Michael Harrison is the founder and publisher of Talkers Magazine, a trade industry publication related to talk radio in United States. It is referred to as “The Bible of Talk radio” since its inception (1990).Michael, a radio broadcasting innovator, is regarded as the most captivating and spirited personalities in the radio biz. Apart from being an editor, columnist, consultant, talk show host, producer and an owner of a radio station, Michael has been at the core of many of the most electrifying radio revolutions of the past 30+ years. Talkers Magazine serves the entire “Talk Media Industry” including broadcast talk radio and television, cable news/talk television, as well as the new talk media delivered via the internet, podcasting and satellite radio.
Here’s the second installment of the informative interview of radio maverick Michael Harrison taken by Marsha Friedman, CEO of EMSI. Let’s dive again into the reflective insights of Michael Harrison to gain further nuggets regarding changing landscape of talk radio, how these changes will revolutionize the industry as a whole and how Talk Media Industry can be used as an effective marketing strategy for promoting your business.
Please click here to read Part 1 of the interview.
Marsha Friedman: First off, what effect do you think the new Arbitron Personal People Meters will have on talk radio?
Michael Harrison: I think that Arbitron is having a difficult time rating radio accurately. It is not their fault, it’s just down to the fact that radio is almost impossible to rate accurately. It’s so large, mysterious, idiosyncratic, fractionalized, unstable and spread out in so many different directions. There are so many things going on at any given moment that there are numerous ways of slicing and dicing the ratings for specific target audiences. Thus, there are lots of ways of being number one in something. Also, it’s so unwired, meaning there’s no way of really attaching a meter to the reality of the act of listening to the radio without interfering with how a person listens to the radio. All of that combined makes it almost impossible to accurately rate radio.
The diary method worked for a long time, although it was extremely inaccurate. There was a huge “guesstimate” element involved in terms of a margin-of-error and it was very chancy depending on many factors: who got the diary, how it was distributed, and even if the person could recall what they listened to. Everybody in the business knew that it wasn’t a very good method, but the diary method was geared to dealing with the mom-and-pop culture of radio that existed before corporate consolidation and everybody had a stake in it.
You heard broadcasters say things like, “Well, it’s not a good system, but it’s the only system we have, so we have to live with it.” But in corporatized radio that doesn’t cut it anymore, especially since we’re in a highly technical era where people want exact numbers. They want specifics and they want them now. The whole diary method being old and last quarter just doesn’t cut it anymore. The problem with the People Meter goes back to what I said before about radio. It’s so difficult to track that in order for Arbitron to do it truly accurately from a standpoint of mathematical science, they have to have so many units out there and painstakingly monitor the distribution of these units – which would make it nearly impossible for them to make any money in doing it. So, that’s why they keep having these fits and starts and different factions complaining that it’s not accurate, that it’s not fair. Of course, Arbitron won’t admit this… and I can’t really blame them. They are doing the best they can.So to answer your question, they have a lot of work ahead of them and there are a lot of problems that are deeper than Arbitron can really be responsible for. What are the big problems facing terrestrial radio as we enter into the 21st Century? A big one is the fact it’s almost impossible to rate accurately.
Marsha Friedman: You say it is nearly impossible to rate accurately Michael, but do you see a better solution in sight?
Michael Harrison: Well, I don’t really see much of a better way to do it because you can’t attach a wire to everybody’s radio in their car and at home to really be able to monitor accurately. We have to come to grips with the situation and deal with it honestly. We have to have better salesman in radio, better account executives that go out and educate their clients as to how to really buy radio. We have to educate the agencies because you can’t just sell PPM and radio by the numbers. It’s not good for radio or the clients, only the agencies because it makes their lives simple. Cost per point should just be one element of the marketing equation based on the premise that it is a guess at best.
There has to be a massive education as to the qualitative nature of radio beyond just a quantitative nature of radio, and that burden falls on the shoulders of the marketing departments of radio stations. Clients out there also need to be educated and demand more of their ad agencies. Putting money out there based upon cost per point is not going to give them the effectiveness for their dollar that they seek.
Even deeper, as we enter the age of the Internet, you cannot talk about the future of radio without talking about the future of the Internet. We’re going to reach a point where, because people will be able to find whatever they’re looking for using search engines, the nature of the programming will define the nature of the audience. If you’re doing something either on the radio or the Internet that people want to hear, see or consume, common sense will indicate that you’ve got an audience. And the key is for us in the marketing world to understand the nature of the programming will be defining the audience. If you build it, they will come. But if you build it and they don’t come, it’s because they didn’t want it or need it. I guess, simply put, radio sales people have got to sell the idea of common sense.
