I promise you that in a decade, 15 years max, brand, your brand is going to be the only thing that matters besides the quality of your product, everything else in the middle, will be commoditized. And as. (hip instrumental music) You got your perspective. I just want to be happy, don’t you want to be happy? Super excited to be here. There’s a lot of a lot of things I like to talk about.
First and foremost I’m going to spend a couple minutes to create context of my background, because I think it will really resonate with the far majority of this room by growing up in retail and thinking about customer account and average receipt size and things of that nature. When I got into the media landscape after building a very large wine retail and e-commerce business, no question, the sector or one of the key sectors that I’ve always felt closest to is this space. We’ve had the luxury at my advertising agency, over the last decade to work with a lot of fast casual QSRs have invested in a lot of that space. My business partner Matt Hagen’s who’s on Shark Tank and with RSC does a ton in the food space so this is, this is very, you know, it’s funny, I can always feel my own chemicals, I feel so cozy this morning in this room, because I think a lot about the stuff that I think a lot of people here think about, and more importantly, I think the thing that gives me the great privilege to be on stage right now is I’ve historically thought about the end consumer, in a way over the last 20 years that has allowed me to have hypothesis and opinions and executions that haven’t seemed as obvious to the people within that sector, and then has had, you know, historical correctness, and so I sit here today at this conference very excited because I believe that we are living in a very interesting time of society and consumer norms, completely and utterly predicated on the fact that the internet is now mature, but you know when I look around this room.
There’s a vast majority of us that actually remember our lives pre-internet. You know, I went through all of high school, you know, up to 18 years old spending less than 15 hours on a computer in my entire life. I probably spend 15 hours on a computer every day now with my phone, and so the biggest thing that I want to start this conversation with is the following. Please understand that the internet is now only about 20 to 25 years old as a consumer product, and is now hit scale in a way that I believe the far majority of this room is under estimating, not only the way consumers consume information to make decisions on purchasing your products, but more importantly, I would be flabbergasted if this room isn’t already trying to anticipate things like Last Mile, things like Cloud Kitchens, things like that are really going to impact this room, all of which leads this to one very large conversation around, really, the elephant in the room which is the internet eliminates the middle.
That’s what it does by nature, the internet is actually the middleman, the middle woman. And over time, every industry and sector will feel that, I actually am really excited to be here this morning because what my speeches tend to do is reach one or two individuals in a room like this to actually change behavior. And the timing of this talk reminds me of two significant talks I’ve given in my career, from a timing standpoint, four years ago, at a retail conference and six years ago, believe it or not, at the Black Taxi and Limo Conference, and one, obviously, as you can imagine was me talking six years ago about Uber and watching the collective naivete and audacity of the room on how much it wasn’t going to affect them versus how much it ended up affecting them and then four or five years ago trying to get people to understand that the growth of direct to consumer purchasing at the retail level was really on the cusp.
And again, because the internet had been around for a while, and Nordstrom had a dot com for a decade, and things of that nature, the room really misunderstood what has transpired over the last three years, which is why we’re seeing so much disruption at the retail level, because the cost of goods, in actual real estate and the COGs to operate a retailer that has 100%, you know brick and mortar with an emerging dot com four or five years ago was a humongous vulnerability, compared to consumer behaviors, let it be very clear for this room and I know it is already, even though I don’t think it’s sustainable with the delivery services with the economics both for them and for you.
I think you all understand that the consumer wants in a certain way, the consumer doesn’t care how we spend our money on our locations, or where, consumer cares about what consumer cares about. The only reason I think I’ve been successful in business is I’ve never had a day and this is natural DNA, this wasn’t taught this is the luck of the draw of how I was created, there’s never been a day where I’ve ever thought about what’s in it for me with my businesses. Every single thing I think about every day is, what do they think, like why is that good for them, what are they actually doing. And so, let’s break that down. Right now, there’s a couple things I believe in that I highly recommend the majority of this room gets much more serious about. Prepping for this, understanding some of the companies in the room both, both the emergers, and kind of the iconics.
One thing I can promise you is that an enormous percentage of marketing money being spent in this industry, franchisors, franchisees, self owned, brand level, an enormous percentage of the money is going directly in the trash. And I think, thank you, thank you mom. (audience laughing) This is happening in the macro. This is happening in every industry. And so this isn’t some wild different thing that’s happening in our sector, but it is shocking to me and as you guys know, as private equity has rolled very deeply into this industry, because I had a lot of street cred and relationships in that world, I’ve been looking even deeper at, you know, the dollars being spent and it’s and it’s scary, let’s actually play this exercise. It’s a good fresher upper in the morning, get us moving a little bit. By show of hands, how many people in this room, now, when they watch television, mainly watch Netflix, Hulu, Amazon or if they’re watching a network show, it’s DVR-ed and they’re watching it on their time.
