Frenemies Page 9
GE has worked hard to create an image as a “cool” company, a company welcoming to young engineers. One of their notable marketing campaigns was “What’s the Matter with Owen?” A college graduate, Owen decides to go to work for GE, to the disappointment of his friends and family, who grouse that 138-year-old GE is not an innovative company. Owen is a bit of a nerd, but he has a sense of humor. We follow his journey over the course of the marketing campaign, as he—and thus GE—becomes cool. The Owen campaign brings to mind Apple’s funny but potent “I’m a Mac” campaign a decade earlier, in which the cool Mac guy in a T-shirt makes fun of the uncool Microsoft “I’m a PC” guy in a suit and tie. GE boasts that its Owen videos were viewed fifty million times on WeChat in China.
A more offbeat marketing campaign materialized when GE stretched to try to make, in Boff’s words, “GE more relatable” to young people, especially aspiring engineers. The idea they settled on was to produce a trendy hot sauce that would be packaged in a ceramic container composed of such advanced materials as silicone carbide and a nickel-based superalloy used in making GE’s jet engines. These materials are able to withstand temperatures of 2,400 degrees Fahrenheit. Using two of the world’s hottest peppers, GE manufactured a limited supply of the hot sauce and sold and promoted it on Thrillist, a popular men’s shopping site. When it sold out, the news went viral. Message: GE is cool. GE’s Podcast Theater produced ten- to fifteen-minute science fiction stories that over eight weeks, according to Andy Goldberg, Boff’s deputy and chief creative officer, were the most downloaded “podcast on iTunes seventeen straight days, generating four million downloads.” The only advertisement was “Brought to you by GE” at the start of the podcast. At the end of the podcast, Goldberg says, “The consumer says, ‘GE gave me a great piece of content.’ They don’t say, ‘GE makes great engines.’”
For almost a century, GE has relied on the same lead ad agency, BBDO. Reflecting another change in the agency business, GE now farms their work out to a half dozen agencies and to many outside project partners, like the New York Times. Once a month, Boff chairs a meeting of all the agencies. “The belief is that you have to have different points of view in the room,” says Goldberg. “Not every agency is good at everything.” VaynerMedia, for instance, is expert at social media marketing, a reason they’re invited along with a couple dozen attendees. “I don’t know who half these people are,” Alan Cohen, a cofounder of Giant Spoon, said after one meeting. But, he adds, “The GE model is to pick people they like. So we feel like we’re employees of the company.” David Lubars, the creative director of BBDO, says he welcomes “other partners” and that “healthy paranoia” drives all agencies to better performance. Linda Boff insists that the agencies are not competitive with each other, that they collaborate because they want “to be their best selves.” Perhaps. It’s a noble sentiment. But the Buddha is not often among us, particularly in times of wrenching change, when much of what is solid melts.
But there is no question that GE’s marketing efforts are widely and justly admired. For a relatively puny annual marketing budget of $100 million, because GE has been innovative its footprint is much larger. Lou Paskalis, an experienced marketing executive who today is a senior vice president of marketing at Bank of America, praises the team culture GE and Linda Boff have forged among agencies to deliver amazing work. “Linda is so far ahead in what she is doing in content marketing. She is the gold standard of turning jet engines and trains into iconography that people love and that speaks volumes about the commitment to the environment, as well as trains and jet engines! Actually, they’re performing alchemy over there. I envy that.” The alchemy, however, has not impacted GE’s stock price, which fell 27 percent between September 7, 2001, when Jeff Immelt was anointed CEO, and June 13, 2017, when it was announced that he was stepping down.
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The marketing team effort can fall short of Boff’s teamwork ideal because talented people do not easily restrain the ambition that accompanies talent. Take Gary Vaynerchuk, who admires how GE “tries different things,” yet makes it clear that the agency he founded, VaynerMedia, is competitive and will not be content just doing social network marketing. “I know we’ll get a bigger piece and one day take over the TV ads that BBDO does,” he says. More than once, Vaynerchuk, who bristles with ideas, has phoned Boff with creative ideas for TV spots.