Marsha Friedman: In this electronic age, what do you think that terrestrial radio needs to do to survive?
Michael Harrison: For terrestrial radio to survive it needs to have the best programming available anywhere, and that programming has to be exclusive to AM and FM radio. If they stream on the Internet based upon the current conventional wisdom that people will hear it on the Internet and thus go back to listen to the radio…they’re not going to. Once they’re listening on the Internet, they have no reason to go back to the AM or the FM dials.
They should create different programming for the Internet and leave their best programming, or their real meat and potatoes, on the AM and the FM dials. On their Internet site, the people will hear clips, excerpts, cutting room floor stuff, special programs which will compel them to go back to their AM or FM radio to hear the station itself.
That’s the only answer. The current model of streaming your programming, although in the short term it gives your advertisers and your brand more exposure (which is a good thing), but in the long run it’s quickening the demise of the AM and the FM channel having any value whatsoever. But because corporate radio lives in a world of quarterly reports, there is the irresistible urge and pressure to sell the future out for immediate gain.
Marsha Friedman: Do you propose this to save their lives or just prolong the lives of the AM and FM stations?
Michael Harrison: I want to point out that this is only a measure that will prolong the life of AM and FM. It will not extend it indefinitely. The only thing that AM and FM can do today that makes sound business sense is to prolong their life an extra few years because I think the handwriting is on the wall. I don’t believe that AM and FM can survive for very long one way or the other in the wake of the Internet. The Internet is going to continue to change everything. These websites that we now consider to be adjuncts to the radio station, or promotional vehicles for the radio, will actually replace the radio station. And, they’re going to do so a lot quicker than we realize.
Marsha Friedman: Wow. So Michael, what happens to the whole terrestrial radio industry?
Michael Harrison: It moves to the Internet and becomes bigger and better than ever before. It becomes more diverse. It becomes multi-channeled. It becomes infinite in terms of its real estate, inventory and creative ability. It becomes unfettered and unrestrained by FCC regulations. It will be superior. Today’s AM and FM radio station will evolve into tomorrow’s “media station” – a broadband superstation, if you will. The only parties that have anything to lose by this transition are the people who have serious money invested in the licenses.
Marsha Friedman: So what you are saying is that in the future you won’t need licensing?
Michael Harrison: No, you don’t need a license to be a broadcaster in this new era that’s unfolding. What you need is to have a product that people want to hear, and not only will they hear it; they will also look at it and read it. Again, I predict that we’re going to see the rise of what I call a media station which will be oriented to audio, video or to text. It’s going to replace the radio and television stations, magazines and newspapers.
For example, the media station of The New York Times will be oriented to text because its history is that it has writers. The heir to WABC-AM will be a media station oriented to audio because it is the heir to great speakers, talkers. The media stations of the big television stations will be video oriented, again because their roots are in video.
The only difference is that they will all have elements of each other. They’ll be no such thing as what I call “monomedia” – media that exist independently of each other with special appliances necessary to receive them such as “radios” and “television sets” or “CD players” and “DVD players.” Audio-only in this new environment will seem archaic because the appliance that you’re listening to it on now has a screen. And will the screen be blank? Of course not, you’ve gotta put something on this screen, and it doesn’t mean that you have to have a television show. It just means that there will be a video accompaniment to whatever it is that you’re presenting in an audio way.
For example, say you are interviewing an author of a new book. While the author is being interviewed on the radio, people who are consuming this on the media station will also have a chance to see a picture of the author, a picture of the book cover, maybe a coupon that they could print out, maybe extensive information about the subject in text form that they could download and print out and on and on. We are adding to the dimensions that we’re playing with and this requires intelligence and abstract reasoning. It’s a completely new paradigm and it’s unfolding before our very eyes. My educated guess is that within 10 years it’s going to be a completely different landscape.
And the only thing standing between websites being an accompaniment or an extension of 20th Century media (radio and television stations) is a couple more clicks of the technological evolution towards cars having Internet radio in them and video monitors being standard equipment. In other words, cars being completely Wi-Fi’d and people being able to click on any of an infinite number of media stations with the same ease they can now turn on a radio or television station.
Marsha Friedman: I had another question about the quality of weekend programming for radio stations. We’re seeing far less radio infomercials being produced and time being bought which certainly affects the revenues of the radio stations. But also you have the issue of the quality of weekend programming being so inferior. How do you see all of that playing out?