Don’t be lazy, raise your hands high, raise them. Okay now I need you to keep them up, please keep it up because I see some of you dropping it, please just for me. Everybody in the front, look because everybody just kind of look around. I think we can all agree that this is not a 14 year old girl crowd, right? You can put it down. I just want everybody understand what just happened. 90% of the hands just went up, which means 90% of this audience isn’t even capable of consuming a commercial, isn’t even capable.
For the rest of us who during live sports or during the 10% of hands that went up, I think we can all agree that the second a commercial comes on television, we all grab this and do something we actually want to do in those 30, 60, two minutes, during that time, billions of dollars are being spent on TV commercials and in 2020, nobody’s consuming them. Super Bowl, on the other hand, I would argue, every, if I actually knew your business and knew your budget, if you could afford it. I would spend there first before all the things I believe in on Instagram or Facebook or YouTube because you get 100% consumption by the American population. So, this is not a digital versus traditional argument. This is why do we not market with common sense in a 2019 environment? We live in a world where a lot of the justifications at the highest company levels are completely and utterly predicated on reporting potential impressions, you know, Millward Brown and Nielsen, reporting, just complete and utter elimination of common sense.
We’ve now, this is, and by the way I stand up here with no hypothesis, we have now run multiple AV tests with multiple QSRs and fast casuals where we run Facebook and Instagram isolated on content, and then we run remnant TV, direct mail, and radio, and it’s not even close. The problem is, 99% of companies have not taken the time and effort to actually do an honest A B test. At the highest level somebody makes an arbitrary decision, one way or the other, or more importantly, and this is very important for this room, if you leave with anything hear this very carefully.
It is wildly easy to waste a ton of money doing digital marketing. This is not blanket statement. I watch people, I believe that Facebook is so grossly under priced for 45 to 90 year old Americans, and you can run incredible arbitrage on traffic results, whatever you want, but I watch people every day waste $100,000 on Facebook and get no return. The ROI of an execution is predicated on your talent, not on the platform. You know the ROI of a basketball for me is negative, I have to torn meniscuses, the ROI of a basketball for LeBron James is billions of dollars. You know, this is very interesting times right now. So, number two, when we start getting into the digital conversation, the thing that I think disproportionate changes the outcome of people’s businesses in this room.
The reason so many people are struggling within that environment, is they don’t realize that it’s the creative, that is the variable of success. People are so caught up right now in the digital and math environment, and they think about the, you know, way that we can target or the digital money that we spend against amplification. They don’t realize that the single piece of creative, or the creative that they’re putting out is the variable of success. I’m running ads, I’ll give you an example, I sell sneakers in a JV that I have with K Swiss, there’s an ad I ran on Instagram where by changing the adjective, excuse me by changing the word hustle to work ethic, the conversion the cost of acquisition went from $77 to $22. We’re talking about changing a word in the sentence.
Most people running a single piece of picture, across all these different platforms, or video, and expecting results when the reality is , what we’re living in right now, if you leave with anything, whether you do it internal or you do it external, if you are a company in 2020, and you have locations, like most of you do, if you’re not producing 50 to 100 pieces of content, a day for Twitter, Facebook, Instagram, YouTube, you are leaving so much uncomfortable opportunity on the table. Yet, I would argue because I did my own homework, that there’s not a lot of companies in this room that made 100 pieces of content in a year for these platforms that are different.
They might have posted 100 times but they posted the same things. So, there is an enormous delta of opportunity. (iPhone ringing) Hey guys, sorry to interrupt your video. I’m just giving you this call from my number to let you know that you have to join my text community. 212-931-5731, hit me up with a text. One thing that this room has to ask themselves, is the following. Are they sales driven organizations, or are they brand driven organizations. So many people here, and with a great sponsor to introduce me, I love sales, I love Google, Google’s great. Somebody’s typing in they want a burger in their local area, like it’s nice to show up, it’s good to show up. That’s sales, let there be no confusion. There are so many people in this room that are wildly missing the delta between a sales and a marketing organization. And marketing and branding always gets destroyed by CFOS and short term operators. Right, nobody I mean, this is why it’s fun to deliver keynotes like this and have lights on, seeing the reactions we all know. Nobody’s got the patience to let marketing play out.
We live in such a quaint, every 90 days, kind of environment. If you’re lucky on 90 days. The reality though is if you look at the businesses, the brands that people are baffled by, I see my man from Ann Pizza or Kona Ice or all these things that people are just surprised that it’s doing so well. They are dramatically more brand driven than they are transactional. I mean I’m just fascinated by our inability as a collective to understand that and create new ways to measure businesses, to create new ways to measure success. So for me, the biggest thing is very simple. We’re living in a time where this device controls our consumers’ every move. You may not like it personally. I watch people every day and executives every day make business decisions based on how they socially want the world to be. I don’t have a whole lot of emotion that kids don’t go outside and play like we did, because we’re old now. Like that doesn’t really drive me. I’m unemotional about my ideological nirvana, of how the world should be.
