the first internet boom, doing some of the earliest web development work, earliest e-commerce, earliest web marketing…all built on the basis of personal incentives, like I’d seen at Theta.
We were even smart enough to avoid the worst of the Web 1.0 downturn, though it did hurt when we went from 7 optical networking startup clients to 0 in a single year.
But, in the end, life was good. Marketing was fun. I got to see all sorts of crazy new cutting-edge technology, and the clients loved me because I could talk to the engineers and scientists and not be dismissed as “the agency freak.”
I even had a hell of a science fiction moment at one client, when they were showing off their new Pico-Force measuring system based on atomic force microscopy, where they could actually unfold individual protein strands and manipulate them at the molecular level.
“That’s like the nanomanipulators in Neal Stephenson’s Diamond Age,” I said.
At that point, two of the scientists turned around to look at me, eyes open and jaws slack in shock.
“You read that too?” one of them asked.
“Where did you think we got the idea?” the other said.
And we also got to do a lot of cool, cutting-edge stuff in marketing. In addition to some of the earliest web development and online marketing, we were able to do some of the earliest social work for Warner Brothers, and built HP’s presence in the virtual world of Second Life, as well as “the largest virtual experience ever” in the words of MIT Tech Review, on the David Rumsey Maps project. We’ve constantly experimented with what’s new in marketing.
And…paradoxically, that’s why we’re more conservative today. We haven’t seen the results from social marketing, unless it’s for an entertainment company. The big bang in virtual never happened. Mobile is very, very important, but who knows if that will extend to augmented reality?
Condensed Marketing Stuff Follows
“So what does this mean to someone who wants to start their own company?” you ask. “Or to someone who’s just on the outside, thinking about it?”
Well, to summarize what we learned in the past two decades, and give you the “key takeaways” (sorry, lapsed into corp-speak there):
1. Most companies are too terrified to be effective at marketing. Show them something amazing, something catchy, something incredibly effective, and the first reaction (at most clients) is, “Wow, this is wonderful, let’s do it!” Then, two days later, an email appears. It usually goes like this: “Our CEO/lawyers/accountant/design intern/marketing director’s daughter/fish/dog looked at it and we’re concerned that it may be too ‘out there…” Yep. Done. Key takeaway: Don’t be scared to stand out.
2. This terror can affect everything they do, so they may not be effective at anything. The second-guessing of great ideas doesn’t stop at marketing. It usually extends all across the organization, to product development and customer service. That’s why you get so many me-to products and crap customer service. “But our competition is doing it,” whines the product manager. “But the competition doesn’t provide any better support,” says the director of customer service. Key takeaway: A race to the bottom helps nobody. Don’t benchmark yourself into mediocrity.
3. Most companies have no idea what to do in marketing. “Let’s do social, I heard it’s cheap and easy,” or, “I’m tired of the website, let’s change it,” or, “Well, all of our competitors are going to that show, so we need to be there,” or, “I know the magazines are getting less and less effective every year, but I think we need to be in the books,” is the rule of the day. Key takeaway: marketing should be a portfolio strategy, with the most money going to the most effective and measurable tactics, with detailed analytics on what is working and what isn’t, with a small percentage reserved for experimentation on “new” or “interesting” ideas. If marketing doesn’t make money, it shouldn’t be done. Period.
Why is it important:
1. Fear is the mind-killer. Fear is the little death…no, wait, that’s from Dune. But it’s true. Second-guessing your first reaction to something you love usually doesn’t result in great things. Trust your gut. And remember, even if you’ve seen it 50 times, most of your prospects are only seeing it for the first time. If the marketing creative work stops you, it works. Do it.
2. Kill the fear before it spreads. If you start a company, and instantly start worrying about if your product has every little feature that your competitors do, you might as well name it the RX-4001i-RevA and hope that someone mistakes you for Epson, or some other company that’s been around since the earth cooled and can get away with crap like that. Apple’s products never have the best specs, most features, biggest shiniest displays, etc—and yet, even now, they’re the highest-value brand and company in the world.
3. Marketing is important, but don’t do it blindly. Today, you can measure any aspect of anything you do online, down to which ad drove which specific sales of which product. Get the reports. Sit down with the agency and torture them until they bring out the one dude who really understands them, and have him explain it to you. Do more of the stuff that works, and less of the stuff that doesn’t.
a. Corollary 1: don’t believe nearly everything an agency tells you. They’re going to trot out these ancient case studies about how branding is done, how P&G has built the Tide brand, or how Toyota built its brand, etc, and imply that those are the right models for you. 100% total bullschiit. These brands had hundreds of millions to billions of dollars to spend on a single product or model, over decades. They’re Rockefellers and sultans, completely disconnected from reality. You aren’t. Create your own can’t-be-ignored product and personality.
b. Corollary 2: see above, x10,000 if it’s “something new.” Agencies love “something new.” It’s usually confusing and not measurable, and they are more likely to win an award for it. So they’ll trot out a case study about how someone got like 12 billion views on YouTube or 1 million Facebook likes or 3 million Twitter followers, but they’ll leave out the convenient fact that (a) the company also had a $150 million ad campaign running at the time, or (b) they’re a celebrity, or (c) they were just damn lucky. Forget chasing new/easy/cheap. Marketing is none of the above.