VaynerMedia is emblematic of the type of digital-first independent agency that aims to disrupt both advertising and its big agencies. Presided over by forty-one-year-old Vaynerchuk, the eight-year-old company had revenue of $100 million, the bulk of it from Facebook marketing campaigns. He delights in sticking his fingers in the eyes of the advertising establishment. “You’re going to die,” he declared when invited to address the ANA’s Masters of Marketing Conference in October 2016. “It’s an amazing time to be in this industry if you’re on the offense. It’s the worst time if you’re on the defense, and ninety-five percent of you are on the defense.”
In a pitch to a prospective client, Chase Bank, that wanted to hire an additional agency to do their social media and digital marketing, Vaynerchuk took a seat in the middle of a crowded white Formica conference table wearing jeans and a crew-neck sweater. After his business affairs executive described how VaynerMedia had grown, Vaynerchuk shared a partial account of his own life.
Born in the Soviet Union, he immigrated to the United States with his family in 1978, when he was three. They moved from a studio apartment in Queens to Edison, New Jersey, where his father would eventually open two liquor stores. Cursed with dyslexia, Gary was a poor student who didn’t play sports or date girls. His dream was to be an entrepreneur, and starting in elementary school he sold baseball cards and comic books, opened a lemonade stand, and arranged garage sales. After graduating from Mount Ida College in Massachusetts, Gary took over his father’s Springfield, New Jersey, store in 1999. He learned everything he could about wine, became known as an expert, and launched a transformative online sales Web site and a daily wine Webcast. A year after YouTube surfaced, he inaugurated his own YouTube wine show channel. Soon after Google’s AdWords advertising platform went up in late 2001, he invested the wine store’s ad dollars. When new digital companies appeared—Twitter, Pinterest, Snapchat—he was an early adapter, posting wine news. His WineLibrary.com became the country’s largest online retailer of wine, outselling such familiar names as Sherry-Lehmann and Zachys.
He and a younger brother started VaynerMedia in 2009. A couple of years later, with the wine business having expanded from $3 million to $65 million, Gary stepped aside to work full time at VaynerMedia. Convinced that the big ad agencies were ignoring social media, he shaped his agency’s identity around social media marketing. His first client was the New York Jets football team, and eventually other clients—PepsiCo, Anheuser-Busch, Mondelēz, Unilever, Toyota, and GE—followed. With money he and his parents made in the wine business, he invested in start-ups like Facebook, Twitter, Uber, and Tumblr. Appearing regularly on YouTube, his fast-talking, clever rants went viral, leading to a multibook contract. The first of these, a Web marketing book, Crush IT!: Why Now Is the Time to Cash In on Your Passion, became a national best seller.
By 2016 he had produced four best sellers, had a YouTube channel, served as a Miss America pageant judge, and became a regular panelist, along with Gwyneth Paltrow and will.i.am, on Apple’s Planet of the Apps, a reality TV series that evaluates pitches by app developers seeking funding. Today he will announce to strangers that he has watched every play of every Jets game since he was in sixth grade, when he says he told a friend, “I am going to own the Jets one day.” He is neither modest nor demure. “If you’ve never seen me onstage,” he writes in his fourth book,* “I model my performance after the comedians I idolized in my youth, like Eddie Murphy, Chris Rock, and Richard Pryor.”
“Our religion is attention,” he told the Chase marketing executives,
explaining that what he loved about constructing marketing campaigns on social media is that they were “underpriced.” There was little “ad waste” because he could try out so many alternative messages, and because in the digital realm results were often measurable. And unlike agency holding companies, which peddle expensive and unmeasurable broadcast television ads, he assured them that Vayner “sold on depth, not width.” He showed several Vayner online campaigns. Soon after the pitch meeting ended, Vayner won the Chase account, including its new upscale Sapphire Reserve credit card.
In a creative brainstorming meeting about Chase’s new travel credit card with six members of his team some weeks later, Vaynerchuk stabbed with his fingers at pieces of sushi from a take-out order and tried to frame Vayner’s purpose and the business opening that yawned: “VaynerMedia was built on ‘We’re going to do a deal with apps and start-ups that nobody else is doing because we come from that world.’ We did. It helped us grow.” But now they’ve grown and proven they can craft video and TV pitches. They no longer have to sell themselves as just a digital agency. Vayner can siphon business from traditional agencies. “We’ve established traditional chops as believers in storytelling,” he continued. “Now we can walk in and say, ‘We can make video for you. We can make TV.’”