I operate, when I put my business suit on, which is not necessarily a suit. I operate based on the reality of the consumer, not the way I want it to be or what got me here over the last decade. My dad’s liquor store was built on direct mail and full page ads in the New York Times. Over my success people think I did it with social media and I did and it mattered post game, but I built a very large business, I built just for context for the business people room, my dad’s liquor store was doing $3.3 million in revenue on 10% gross profit.
Shoppers discount liquors, he meant it. Right? 3.3 on 10% gross. I took that business in a six year period from that to a $62 million a year business running on 27% gross profit, without a credit line, and with no cash infusion from BC, or private equity. How? I mean every marketing penny work like a dollar. At first I figured out how to do direct mail in the way that I’m telling you to do social. What I figured out as a child, in essence, was that if I made seven different flyers that were more contextual to the addresses in New Jersey that I was sending, that if I sent high end wine to Short Hills, it would do better than if I sold every day wine to Middlesex, it would do better. My cost of the creative was higher, and my dad and everybody else made fun of me for it because you should pay as little as possible for the print, the postage cost the most.
But what I even understood inherently then as a kid was that the context of the creative mattered, not just the ability for them to see it. So my conversion rates were dramatically bigger. That led me to the biggest nirvana, which was in 1997 I started a very significant email newsletter because that was a new phenomenon. How many people here were on email in 1997? Raise your hands, just curious. So for the hands of the room, for the youngsters in here, let me tell you about us who had email in 97. We read every single email. Remember that? It was new, we read it, we treated it like actual mail. How many people here are close to their email marketing or have done email marketing in their career? One more time. Great, ready for this, 90% open rates.
90% open rates in 1997. bBt like I know the sun will come up tomorrow I know that marketers ruin everything. And I spent the next decade ruining email and taking that from 90% to 30%, because you know at first it was five days a week email and that was incredible and then one miraculous day a year or two in I was driving to the store and I’m like people read email on Saturday. And so we added the weekend, and then the breakdown fall of 2004, when I decided people read email twice a day. And we started emailing twice a day and you know exactly where this story goes, and so learning the pattern behavior with that, when Google AdWords came out, the day it came out, I bought ads and I owned the word wine for five cents a click, for a month before Google made a 10 cents floor, and before anybody even knew it existed.
Because I understood context, I was then also good once everybody came in buying Silver Oak 1994 Napa Valley Cabernet, and those are my conversions at five and 10 cents. That long tail contextual mentality is the biggest thing that’s missing from marketing today. The number one reason most people in here are wasting most of their money is A, they’re distributing it somewhere people don’t see, which is whether remnant TV direct mail, you know, print or see it at a cost that’s effective in comparison to their business, or two when they go digital, they go vanilla. It is so easy to make a piece of creative that targets an Asian American within a one mile radius of your store, and actually have Asian Americans in the creative. It is easy to contextualize your creative, you have to go in a different mindset, you have to put the dollars into the creative not into the media amplification, that is against old best practices of the last 50 years of marketing, but that’s because the last 50 years of marketing were a television down mentality, and now we’re an internet, consumer first up mentality, we must create relevance, not potential reach.
We must create relevance, not potential reach, you have to tell me why. You put something about the New York Jets in your creative, I’m going to eat your hamburger. You mentioned something that we beat the Cowboys, I’m in a real good mood, right? Today, contextual. The speed in which that kind of creative, to get consumers to do something is not inherently native to this industry. As a matter of fact, it’s not inherently native the most industries, except the emerging direct to consumer brands that live mainly on Instagram today.
Now, those businesses are vulnerable because they’ve raised so much capital, they’re willing to overpay for their customer and they’re actually underwater, something that most of us don’t have the luxury for. But because of that they become lazy and they also do not make enough contextual creative, because they can afford to buy somebody that’s worth less to them. We cannot. However, what really is fascinating about actually taking this consumer centric approach is this doesn’t just matter in marketing. For example, I’m dying to know in this industry, when it’s going to figure out that every late afternoon and every evening it has a very interesting expiring piece of inventory that can be converted in massive customer acquisition.
If I owned one of the businesses in this room, the plan that I would have around food that we throw out as an offense to surprise and delight my local community and customers and record those surprises and delights, and amplify that creative would be at the top of the things that I would do. You’re talking about an asset, you’re talking about an asset. What we don’t have as a mentality of creating and campaigning and making ideas live, fast, recorded, and amplified. But we live in a world where everybody in this room has an asset that is expiring every night, and having the speed in which turning that asset into a surprise and delight moment without undermining the core product, so that people wait for it is an incredibly delicate and important strategy that I highly recommend people debate on.
Very simply to make it literal, taking whatever product you sell and driving it somewhere that evening and giving the high school football team the product before the game and filming that reaction and then posting it on Facebook and targeting the local area about that moment becomes the emotional trigger that makes somebody consider your place that hadn’t before. It matters. The other thing I’m fascinated by is menu items. I’m fascinated by the math around that first item that drops off, that isn’t core, that you’re always trying to figure out if we can get one more item to the core, what that means to our economics and the ability to create marketing around that sixth, seventh, eighth item.