Michael Harrison: Well, I think that it’s self-defeating for radio stations to have to broker time to inferior programming on their precious airwaves in order to make money which goes back to what I said before about selling out the future for immediate survival. Unfortunately, the reason they are forced to do this is because of the problems they are having selling spots and advertising. So sadly they have to resort to a method of generating revenue that at one time was considered embarrassing. It would behoove the stations to be as selective as possible in their choice of brokered shows and help their clients produce as decent a product as possible. Not likely to happen, though.
Marsha Friedman: I remember back in the early 90′s when I first got into business, there were a few stations that brokered time. Boy has that changed!
Michael Harrison: Correct, correct. This is an unfortunate thing, but I understand why they’re doing it because we’re in a period of time when we’re seeing the decline of the radio spot as a workable unit of measurement. It’s getting harder and harder to sell these things and as a result, they have to do whatever they have to do to survive. But again, it’s killing the viability of radio and its future unless, of course, they put good shows on.
I have to say out of fairness, there are a percentage of brokered shows out there that are actually very good. It is not a majority percentage, but they do exist. So let’s not paint all brokered shows as being bad. That’s one. Two, there are a lot of shows out there that are not brokered but are still paying to get on and that’s called compensation where the syndicators are paying the stations, not the stations paying the syndicators, but the syndicators paying the stations to get on. They’re calling it by the more positive term “compensation” because it’s more mainstream well-known talent than your local chiropractor promoting his practice. But it’s still a form of brokered show.
So, again, it comes down to the fact that terrestrial radio is having a terribly difficult time generating revenue via traditional advertising sales and this ties back into the discussion we had earlier about the difficulty in getting accurate ratings and selling this product quantitatively in a marketplace that understands radio has serious, serious problems.
Without quality content there can be no future for AM and FM radio. It can’t be because you can get better stuff on the Internet. And then as soon as the Internet is a few notches more accessible and ultimately ubiquitous – it’s over. Ah, but out of the ashes of good ol’ 20th century terrestrial radio will rise the phoenix of exciting, unlimited media station broadcasting – and what a wondrous scene that will be!
Thanks Marsha Friedman via
Here’s the third installment of the enlightening interview of marketing expert and best-selling author, Al Ries taken by Marsha Friedman, CEO of EMSI. Al’s insights are very enlightening and profound. I hope you found them enlightening as well. For those of you who have not read Part 1 &2 of the Interview and may not be familiar with Al Ries here are the links part1, part2.
Marsha Friedman: We have covered so much information, Al, and it’s all been so good. I don’t want to take up too much more of your time, but I have two questions I want to make sure I ask. First, what are your thoughts about marketing today, as compared to the seventies and eighties when we didn’t have things like the Internet, social networking, social media marketing, blogging, etc.? How has it changed marketing and do you think it’s better?
Al Ries: Well the Internet is a new medium and we don’t get very many new media. Before the Internet, the previous “new” medium was television. So over a course of history, you can see that “new” mediums took a long time to develop. First there was the printing press created by Gutenberg several centuries ago, which gave us the printed book and the periodical (which includes both newspapers and magazines). Then several hundred years later, we got radio and finally television, and now we have the Internet.
Every medium changes society. One may ask, “What is the key consequence of the Internet?” It’s the first global medium. You see, radio, television, newspapers, magazines, books…they all are basically national. We have books published in Germany, Spain and many different countries. But each of those editions is published by different people in different forms and unique to those various countries.
A book is not a global medium like the Internet. Every day of the week with the Internet we correspond with people in China and in countries around the world.
In Marshall McLuhan’s terms, “the medium is the message.” So, what is the message of the Internet? What are the social consequences of this medium? The social consequences are the homogenization of the world. Wherever you go in the world today, you see the same brands. It’s incredible. My wife and I were walking on the Great Wall of China and my wife said, “Let’s stop for a Gatorade.” Sure enough, they had Gatorade. This is China, right? Another example, I got an e-mail this morning from our associate in Vienna. He asked me, “What’s this Excelsior Jewelry being sold by Steven somebody or other in Los Angeles?” I said, “I never heard of this.” He said, “Oh, they’ve got stores around the corner of…” I think to myself, “Wait a minute!” I am closer than he is and yet HE is more familiar with it, because of the Internet.
I do a monthly article for two publications in China. They send me some questions and the latest question is, “We’re interested in the Disney brand, etc., etc.” So, again, the social consequences of the Internet, the homogenization of the globe, is that we’re becoming a monolithic society. More and more, everything around the world is the same. Eighty percent of Coca Cola’s profits are from outside the United States.