c. Corollary 3: Mass advertising is unmeasurable, and almost never works for smaller budgets. This is why agencies love it. Well, at least the first part. Smaller budgets are defined as $10 million or less. They’ll try to dazzle you with reach and frequency and such, but bottom line, you’re not going to track a magazine ad or TV spot back to a specific purchase. Stay online. Measure. Refine. Do better.
d. Corollary 4: Mass social almost never works, unless you’re an entertainment company. Entertainment properties have fans. They’re natural for social. Almost every other company isn’t. People are there to talk to their friends, not BUY NOW. You’re entering their living room, their pub, and their coffee house. They don’t like it. Social produces 10x the results of conventional advertising for entertainment, and 1/10 the result of conventional advertising for everyone else, in our experience. Forget big social—it’s a distraction that can eat your company.
e. Corollary 5: on the other hand, micro-social almost always works, unless you’re a dick. Finding the small, specific, passionate communities that are interested in your products, whether they are barbecues, espresso machines, audio gear, or high-end bicycle accessories, is almost always worth it. Going out, joining these communities, answering questions that come up, and not selling at all is a wonderful way to get the word out. But don’t think you’re King Salesman of the Universe out to convert the masses, or start attacking other brands, moderators or forum members. One problem: most agencies are too lazy to do this hard work. And it is hard work. Pay lots of attention to micro-social, and be prepared to post, respond, meet new friends, piss some people off, delight some others, and become part of your specific niche.
So, Do I Need Marketing?
Bottom line, this is important because marketing is one of the most important things you’ll do. It will be critically important to the success of your company. You may not need to have a single agency to do it, but you will need to get the word out—in a memorable, compelling way.
“But that’s not true!” bleats one member of the audience. “I hear that Gen Yers are so cynical and jaded to marketing that it doesn’t work anymore. I hear we’re moving into a post-advertising future.”
LOLOLOROFLCOPTER. No. Sorry. In 500 years, when we’ve all enhanced ourselves to be perfect physical examples of the human species, immortal and all-knowing, or uploaded ourselves to the grid, or devolved into a dystopic hunter-gatherer existence that can only communicate in leet-speak, there will be marketing. There will be ads. You can bet on it. And the successful companies and organizations will know how to use it effectively.
It’s true we’re moving into a different ad regime, though. Gen Y doesn’t like screamy, shouty, “This is the biggest bestest most amazing product in the universe, it will transform your world, and happy bunnies will follow you wherever you go.” Because words like “best” and “amazing,” and “super,” have been overused.
Gen Y, in general, wants to know more about the nuts and bolts. Spare the superlatives. Give them the facts.
But, you know what? Whether it’s an AMA on Reddit, a post on smokingmeatforum.com, or a banner ad on Gizmodo…it’s still advertising—and still marketing. If you, as a company principal, can do some of the marketing basics, it might be enough to save you from having to hire an agency.
If you can’t, shop very carefully, ask a lot of questions, measure everything they do, remember that you’re not a Rockefeller, and remember this short advice:
1. The most important thing is your website and e-commerce system.
2. The second most important thing is how they work on mobile devices.
3. The third most important thing is press, and by press we mean mentions and articles both online and off, in and out of the niche press.
4. Online ads are probably next, but make sure you can track all the way to a sale. You’re shooting for a cost per sale that’s less than the profit on the sale. Don’t let them tell you anything else.
5. Everything else comes after: shows, brochures, t-shirts, lifesize figurines of your founder, skywriting, heat-activated urinal billboards (which are actually a thing), sponsoring your own events, laser-blasting your logo on the surface of the moon, etc…
Marriage and Writing
Okay, one more anecdote, and then we’ll move on to the founding of Schiit. Which wasn’t called that at first. Actually, it had no name. But I’m getting ahead of myself.
During my time at Centric, I built it up to a big, successful, multi-million dollar business. We did very well. Not bragging, just facts. And, one day, I sat back and wondered, What’s next?
What’s next turned out to be Lisa, AKA Rina, my wife of 13 years. Would I have started Schiit 9 years earlier if I hadn’t met her? Probably not. But she challenged me enough to keep pushing, keep expanding what I could do, that she certainly got me into the right head-space to start something new.
It started when Lisa and her writing buddy, Jen, announced they were going to write a book and get it published. This was 2002.
Now, I’d done some writing in the past, and I had even sold a couple of things. I knew how hard it was. I had written dozens of stories, and never really gotten anywhere with them. So I muttered something vague and wished them good luck, and figured that would be the end of that.
Eight months later, they had a book contract.
I couldn’t be outdone, so I pulled out the computer and started writing again. The end result is my own three novels and about 30 published stories, as well as a 1st place win in the Writers of the Future contest, being a finalist for a Theodore Sturgeon award, and twice a finalist for a Sidewise Award.
The point is: I had this capability all along. But I didn’t do anything about it until someone (figuratively) kicked me in the butt.
Who’s going to kick you in the can? When will you do your writing, or company-building, or adventuring, or whatever you want to do?