When you go away from making one vanilla brand piece of content to a world of thousands, all of a sudden your onion rings strategy creatively becomes a real game. Very, very, very, important, very, very opportunistic. This leads me down a path that I’d like to get the people in this room to think about which is the following. If you do not understand that you are a media company first, comma, then a fast casual, then a QSR, then a restaurant business, you will become very vulnerable. I believe what you’re seeing happen in society, politics, social issues, everything, it’s happening in front of your face. What’s happening is communication is the number one, two, three, and four things that matter. I believe pretty executives in this room that what I’m talking about right now is not the kind of thing that you go and hire an agency for or put your niece in charge of. This is something you yourself have to spend 50 to 100 hours to deeply understand because I believe being able to communicate in a contemporary fashion continues to grow in importance on the outcomes of businesses and is now as equally as important as being able to pay your taxes, balance your checkbook, and breathe oxygen within a business environment.
I believe that marketing has now become an operational function that if you really look at what’s happening, it is unbelievably impossible to be successful without having your comms strategy tight, strong, and remarkably effective. I laugh at the old adages of, like, you know, I think it’s David Ogilvy or whatever it is, that the old adage of marketing right, we spend all this money but 50% of it I waste, I just don’t know what 50%. That makes a lot of sense to me as now as a historian of the marketing world, the television, print, radio, that makes zero sense in 2020. I know where every penny does everything about everything. And more importantly, this is not a sales and conversion game, this is a branding game. Let me explain what I mean by that. Another tidbit that I would love for this room to leave with is the following. The biggest mistake that people make when they do digital marketing is they think of it as a sales channel. A lot of people go into deal mode, or conversion mode, to prove its ROI, and what they’re doing is they’re hurting their brand, and they’re training their consumers to buy their product on a cycle which hurts all of our collective margins.
If you look at what I do with my content or what other successful businesses are doing. I’m treating social as a branding platform, not as a sales platform. The content I’m putting out there is to build brand, not sales. That is a very unique execution that I’m seeing in the marketplace. Too many people look at TV, or naming rights, or putting your company’s name on jerseys, or whatever it might be as the branding play but digital as the lower funnel sales play. The rep, you know the thing you take away from the deals that you would have done on print or direct mail.
I believe that is a huge vulnerability and that what people need to understand is the only way you’ve ever built a brand in society is you have somebody’s attention, and then you tell a story. The attention is very clear where it is. I want to remind the hands that went up here. Television commercials are the most overpriced way to communicate in today’s society. I understand that it dominated, I loved it too.
I’d be thrilled to do it, it’s, by the way, I wish I was growing up in the 60s and 70s. All I had to do was convince you to do business with me, and then it was easy, one 30 second spot. Piece of cake. You know how much more fun it is and how much more profitable it is for an agency to do a 30 second spot versus doing thousands of pieces of creative. It’s a lot easier. The problem is, it’s not where the consumer is today. And now I’m going to segue into the real elephant in the room for me. When this came out, I ended up making a lot of money. This came out, and I said the smartphone was going to be the most important thing ever. I wish I was making content back there because a lot of you will admit to yourself that you thought this. When this came out almost every single business friend that I had told me it would fail because the BlackBerry was so goddamn good. That they couldn’t feel the buttons on this. And they got so good at blackberry didn’t even have to look anymore and they’ll never give up that Blackberry.
What I know is that technology always wins. Always. There is a looming technology in our society that I think is going to be an absolute tidal wave to this industry. That technology is the first platform since this that I believe I’m taking as serious as I took this. This came out, and the first three companies I invested in in 2007 and 08 were Facebook, Twitter, and Tumblr, it obviously changed the course of my life. Today I sit as a snake in the grass like I like to waiting for Alexa, Google Home, Apple pod, or whatever voice AI device actually wins our society norms, to actually hit scale. How many people here have a Google Home or an Alexa, raise your hands. Now, this is great. Now, as all of you know because the majority of this room does have one. Right now, that device is very similar to the first year two of the iPhone. To remind everybody about year one on the iPhone and the App Store, the number one app for a long time, was the app that looked like a beer was on your phone and you drank it.
I think people get caught by technology, by not understanding how it usually works. I think we can all agree right now that Alexa and Google Home were for the most part treating it pretty basic. We’re asking for some music, our kids are doing some stuff, but this is not the most important thing in your life right now. However, I argue much like what evolved with the iPhone, that the device in the home is going to accelerate over the next decade in a very significant way, that when you start realizing that your Google calendar is attached to your Google Home device, and you can just tell Google to schedule a dentist appointment, and it will understand what the perfect time to schedule it is, and reach out to your dentist and slot it in, very quickly over the next decade, we will get very used to the number one thing we have chosen forever, which is why last model and delivery is becoming such a big part of your business, which is convenience is king. I don’t have to tell this industry with drive through, or what the nature of a lot of this industry to begin with versus clicking at home, convenience will always win.