Interestingly enough, here is the really meaningful idea when it comes to marketing. To explain this, let me give you an analogy. If you lived in a small town of just one hundred people, how many stores would you find? Probably one. And, what would that store sell? Probably everything. I mean food, clothing, boots, shoes…everything people needed in general, hence the general store. Boom!
You move to a big city where there are millions of people and what do you find? You find specialty stores. Not just clothing stores, but women’s clothing stores, children’s clothing stores, men’s clothing stores, dry cleaners and super markets. The principle is this, the greater the market, the bigger the city, the more specialized the brands have to become. The implication or the consequence of the Internet, the message of the Internet is as we become more and more of a monolithic world, the brands will have to become more narrow, more focused to stand for something locally. And that’s going to be a challenge.
Everyone wants to be what I call a monolithic brand, a brand that tries to have a full line of products and services for everybody. It’s just not going to work. Why? Because as more and more companies compete in a single market, each one of those competing companies has to be more narrowly focused.
In America, for example, we got locked into Microsoft, whose initial focus was on personal computer software. If you lived in Guatemala, where there are only three million people, could you start a company to just do personal computer software and grow like a Microsoft? I don’t think so. Invariably in a big country like America, we have companies that you couldn’t possibly start in a smaller country. Why? Because the smaller the market, the broader you need to be and the bigger the market the more narrow you have to be. As we become global, the logic is, “I’m going to sell my products around the world, so I have to have a broader line, because there are a lot of different people around the world.” That’s the logic. That’s not practical marketing. If you’re going to sell globally, we have to have a narrower line.
We work with a lot of companies in smaller countries and I can tell you that a typical company in a small country is very different than a typical company in America. A company there can be in food and banking and automobiles and all sorts of stuff. That would never work in America.
In Finland, a country of five million people, they have a company whose product line is narrow. The company is Nokia and their products are sold around the world. Why? Because Finland is too small, so to build a big company in Finland, Nokia had to think globally. We don’t sometimes think globally because America is big enough that you can produce a pretty big company if you just sold to Americans. But you’d better be thinking globally, because if you don’t, somebody will come into America with their global brand (like IKEA for example) and they’ll take your business away. So globalization is the idea that has really, really been driven by the Internet.
Marsha Friedman: What a different world today. Amazing! I would be remiss, being that I am in the PR business, if I didn’t ask you about your book, The Fall of Advertising and Rise of PR. I could quote you forever from the book, because it really is an important message that businesses need to hear. Could you just comment, because I’d love to have it coming directly from you, as to why PR is so crucial in establishing a brand and planting the seed?
Al Ries: The issues here have to do with credibility. In other words, the average ad has little credibility. And there are lots of reasons for that. One of which is there is too much advertising. As a result, the average person doesn’t necessarily believe much of what he or she reads in the ads. That’s no problem if you have a strong brand. In other words, Rolex can run ads and people will believe it because they know Rolex, they know it’s famous and they know it’s one of the most powerful brands in the world. Their friends and neighbors brag when they buy one. But when they see an ad for a brand they’ve never heard of, their tendency is not to believe a single thing they read. As a matter of fact, there’s a lot of research that says most people won’t even look at an ad for a brand that they’ve never heard of on the basis that, “If I’ve never heard of it, it can’t be any good.”
Marsha Friedman: That makes a lot of sense.
Al Ries: So advertising, more and more, is not good for the new brands. What’s good for new brands? PR. You see, in PR you’re not speaking for the brand, it’s the New York Times or the Wall Street Journal, or CBS, NBC or ABC who says it’s terrific. So the third-party endorsement through PR is the way to launch a new brand. Now that goes exactly against the thinking of management in America. Anytime anybody says, “Let’s launch a new brand,” management says, “We can’t afford to spend $20 or $30 million on an advertising campaign.” And we will say, “You’re right. You shouldn’t be doing that anyhow. You should be launching with PR.” Our philosophy is PR first and advertising second. You only use advertising after the brand has become established.
I’m not saying that established brands shouldn’t do PR; sure they should. But believe me, there is such an opportunity in the PR business to launch brands. As you probably know from your own experience, in meetings to launch a brand—and I’ve been in many of those and looked around—there are no PR people. The ad agency is there, the marketing manager is there, the sales manager is there and I ask, “Where are the PR people?”
So the PR business has a long way to go. First, they’ve got to get in the room. They’ve got to find a way to break down the door to get in the room before the brand is launched. That’s an issue too, but the philosophy I recommend is very powerful: PR first, advertising second.