Imagine, he said, rapidly throwing out an idea that just came to him and was unrelated to the banks’ credit card business but was related to the way he approached social media: “What if the retweet button on Twitter was brought to you by Xerox, because it’s a copy!” On second thought, he added, “Twitter will never do that.” On third thought, “People don’t aim high enough. They say no. I just said no.”
Members of his staff gently steer the discussion back to the subject of the meeting. One of the challenges with travel, a member of his team interjects, is that people don’t want to cart heavy luggage. They can pack lighter by shipping their clothes ahead. We have to think of the customer and what they can afford, Vaynerchuk said. “Are you guys familiar with a start-up called Affirm? It’s a financial company that makes consumer credit more accessible. It was started by Max Levchin, a cofounder of PayPal.” And, he adds, if you go online to the Casper mattress company to buy a mattress, “when you go to the shopping cart and put the credit card in you’ll see the confirm button. You know what this is? It’s making three equal payments. It’s allowing you not to pay at once.”
What would be “amazing,” he says, is if Vayner could lock up customers for their credit card client by signing exclusive deals with retail companies to use a button on their Web site for the Sapphire Reserve credit card. “We could find out if the ability to create a Sapphire card button that triples the points can be integrated into their Web site.” Customers could pay in installments without being hit by steep interest charges. “If we quietly made deals with fifteen companies” we thought would be major businesses in the future, he said, we could “do what Walt Disney did with Orlando. Nobody knew he was buying all the property” that would turn into Disney World. “If you bet on companies early enough,” Vaynerchuk later says, no doubt thinking of his early relationships with Twitter and Facebook, “you create a disproportionate emotional relationship.” With this front-row seat, Vayner would be serving their Chase client. They would also be serving Vayner by building relationships with, and collecting data on, these consumers. “We would lock in a new generation of shoppers,” he said.
If Gary Vaynerchuk is one day to own the New York Jets, which remains an obsession, he knows he needs to branch out and be more than a digital ad agency; in fact, more than just an agency.
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One gets a sense of the changed dynamics between client and agency by attending the marketing meetings of Bank of America, a Michael Kassan client. They are presided over by Anne Finucane. Her pedigree is not that of a typical banking executive. One of six children, she was raised in Boston by a mother who was a distant cousin of Democratic House Speaker Tip O’Neill, and a father who was a prominent lawyer whose clients included the New England Patriots, back when they were known as the Boston Patriots. Soon after college graduation, she joined the staff of Boston mayor Kevin White, where she would meet and later marry prominent Boston Globe columnist Mike Barnicle. They were close to the Kennedys and other Massachusetts Democrats. She became a senior executive at Hill Holliday, a Boston advertising agency, and in 1995 was appointed vice president of marketing and corporate affairs for Fleet Financial, a troubled bank that in 1993 paid $100 million to settle claims that it was guilty of predatory lending practices. Her main task over the next several years was to dig Fleet out of this mess by making acquisitions and assuaging elected officials and local regulators intent on protecting consumers and jobs. She became a confidante of two Fleet CEOs. By 2004, Fleet was itself an attractive acquisition target, and Bank of America bought it. With her deft political and interpersonal skills, she became a confidante of CEO Kenneth D. Lewis, and then of his successor, Brian T. Moynihan.
The secret to her relationship with four different bank CEOs? “I think it’s because I am not a banker. My expertise is in the world of marketing, communications, public policy, data analytics, research. If you have somebody who has neither the interest nor background to want your job, and you believe the individual is good at their job, then you’re set up to be a trusted adviser.”