The convenience structure of the voice device in our society is going to be a very big deal. And more importantly, it will lead to the thing that I care about the most which is in a world of voice, the only thing left will be brand. When the UI is no longer visual and it is audio, only brand will succeed. Let me explain. It should be everybody’s great fear in this room that an eight years, if I’m sitting in my living room and have decided to order food, if I say, Alexa order me a pizza, Alexa, order me, chicken, Alexa order me a burger, you better damn well spend the next decade, making sure what comes out of my mouth is Alexa order me a Shake Shack, or a Five, or an And, or a Kona, you better get there, because you do not want Alexa, and Google, and Apple deciding which pizza, which Chinese food, which pancakes I get delivered because either A, the cost of that toll booth will be so great that you will not be able to afford it, or B, and far more likely B, it will send to me, the company that they have financial vested interest in because they own it.
I believe over the next decade, we will be in a place 10 years from today, and real quick how many people in this room are retiring in the next five to seven years, and I don’t mean, you’re going to crush the execution of your company and flip it and buy an island. I mean, I mean you’re just fucking old and you’re finished.
Okay, got two, or three, four. Okay, so for the four of you that enthusiastically raised your hands, five, you can take some of these thoughts with a grain of salt, other than I do believe there’s so much opportunity right now to spend your money more wisely to get customers in, but for the rest of you, I highly recommend you pay attention very carefully to the last three minutes, and the next two which is the following. I promise you, and I’m saying this not to do anything other than because I know D-Rock is recording right now, and I’m going to air this in 10 years on whatever the Instagram of the day is to say I told you so. I promise you that in a decade, 15 years max, brand, your brand is going to be the only thing that matters, besides the quality of your product.
Everything else in the middle will be commoditized. And as you know, the margin, and the subjectiveness around the quality of your product is very uncontrollable. There are people that prefer a White Castle over a $35 burger. So that’s subjective and very marginal based, what is not is your capability of building a brand that comes out of my tongue. If you do not go 100% in the mentality of building brand, you will be uncomfortably vulnerable. The cost of entry to be in your space is about to collapse because of the virtual kitchens at scale. People will build brands and market and everything else will be a commodity, they will. And that’s the truth. And so I highly recommend that this morning, we really get serious.
I come to every speech the same way which is I’m so flattered to be there, I’m so humbled to be compensated the way I am, I’m desperate to bring the most value. And the way that I know how to do that is to put the truths that are actually happening in the system and are obvious to me on a plate in front of the audience, I know that 95% of the people do nothing about it. But I am telling you right now, for the 5% here that will consider it, here’s the formula.
Here’s the prescription. You have to become some, you, you, have to become somebody that knows how to run ads and makes pictures, videos and audio on these 10 social networks, from LinkedIn, Facebook, Twitter, YouTube, you, you have to understand it cold. You cannot outsource this, because how will you hire people or hire partners to do it if you don’t know how to judge it. One of the great things of growing up in retail was I did everything. One of the great things about Vayner Media is I didn’t know that strategy, and creative, and account, and media were separate functions, I did them all for myself. I love the feeling of waking up every morning knowing if everyone quits I know what to do. You cannot be in this room today, and have people quit and not know how to communicate and market your company. It’s over, the cats out of the bag. It’s what’s left.
And so, all that effort into figuring out the perfect location because of traffic and all that arbitrage, or the decorations of within, or all those things, they still matter, but every second that goes by they matter less, and the ability to know how to run an Instagram swipe up ad for $3 CPM within a four mile radius of your store against 44 different pieces of creative to make all those citizens feel contextual to then convert into traffic and higher receipt spend, that matters more, and will continue to. If you don’t have a Tik Tok, and LinkedIn strategy for your restaurants right now, you’re making a mistake, because they’re the two places that have the most organic reach, where you don’t even have to pay for media to build awareness. Both seem wildly crazy for this sector based on what they are.
LinkedIn has historically been a B2B recruiting place which has now become really Facebook 2012 and Tik Tok everybody thinks is just for 11 year olds, just like we used to think Facebook was only for college kids. Don’t even get me started on the fact that the 12 to 14 year old girl in a family, usually influences the mom’s buying decisions, and she’s the one that actually buys for the whole household. Please let’s get more thoughtful, please understand where this is going. If you have not committed to truly acting like a media company, producing content at scale, your competitor will. I’m seeing it already. And when we really get at scale of the infrastructure that allows me or anybody else to compete, without all the upfront costs of locations and decorations and all the other variables, it’s going to get very competitive really fast.