And the other implication of this is the PR people need to get involved in the strategy of the brand. That’s the biggest single hang up, because traditionally it’s the advertising agency that works with the client to develop the marketing strategy—the “ultimate driving machine” words—and not the PR agency. But, the PR agency should, in a sense, take over the brand launching part of it and work on how to verbalize and visualize the brand. I think more PR people should be interested in reading our books than advertising or marketing people because some very major companies could buy into the concept of PR first and advertising second.
It would create enormous business for PRs, but more importantly it would make the function more important for the company. And nothing is as powerful in a company today, as a successful launch of a new brand. A new brand can double their business. The opportunity for a company’s expansion in many ways lies in the development of new brands.
A number of years ago when Apple came out, Richard Edelman, President and CEO of the world’s largest independent public relations firm, used to make speeches on this subject and Edelman’s business has gone through the roof. I can’t believe how large they’ve grown in the last ten years. There is an enormous potential in the PR business if you just do exactly what I’m talking about: establish the idea that the PR people should be the ones that are the outside consultants launching a new brand and not the advertising agencies.
Marsha Friedman: To your point about no PR people in that Board meeting discussing a brand launch; my experience is that there’s often a big misunderstanding by management as to the actual function of PR, and for that reason, gets overlooked for its importance and value to the company.
Al Ries: Yes, but this is not a one-sided thing. I think many in the PR industry don’t want to be responsible for the success or failure of a brand so they don’t really want to step out and say, “Hey, you should let us handle it.” They would sometimes rather say, “Send us the ads and we’ll publicize the ads.” That’s easy way out, right?
Marsha Friedman: Yes, that’s true. I’d like to ask you something else that just came to mind based on everything you just said about launching a brand with PR. Since you are engaging the public, then what the brand stands for may change, based on the response from the people. I was thinking about a Clear Channel radio station here in the Tampa Bay area that had a caller who said their Christian radio station was “life changing radio.” Ever since, Clear Channel grabbed that and now it’s their slogan. So, if PR is used effectively, the public may tell you how best to position your product to speak to them?
Al Ries: Exactly. That’s exactly it. When you launch a brand with PR, the idea that you’re going to live with forever isn’t necessarily in the PR release. It’s usually in what the magazine or the newspapers or the consumers wind up saying about the brand. So always keep your ear to the ground and when you hear something that’s good, you jump on it. But that’s the thing that companies don’t like, because they want control of the message. And, when you launch a brand with PR, in a way, you leave control of the message in the hands of the media and public, and corporations don’t like that.
We once worked for a company, that is out of business now, but their product was prepared foods. They hired us as consultants after they were in business a couple of years and after we looked over their material, we noticed there was a headline in one of the big magazines that said, “The Joy of Not Cooking.” And, we said, “Terrific, here’s what we want you to do. You see that sign out there with your company name? Well underneath that we want you to put a big sign that says “The Joy of Not Cooking.” It’s a consumer oriented idea and those words were the “ultimate driving machine” for them.
Do you think we were able to sell that idea? No. Instead they wanted to talk about the opposite: the joy of cooking and the experience of their 12 chefs.
Marsha Friedman: And, that gets to your point about the brilliant marketer being the one who is able to put himself in the mind of the prospective customer.
Al Ries: Yes, it’s all in the mind of the consumer. You are taking a chance when you launch a PR campaign as you can’t control the message. From many companies’ point of view, they hate that part. They want total control of the message and they want to hammer an idea to the consumer. I mean, look at some of the messages out there. I don’t know if you’ve seen Chevrolet’s latest advertising message: Chevy runs deep.
Marsha Friedman: Okay, I have no idea what that means.
Al Ries: Well, what you see is an old fashioned photo and typography. In a sense, what they are trying to say is, “Look at the heritage of the Chevrolet brand; it’s been around forever.”
Marsha Friedman: I see…
Al Ries: Chevy runs deep. Again, in our terminology you’ve got to bring the message down to earth. If we’re selling tractors, “runs deep” is great. But not SUV’s or cars. You don’t want to paint a picture that the darn thing is in the ditch.
Marsha Friedman: Great point. Al, I want to thank you so much for taking the time to share with us your nuggets of wisdom, so that our readers can be enriched and, hopefully, their businesses grow.
Al Ries: Thank you for calling Marsha. It’s been nice talking to you and answering your questions.
Reflective insight from Al Ries, once again. We hope the information shared throughout these three segments has indeed been thoughtful and profound.We also wish that Al’s insightful and thought provoking ideas must have given you some nuggets of marketing wisdom which will be helpful to the success of your business.