No bank came out of the financial crisis of 2008 in more parlous shape than BofA. That year they further burdened themselves with the acquisition of the collapsing Countrywide Financial for $4.1 billion, and troubled Merrill Lynch for $50 billion. Like most of the nation’s largest banks, BofA was on federal life support. Unlike most banks, its stock price and profits took longer to rebound, not regaining profitability and stock price growth until 2015. When Finucane put up for review the varied agencies who serviced BofA in 2015, she turned to Michael Kassan. “He knows how other pitches go,” she explained. “He knows who’s hot and who isn’t. He knows who won business and who didn’t. He knows who lost creative people or account people. He knows what’s happening in the media and what the freshest pitches are.”
With 50 million banking and brokerage customers, 4,689 financial centers, 16,000 automated teller machines, 13 percent of all U.S. banking deposits, and a political climate in which big banks make for an inviting piñata, marketing BofA is not simple. Bank of America operates a retail bank, an investment and corporate bank and trading company, and an investment services wing. For their quarterly marketing meetings chaired by Finucane, two dozen or more agency and BofA executives congregate on the Fifty-first floor of the Bank of America building that looms over Bryant Park on West Forty-second Street. For the June 2016 meeting, in addition to senior BofA communications, marketing, consumer, government, data, and enterprise executives, in attendance were two WPP executives, Donald Baer, chairman and CEO of Burson-Marsteller and former communications director for President Clinton, and Joel Benenson, CEO of the Benenson Strategy Group, who served as President Obama’s and in 2016 as Hillary Clinton’s principal pollster; Rishad Tobaccowala from the Publicis Group; several executives from the primary creative agency, Hill Holliday, an IPG agency; Stephanie Cutter, partner in Precision Strategies, who was Obama’s deputy campaign manager in 2012; and John Marshall, senior partner and chief strategy and innovation officer of the corporate identity firm of Lippincott. Each had assigned seats around a vast table formed into a square and draped with a white cloth.
This June meeting demonstrated how dependent the bank was on forces it could not control, and how advertising often takes a backseat at a marketing meeting and why more money is spent on marketing—media strategy, public relations, polling, lobbying, consulting, research, design, direct mail—than on advertising. This meeting commenced with a report on BofA’s finances. Bank profits rose from $4 billion in 2014 to $16 billion; the bank’s liquidity was four times as large as in 2008. But this good news was drowned out by the background noise o
f an angry presidential campaign where expected Democratic nominee Hillary Clinton and her challenger, Bernie Sanders, and likely Republican nominee Donald Trump, vied to criticize big banks.
Surveys reveal that support for banks dropped five points, Finucane said. “My concern is Bank of America should not be a focus of the conversation when the talk is about Dodd-Frank.”
Pollster Joel Benenson said Sanders enjoyed broad support when he declared, “We have a rigged economic system.” That issue won’t disappear after the election, in part because “corporate profits are at record highs and yet wages are largely frozen.”
Repeating her caution, Finucane said, “We don’t want to be the tip of the spear.” How does BofA mitigate the issue?
Despite the strides BofA has made by improving mobile banking and home mortgages, global corporate communications and public policy executive Jim Mahoney answered, “Candidates screaming makes it difficult to communicate effectively.”
They discussed the positive steps BofA has taken to demonstrate its good citizenship, including the support the bank provides for reducing carbon emissions and for what’s known as “sustainable growth”—BofA is the number one underwriter for green bonds. “Right now we’re better than the rest of the financial service industry, but what kind of a goal is that?” Finucane asked.
The conversation veered to how the bank could better engage with its customers by serving as a “curator,” or helper. Already, their user-friendly mobile banking app has more than 22 million customers. The bank is aided by the data it collects on its customers. A potential consumer who downloads their Zillow app offers “a clear indication” of whether they seek a new home loan. BofA doesn’t have access to the names, nor do they share or sell customer data with anyone outside the bank. But in addition to the information gathered by their apps, the bank often knows of other online customer behavior and can tailor their messages accordingly. “We don’t just need to run ads” at them, Lou Paskalis, who oversees their marketing investments, says. “We need to engage with them. We don’t say, ‘Click here to get that loan.’” They take it slow, banking the consumers’ cookies so they can track them on ad-supported sites. Maybe, the BofA document that was distributed before the meeting says, they “insert a Home Ownership thought leadership content piece” when the consumer is reading the New York Times online. Or serve them a “Best Rates” message when they’re on their ESPN mobile app.