Please do not do what a room full of retailers, and a room full of taxi and limo drivers have done in the past, please do not take this talk for not the seriousness that I come with. And by the way, I have no interest in being Debbie downer. This is more of change your strategy, understand what’s happening, you have plenty of time. We’re not there yet, but don’t do what everybody does, and use that time to be passive and hopeful, a strategy of this never works. And I know this room is smart. I know you don’t want it to happen. I don’t want anything, I don’t want every winery to ship their products direct to consumer, that’d be bad for my dad’s business, but I think they should. If you’re capable why not keep all the margin? I know you don’t want it.
The problem is the customer does. And that is the rub. Thank you. (audience clapping) – I’m freaking old but I’m not finished yet. So, in your app, if you go to the Gary, (stammers) Gary session at the very bottom, they’re going to have a Q&A, we’ve already got questions coming in there, please add your question there and we will go from there. We’ve already got several. – [Gary] Let’s go. – Gary, what do you think of Bitcoin and blockchain and how is it going to change the world? – So I bought Bitcoin in 2014, so that was good, I wish about more. I think blockchain is the one technology in our society that I’m aware of that has the ability to be as big if not bigger than the internet. I also think it’s super far away. I also believe that America, Russia, and China will do everything in its power to not let it hit scale, because if you really understand the technology of blockchain, it cuts everything out of the middle including government.
And I think that it’s a very exciting technology, it is the acceleration of the internet itself, because what the internet did was allow the Facebooks and the Googles and the Apples to be, in essence, the middle, and then everybody else is the tollbooth collector to their toll booths. But I think it’s going to be a big technology but I think it’s gonna take a very long time to manifest. And I think a lot of money will be lost in cryptocurrency because just like search engines and browsers, thousands died, one or two emerged, but I think it’s going to be here.
I don’t think it’s something, look, the things that, even the fact that I talked about voice is not what I normally do, I tend to talk about do LinkedIn and Tik Tok right now. Buy influencers on Instagram still, it’s not over it hasn’t even started. It’s like that tactical. The reason I wanted to bring up voice today even though I think it’s five or seven years away, is because it leads you down the inevitable path of why brand creative is what I want you to do, not transactional. – From Aaron, quality or speed, if you can pick only one what would it be? – Speed. Speed’s not subjective, quality is. – [Host] Simple enough. – It is, it’s very simple. I live with it every day. What is quality creative, is what, you know, like people, like my senior creative’s like well this isn’t quality. I’m like based on who, you? Speed is non-debatable, quality is, until it hits the market, and then you could see if its quality.
Hence why a religion around 1000 pieces of content, let the consumer show you what’s working, not your audacity. – Sally asked how will this changing environment affect supply chain management? – To me, Sally, you’ll appreciate this, I haven’t spent a whole lot of time on supply chain management. Obviously there’s technology advances. I am, as you can see I speak with enormous conviction around what I’m passionate about, which is I spend 100% of my time on consumer behavior, what customers are doing what they’re paying attention to, how they’re acting.
I just haven’t spent enough time to give a great answer on that. – What would book, besides your own, which I basically have here, so that, but besides your own what book would you recommend, or what source should people go to for information on social media efficacy? – I’ll give you, actually I wouldn’t even read, it depends on, like I would never read my own book because I don’t learn by reading books, I so, I think you have to first be self aware of how you learn, but I’ll give you a website that will crush this for you because you could literally type in what does a 10 location hot dog business do on LinkedIn like it’s incredible, I’ll spell it for you G, O, O, G, L, E, dot com. I believe that Google for the inevitable questions in this room are remarkable.
If you literally typed in tonight how do I run ads on Facebook to raise average transaction spend, you will actually get results. And then you can decide if you’re a good reader, or if you’re more like me and will watch a video, the free information on the internet is always better than a book in my opinion because it’s contemporary. I wasn’t, you know, what can you throw my last, my slide? I want to show you guys something that’s very interesting, my last book, Crushing It, which came out about 18 months ago 24, I don’t really know, two years. Nonetheless, if you look above it, it’s got a bunch of logos, that’s Instagram, Snapchat, Facebook, Twitter, podcasting and YouTube. If you look at that book which is only 24 months old, I’m talking about the real blueprint of what you should be doing, yet, LinkedIn, and Tik Tok are not in it. Yet, it’s the only thing that I want most of you to do right now if you don’t want to spend money.
So, to answer that question, one of the things, like, again, I day trade attention. I believe most people do marketing like they buy mutual funds, they make a decision and then they go to sleep. I’m making decisions every day, every day, you know, Instagram’s organic reach is clearly starting to decline. So this golden era of four, five, six years of Instagram, I believe is now starting to look like what Facebook did a couple years ago, I have to, I’m day trading, because the customers living every day, every day, a new competitors popping up against you, every day, a new diet reports coming out, this is an everyday thing. – From an anonymous caller to our channel here. With all the focus on AI and convenience, third party delivery, etc.