Thanks Marsha Friedman via
We continue with Part 2 of the insightful Interview. Let’s take another dive into the interesting conversation to gain more of Al’s nuggets of marketing wisdom. For those of you who have not read Part 1 of the Interview and may not be familiar with Al Ries here is the link.
Marsha Friedman: Every business person obviously wants to have success. Their long term goals are to be very profitable and growing. However, when the doors need to stay open now, it’s hard to worry about 2 to 5 years from now. What are some of the things one needs to be aware of so that good decisions are made that will support all of their goals?
Al Ries: Short term needs and long term goals can sometimes conflict, and the most important advice I can give in this situation is don’t forget your focus. When it comes to focus, one needs to narrow it, not widen it. My company, Ries & Ries, works with clients all the time looking for ways to narrow their focus and get them out of offering too much stuff. However, many businesses aren’t keen on the idea, because when one narrows their focus they have to drop some product. So what happens in the short term? When you drop a product or service, you’re going to lose some business initially. Who wants to do that? To the average business owner, the thought is “Wait a second, we can’t do that!”
I’ll give you an example. My company was doing some consulting for Burger King. Now, Burger King has twelve hamburgers on their menu. We said to them, “That’s too confusing. Let’s reduce it.” Their reply was, “Oh! We can’t do that.” You see, they know the percentage of sales each one of those 12 products brings in, right? So they think, “If we make it five products, it means we’re going to lose 3.7% of the business.” They look at the numbers and what will happen in the short term, but they don’t look at the long term implication. The implication is when you simplify your product line, you make it easier for consumers to know what you’re selling and you’ll sell more, but not necessarily in the short term.
So “focus” is a long-term concept that can eliminate the short term issues, but you need to start for it to work.
The result of focus is the more you focus the stronger your brand becomes, because you can stand for something. For example, what’s a Chevrolet? I know what a Chevrolet is: it’s a large or small, cheap or expensive, car or truck. If somebody says to you, “I bought a Chevrolet,” not much was said. Did he or she buy a ZR1 for $105,000 or a sub-compact for $13,000? There’s a big difference there. So to say, “I bought a Chevrolet” is saying nothing, because the brand doesn’t stand for anything!
Many, many, many brands today do not stand for anything, because they’re into everything. If you’re into everything, the brand can’t possibly stand for a single thing. Yet what’s the trend in business today? Expand the brand. Why? Because it makes sense! “Well, we want to grow,” they say. “So if you expand the product lineup, you’re going to grow.” That’s logical. But it doesn’t work and that’s the most important thing about marketing. Every single principle of marketing is not necessarily logical and it makes it a very difficult discipline to learn, because almost everything you should be doing doesn’t necessarily make sense, if you look at it from the obvious point of view.
Marsha Friedman: I agree. In the focus section of your book, you also talk about the importance of focusing on one word, phrase or benefit.
Al Ries: Yes and that is where it becomes more important in the long term. Look at brands that have become very, very successful. Invariably they stand for something. Rolex stands for “expensive watch.” My company used to do some telephone interviews and we’d say, “Okay, we’re going to say a brand name and you tell us the first word that comes to your mind.” The highest score ever was Rolex and the word was “expensive.” From a management standpoint you might think that’s not a good word. Let me tell you, that’s a POWERFUL word! That’s what makes the Rolex brand. People buy a Rolex BECAUSE it’s expensive.
Marsha Friedman: You’re correct, it’s a status symbol.
Al Ries: That’s why they don’t buy a Rolex in spite of being expensive, they buy it to show off their success. If Rolex were to sell $1,000 watches, after a while, the brand would be destroyed because it’s not what the brand stands for. It stands for expensive watch in the same sense that Starbucks stands for expensive coffee.
Before Starbucks, if you asked somebody, “What’s a brand name of expensive coffee?” They wouldn’t know. That’s opportunity and yet if you’d have told somebody years ago, “Hey, let’s launch a chain of expensive coffee.” people would ask, “Why would you want to do that?” I mean, who wants to spend more money on coffee? Nobody!
Marsha Friedman: Let me ask you this, Al, and I preface my question by saying I totally agree with the focus concept. But what would you say about companies like, Home Depot? Home Depot’s focus is “Home Improvement,” but they have thousands of brands and products. So how does that work?