What in your opinion, it just moved on me. What in your opinion drives someone to get out there, get out of their house or office, and come into a brick and mortar? In other words, what’s the most important to the experience? – Convenience. Like if your locations happened to be right outside my office and I want to go, like, convenience is still king. Experience, I believe that all of us, you know, and I say us because my family has a retail business like are going to, I’m trying to, we have this huge two story wine shop, and I’m trying to convince my dad to turn the second floor into something completely different, because you need some rationale for somebody to come.
Look, people are going to continue to go to places and eat. My problem is, I’m worried how the math plays out based on the costs you put into that. My point to the retailers was people, guys, gals, people still shop, the square footage costs doesn’t make sense in 2019, like it did in 2010, right? So it doesn’t take a lot of behavior changes for you to be underwater on your COGs.
Not complicated. So convenience, so I still think that will matter. And I think uniqueness. I believe will be a day where you charge for less than the food in your place than you do for delivery, because you’re going to try to hack them coming in. And that’s going to create even more friction and so like there’s so many of these, like, you’ve got to be consumer centric this is what they want.
So now how do you do that. I believe that it’s convenience and I think it’s about programming. I think a lot of us are going to get into program, listen, people want to go out. People want to go out more than ever. People want to go out to show that they’re out, you’ve seen the extreme like dessert places that are doing well, because their locations are doing well because people want to take a photo and put it on Instagram.
People are hiking more than ever. They don’t want to fucking hike, they just want the photo. So I say use the psychology of consumer behavior. One of the things that I would highly recommend is create one new item on your menu that is so ludicrous looking that it makes people take photos, which is the real reason they come to your place. I’ll tell you another thing about doing content every day. I started something that I want all of you to steal called What If Wednesday. I think every business here should start something called What If Wednesday, and you make up a food product you don’t actually sell, draw it up, or actually make it if you’re capable, put it out, see what happens. Now you’re doing R&D on menu items at a very low cost.
This is about ideas and making things. – For brand cultivation, how do you navigate the current politicization of the media? – You know, look, I think America is on full tilt, we’re separating at our seams and you’ve got to be thoughtful, you’ve got to recognize that if you enter into that fray, half your customer base is going to go on tilt. That’s how you navigate it. And if you feel compelled that that’s what you need to do for your for you as a human, you’re more than welcome.
I jump into certain things, I stay out of other things, you know, as we’re seeing with the NBA in China, you know like, they’re very passionate about some issues, they’re going the other way on when it hits their wallet. Like you know this is real life. This is real life. So my advice on this is very simple. You do you. You know what you how you care about your life, your family, your legacy. Recognize that history will look at all of this, so you’re gonna have to talk to your grandkids one day but at the same token, you can’t be ideological about this. We are at a point right now where we are completely in half.
And if you go hard on something, half of it will go the other way. And that’s fine, that’s happened before. You know, I recommend everybody doing more history lessons on the Vietnam War, and how businesses navigated during that time and things that nature, obviously with social there’s more amplification, there’s more instantaneousness. This is not a place, this is a place, much like everything I said, I’ll be very frank, I’m actually going to say something funny to you. I was about to say, look, I’m not trying to impose, I’m trying to observe, not saying what’s right or wrong, no different than what I just spent the entire keynote on.
Ironically, the best thing that could happen for me selfishly is none of you take any of my advice, because all of this is just one stream, and if you start running ads and you start doing creative, the cost of my content goes up. And that’s my biggest point. I’m very worried for SMBs and midsize businesses not realizing what comes next, which is the following. When Coca Cola, and GE, and Ford, and the biggest companies in the world really realize what’s going on, and they shift their budgets really here, the cost of getting in front of people is going to go up exponentially.
It’s what happened on search. It’s really good for us early people, and then the big companies got in and all sudden 10 cent words became $14. – Somebody’s reading our minds out there. You’ve got 2 million to spend on media and creative. How much would you be spending on content creative? – That’s a great question. I need to, you know, I hate blanket macro stuff but let me say this, way more than you think. I probably be, just on sheer starting the conversation. I’m far more in the 30 to 50% than I am 20% and below. Content is the variable of success. The media when bought right, here’s where I’m passionate, I believe most of the companies are overpaying for media both in programmatic digital and with traditional.
I think there’s a better way to buy it in day trading on marketplaces, on Facebook, Google, YouTube, Instagram, Snap, all these things, LinkedIn, right? So all of a sudden I’m saving you, I’m actually getting in front of people versus potentially getting in front of people, which then I can take that savings and make a lot more contextual creative. and instead of making one vanilla piece that cost 35,000, I can make 887 that costs 35,000 and scale, scale, scale. – Internet trolls. – Yep. – Ignore, engage, provoke, or let your fans deal with them for you? – First, with internet trolls, the first thing I deploy is empathy, because if you’re a human being that is actually taking time out of your day to consume something, and then spit venom, you’re life’s fucked.
Number two, I think you should engage it. I engage trolls, I feed my trolls, because I don’t think of them as trolls. I think of them as dissenting voices that can show all the consumers where I stand. More importantly, first you have to look in the mirror and figure out if they’re right. Very early on I had a soup client, and it was 2009, if you remember early Facebook, if you posted something on a person’s page it would show up like a wall like old MySpace, and they posted pictures of animals being caged that they were using for their food products.