Al Ries: Well, to make my point, let’s take Wal-Mart for example. Wal-Mart has more than 150,000 products. But you see, once again, the Wal-Mart brand is built on one word. What is the word? It’s the word, “cheap.” If people want something cheap, they go to Wal-Mart. Now that doesn’t appeal to everybody, does it? No. But “cheap” is a very, very powerful brand provided you’re perceived as the cheapest. K-Mart went bankrupt. Why? Because they tried to emulate Wal-Mart’s strategy, but the consumer saw Wal-Mart as the first cheap store and therefore they own the word “cheap.” Now Target was smart. They said, “Hey, we can’t own ‘cheap’ because Wal-Mart owns it, so we’ll go a little upscale.” There’s a cliché about Target; they’re called Targét (pronounced TAR-ZHAY). Oprah Winfrey said Target was Cheap Chic. It’s a little better design and Target has done well; K-Mart has not.
The same goes for Home Depot. Home Depot was the first home improvement store. Whatever that meant, but to the average person it meant that if you have a project to do, you could go to Home Depot and get everything you need to complete the project (lumber, faucets, nails… you name it). Home Depot is a little like Wal-Mart. They not only sell you the whole package, but they sell it at a very good price. So in a sense, Home Depot is the Wal-Mart for men. For doing projects on Saturdays you go to Home Depot.
Marsha Friedman: So then, if a company says, “Okay, we’ve got a brilliant idea and we know that this is a money-maker. We want to release it.” How would you suggest they release it if you’re saying stay focused on what you have, don’t widen your focus, don’t lose your focus and don’t water down your brand? How would they do it?
Al Ries: Let’s look at Crest. Crest, the first cavity fighting toothpaste on the market. What is Crest today? Well it’s a mouthwash, white strips, electronic toothbrushes, etc; it’s all sorts of stuff. In my opinion, I don’t think that works as well as if they had separate brands for each of these categories. A separate brand for mouthwash, a separate brand for white strips (the teeth whitening stuff) and so forth. But the tendency on the part of many companies, and it’s because it makes sense to them from an economic standpoint, they think, “If we have one brand name and all these products are under one brand name umbrella, we’ll save money on advertising.” It is better to start a new brand and not mess with the established one.
Thanks Marsha Friedman via
Al Ries, Chairman of Ries & Ries, is a legendary marketing strategist and also the bestselling author (or co-author) of 12 books on marketing including Positioning, Focus, The 22 Immutable Laws of Branding, Marketing Warfare, The Fall of Advertising & the Rise of PR. His latest one being, War in the Boardroom. Ries founded his own advertising agency in New York City, Ries Cappiello Colwell in 1963 which later changed to marketing strategy firm, Trout & Ries. In 1999, Ries was named as one of the 100 most influential PR people of the 20th century by PR Week magazine. Al is also an internationally renowned speaker and consultant to many of the mega brands and corporations.
Here’s an interesting piece of conversation between International Marketing expert and Best Selling Author, Al Ries and Marsha Friedman, CEO of EMSI:
Marsha Friedman: The first thing I wanted to talk about has to do with “the law of focus” from your book, The 22-Immutable Laws of Marketing. One sentence that jumped out at me is your point about having the ability to think like a prospect. I find that to be the biggest problem with many marketing people. They miss the importance of thinking like their prospects think, which is the exact viewpoint you need in order to write successful marketing pieces.
Al Ries: Essentially, this gets right back to the first book you mentioned, Positioning. Here it is, thirty-five years later, and people are still doing the same thing. They think of marketing as communication; “I’m communicating something about my product or service that makes sense.” But what we’ve been saying for years is that’s not the way to look at it. You have to reverse the process. You have to start with the mind of the prospect and you have to think about what’s in their minds and relate what you are doing or what your product has to offer, to what’s in their minds.
Hopefully, in the best of all possible worlds, you look for an open hole in their minds. Almost invariably, the big successful brands are the ones that are not necessarily terrific at marketing or anything else, but they find a hole and fill it. A perfect example of this is in the category of energy drinks. The first energy drink was Red Bull.
But before Red Bull came along, there wasn’t even a category called “energy drinks.”
And that brings up another point; consumers are more interested in categories than brands. Yet, what do most marketers want to talk about? They want to talk about their brands. “Hey, our brand is terrific!” “Our brand is this; our brand is that.” But, most consumers don’t think in terms of brands. When they order something in a bar, they don’t think brand. They think category, “What do I want to drink? Do I want a beer? Do I want a coke? Do I want a gin and tonic?” In other words, they think category first. They think, “I want an energy drink.” Then they ask the bartender for a Red Bull.
So a lot of this has to do with thinking like a consumer, and filling holes in people’s minds. Telling them, in a sense, what they DON’T know as opposed to what they DO know.
Marsha Friedman: That’s a great point. And, when not understood by marketers, companies can go miles off message of where they need to be and fail miserably.
Al Ries: Think about it from the PR point of view. I mean invariably your clients tell you we got this product, we got this service and we want you to publish it and we want you to do this and we want you to do that. The best stories often are, if you think about it, from the customer’s point of view, what are they looking for? If you can figure out what they’re looking for, it’s easy.
Marsha Friedman: Exactly, and that’s the education we frequently go through with clients; getting them to understand that the media doesn’t care what their business or product is. The media’s interest is in serving their public: their listeners, viewers and readers. Their need is to provide information that’s entertaining and informative to their audience in order to keep them tuned in.
Al Ries: The media is filling a hole on the page for the consumer, while you’re filling a hole in the mind. It’s the same thing.
Marsha Friedman: That’s exactly right. Another point I wanted to bring up is the lack of understanding too many business owners have about the importance of marketing, particularly with small to mid-size companies. It seems they become so focused on their products and for a variety of reasons, perhaps lack of education about marketing as a primary one, they lose sight of the need for marketing to occur as a continuous activity for the company’s survival and success.
Al Ries: Here’s why they do that. Everything about running a business, especially a small business, is very, very short term. In other words, I buy stuff today and sell it tomorrow or the next week. I hire a person today and pick up the phone and get something done or build something. I mean they’re very, very short term, but marketing is long term. Nothing happens right away. I mean you could have the very best marketing in the world. You won’t see any results in the first week or the first month, really. It sometimes takes years and years, and most companies just don’t have the patience to deal with marketing because it is long term. Now some of the best marketing campaigns, like the ultimate driving machine, are thirty-five years old, for goodness sakes. Thirty-five years old and most of the successful programs have been around like forever. Nike’s “Just Do It!” How many companies have the patience to run a marketing program for two or three or four decades? I mean people change. For one thing, they lack patience.
Marsha Friedman: Exactly! I think perhaps in today’s world where everything moves fast (fast food, fast everything), long term marketing just doesn’t fall into that state of mind.
Al Ries: Well think about one of the trends that’s taking place in business today and it’s a very, very strong trend…coupons and discounts. Grouponicus, for example! Groupon is enormously successful. I mean…they turned down an offer for six billion dollars!
Marsha Friedman: I know. I just saw that.
Al Ries: They’ve been in business for years. That’s typical short-term thinking with long-term consequences. Now in the short-term, coupons will work. I mean short term you have a coupon deal and next week you have lots of customers, but what happens in the long term? Whenever you get a coupon deal, you have business in the short term, but in the long term, the customer just waits for the next coupon. Look at Macy’s. They’re running 50% off deals, right? They might have big crowds and they might rack up a lot of sales, but next week or the week after, who’s going to go to Macy’s unless they have a sale? It’s crazy, so in a sense, while it works in the short term, it’s a little like cocaine. You get a short term high, but a long term low. So if you don’t look at the long term consequences of what you do—and this holds true in your personal life too—you’re going to be in deep trouble if you treat marketing as a short term phenomenon. What can I do today that will make sales tomorrow? You’re going to do exactly the wrong thing; you’re going to be into coupons. You will have to be into all sorts of stuff that doesn’t really make sense in the long term.
Marsha Friedman: Al, I love it. I think that’s such a critical point for people…business owners…to understand. How do you feel when companies have high prices, then they slash them because they’re low on cash or cash flow, only to bring them back up. What are your thoughts about that?
Al Ries: Well let’s look at the industry that has done that the most. I mean not so much short term, but they play what we call in the retail business “the high/low” game. In other words, high prices today and then we can have a big sale tomorrow. We have lower prices tomorrow then we jack them up. We see this a lot in the airline industry.
The airline industry, over decades, has been practicing high/low pricing. In a sense, where they have competition (let’s say a regional area), they have low prices. Where they have no competition, they have high prices. Has that worked for the airline industry? No. The four largest airlines in America have all gone bankrupt.
But, the one airline that has been consistently profitable for the last thirty-five years has been Southwest; they’re basically like a little Wal-Mart. They have low prices, but they don’t jack up the prices so they can have discounts and coupons. They have everyday low pricing. That’s a long-term strategy that works better than the short-term strategy of low prices today and high prices tomorrow.
The reason that high/low doesn’t work is you educate your consumer to wait for the low price. In a sense, the consumer feels the low price is the regular price and the high price is the rip-off price.
Now the airline and other companies feel exactly the opposite way. They feel the high price is the regular price and the low price is the discount price. So consumers and companies don’t see eye-to-eye on these things; consumers don’t think that way.
Thanks Marsha Friedman via