And I get this crazy email that I have to be on, you know they just started social, this was all so new, and I’m on the phone with the board and the CEO, and they’re like you have to fix this. And I’m like, no problem. Let me ask you some questions. Number one, is this true? Yeah but you got to fix it. And I go, I can’t. It’s not how the world is going to work anymore. So, um, I don’t look at it as trolls, I look at as, you know, listen, when people are saying egregious things that make no sense, you don’t need to engage, but if people are complaining about service, or people complaining about something didn’t taste right or things that nature, I think it’s actually very smart to engage, so that everybody else can see that you’re listening, and you stand by your product because when you’re not replying or deleting and hiding.
You’re always one screenshot away of deleting a negative comment, becoming a much bigger story than the fact that somebody didn’t like the tomato soup. – [Host] You’re a strong figurehead for your company, a social media voice. Question is can explosive success be achieved without a human person representing the brand? – Mainly it does. Very few companies actually use a CO for her him to be the face. There’s, almost every company doesn’t have a figurehead. – Would you have any advice for executives in themselves approaching social media for helping out their company and sales? – First be self aware. If you’re introverted and you don’t like it, and it’s not your scene, you don’t have to do it. Second, if you have gift of gab and you like it and you love people, you should do it, but recognize that you have to spit 100% truth at all times, or you are vulnerable.
– [Host] What should a small independent restaurant post on LinkedIn, and this also could be referred chain restaurant. – Yeah, I mean, look, LinkedIn is crazy organically right now. Post, I always think about it this way, post something that brings people value. So, if you’re an independent restaurant, there’s a lot of things that can be value. Your head chef is funny, and you could just videotape her or him. You could show how you make your product if you’re proud of that.
And now you get into the recipes and making business, you could talk about local stuff. I still believe most of you should be the mayor of your town on Facebook and LinkedIn. Where like, ready, one store location in Kansas City, that posts on LinkedIn or Facebook about the pothole on Main Street, and everybody rallies around that laugh, which then leads to them maybe fixing the pothole at night with their employees, and now becomes a localized event. So, so it doesn’t have to just be about your business, it has to be part of the community, much like restaurants have always done a good job with, the same reason that you sponsor the softball team is the same reason you should make content about how awesome the principal is, or the pothole, or blah, blah, blah. Media company, remember, I know it’s heady, so I keep trying to reinforce it.
You’re a media company, comma, your a restaurant. Now all of a sudden you can talk about sports and weather. You’re the news, you can be. You really can. And of course if you can do it about your recipes, because you’re, you’re so proud of your products, that’s going to lead to success. – How do traditional marketers shake it off, is their conversion therapy? – Yes, I think it’s a side hustle. If you’re a traditional marketer and you’re like, I just, I would start a side hustle of buying some product and trying to sell it on Shopify and Amazon and running ads on Facebook and Instagram to then taste what it really works like.
Side hustles, where do you force yourself to play small because you’ve always played big, and you’ve lost touch with reality and you’re in theoretics. – The industry right now seeing a lot of virtual kitchens, ghost kitchens, dark kitchens. What can the executives do to deal with this and how do you explain that phenomenon. – This is the single most important issue in this room. This is going to be real bad. I really believe that. The only thing I think you can do is while you’ve got the advantage and you exist, versus your competitors that don’t exist yet, you have to out brand them now.
I’m telling you right now you have to. And you have to be thoughtful in your expansion. If you’re going to build out, you know, more locations, you have to be more thoughtful of the cost of goods of opening that up when you’re going to be competing against people that don’t have that cost. And they’re going to pour that money into marketing. This is big. I can’t stress on you enough how you need to look at your P&L, find as many dollars as humanly possible for marketing, and then be great at it. I can’t, I you know, I don’t think I’ve been around the bush this morning. You have to become an actual practitioner and strategist and understander of contemporary branding, because these virtual kitchens are going to be a real problem.
They really are, you’re going to have 10 new competitors tomorrow, who are going to take all the money you spend on location and staff, and all this other stuff and put it directly into getting consumers to pick their product versus yours. This is very real. I’ve been telling this to CPGs for a long time about Amazon and Shopify and they laughed, and they we’re much bigger companies than you, and they’re competing gets much smaller infrastructure, and they’re being affected, this infrastructure is far better. And you’re far smaller than Procter and Unilever and Kraft them Pepsi. This is real. I don’t want this to be like a ugh, this needs to be, I need to go act. I need to build my brand at all costs. – [Host] We have 14 seconds left, will the Jets ever be relevant? – I think that’s fair based on my tone this morning. Of course, I will buy the Jets and 22 years, I will win a Super Bowl.
I will grab the Lombardi trophy look in the camera, look at all of you and say, I told you. Thank you. Thank you for this morning, I wish you success.
