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Marketing as the harbinger of business agility
Yesterday's cost center, tomorrow's mission control
Paint company Sherwin-Williams recently found itself in a pickle. Tony Piloseno, an Ohio college student working at a Sherwin-Williams store, was also mixing paint on TikTok and building a million-plus followers. Excited about the potential marketing uses of his TikTok prowess, he spoke with his bosses who, in turn, connected him further up the corporate food chain to someone in marketing. Rather than hear what Mr. Piloseno was proposing, the corporate marketing person brushed him off. In a near-perfect illustration of how corporate silos work, Sherwin-Williams’ loss prevention department caught wind of his increasingly popular TikTok account a few weeks later and promptly orchestrated his firing. A variety of media outlets picked up the story a few months later, undoubtedly ushering in a week from hell for whoever runs PR at Sherwin-Williams. Whomp whomp.
The story has a happy ending for Mr. Piloseno, who – after reportedly entertaining many offers from other paint companies – took his talents to Florida Paints, where his mix of paint and videos is encouraged.
It also serves as an excellent example of how marketing can be an early harbinger of seemingly unrelated business challenges, such as:
Even skilled marketers don’t fully understand the value of marketing across different channels
Sherwin-Williams is no stranger to and certainly no slouch in the advertising department. In 2019 it spent ~$355 million on advertising; the year before, data from eMarketer ranked it the third fastest-growing retailer with 34.4% revenue growth, behind Wayfair and Amazon. Its efforts seem particularly strong across premium print and commercial TV. Mr. Piloseno’s TikTok channel had around a million followers when he was trying to make his case to Sherwin-Williams’ marketing leadership; thanks to TikTok’s algorithm, the reach of each video was significantly higher than his number of followers, and Mr. Piloseno also posted his content to Instagram and YouTube. Yet this wasn’t of interest to corporate marketing, which didn’t feel the need to explore a new channel or even attempt to quantify how much earned media this activity could generate (although it probably ran a similar calculation on the negative effects of national and international media covering the aftermath of Mr. Piloseno’s termination). This is a process issue: Most marketing budgets don’t have much wiggle room or ability to reallocate resources to an emerging opportunity.Most marketing organizations don’t have the means to evaluate and recognize potential opportunities like this one as they’re unfolding. Which system would have the necessary data? Is an analyst with the necessary skills available? In a world where speaking to customers in real time is the goal, this legacy lag isn’t working in marketers’ favor. For all that industry talk of innovation and bold ideas, we’re actually incentivized to maintain the status quo.
Misaligned incentives across divisions and departments can spell unanticipated trouble
Many organizations with corporate and regional branches have an inherent hierarchy: The operations of a single, individual store aren’t necessarily of interest to corporate divisions, and vice versa. Regional and local marketing budgets are usually assigned for the sole benefit of that store or region, so anything that extends beyond a single territory potentially takes away from set goals for that location. In this case, the bulk of Mr. Piloseno’s online audience didn’t “belong” to his store – his efforts couldn’t easily be attributed to an increase in in-store sales, and without the involvement of corporate marketing, there would be no easy way to analyze a potential contribution to overall sales. That regional-vs.-HQ dynamic may have contributed to corporate marketing’s reluctance to hear out Mr. Piloseno’s proposal: If corporate marketers are incentivized (through personal goals, OKRs, or a similar facet of annual performance reviews) to only maximize global goals (e.g., increase ROAS, hit overall sales targets), their appetite to listen to good ideas from the field may be limited.
Organizational silos can both obfuscate and rapidly escalate a problem
Mr. Piloseno’s work caught the attention of Sherwin-Williams’ loss prevention team which instantly saw a problem: Here was someone filming videos with the company’s equipment and materials, presumably on the company’s time. The department that is incentivized to reduce operational loss and waste sprang into action. Even if the marketing department was on board with this activity, the loss prevention department is so far removed that it’s doubtful that it would have stopped the firing train and consulted its marketing colleagues. If the marketing department didn’t have the tools to help recognize the potential value here, the loss prevention department surely wouldn’t either.
In other words, everything worked as intended here. The result is a healthy dose of embarrassment for the company.
If you’ve caught Ana’s Future Without Advertising conference keynote, you’ve heard her talk about how we are in an “in-between” state – when we don’t yet have a very clear picture of a new business model, but we know that existing ones no longer work. She likens it to a basketball match that starts with two teams playing by regular rules; at half time, however, one team returns and suddenly each shot it makes is a three-pointer and it somehow has seven players on court. If you’re the other team, your choices are to keep playing by existing rules (which really doesn't put the odds in your favor) or change the game so the new rules suit you better. Rishad Tobaccowala coined it perfectly in a keynote at the 4A’s back in 2013 (and frequently since):
“The future does not fit into the containers or the mindsets of the past.”
And that’s the problem: We can almost see a new marketing future, but we’re still using old methods and measurements of interpreting success that are no longer in line with a good consumer experience. It’s often approached as a technology-first issue, and that really doesn’t do justice to the tech and partner stack that a company like Sherwin-Williams (and its $300 million-plus annual advertising budget) is able to construct. So in addition to traditional concepts of marketing efficacy, we should all really have a recurring annual organization-wide goal: to increase marketing agility.
Resist the urge to roll your eyes at agility as an oversubscribed industry buzzword. Most large-budget marketers run their media-mix modelling once per year: Where was a channel like TikTok on the relevancy scale a year ago when that modeling would have been done for 2020? The planning and feedback cycle for television campaigns is measured in months; can the same be said for consumer attention?
At its core, marketing agility requires three dimensions:
Technology: You need a centralized system of record that lets you quickly feed in, analyze, visualize, and take action on information coming from disparate data sets. In many orgs, a data management platform or a customer data platform act as this connective tissue. A semi-custom data hub is also a popular choice (especially if your organization has troves of data warehouses and data that didn’t necessarily originate in digital, easier-to-track channels). The challenge in most companies is that this type of data infrastructure is often predominantly single-modal: It’s owned by the marketing team and isn’t easy for other functional groups across the organization to access, let alone think through potential use cases for data originating from marketing and advertising activities (hence Sherwin-Williams’ loss prevention department identifying an increase in customer engagement across social channels as a serious threat instead of an opportunity). DTC e-commerce companies are generally more agile than their legacy brethren and are starting to approach this data-enabling layer as a business operations platform (for a good example, check out Yaguara).
Process: Given the lead time required in some channels and the constraints imposed by monthly minimum spend or similar contractual obligations, designing an “override” process may not be easy. A good place to start is to treat marketing activities as a pulse check for customers and get into a regular habit of notifying other departments across the company of interesting developments. For example, your warehouse folks will likely want to know that a marketing campaign is going viral, so they can expect more orders and possibly more returns. If you work with many execution partners, having a map of how decisions and actions are made is a good start. For instance, if you want to reallocate spend from one channel to another, a map could illustrate all the steps in the corporate chain that must be taken to ensure this is possible in a timely manner. Ideally, it could also inform how such a move would impact key department KPIs and which should be prioritized.
People: Typical organizational structures don’t easily allow for information to flow across multiple teams. This is reflected both in day-to-day tasks and in annual personal (and team/BU) performance goals, which often create rigid, counterproductive incentives. We often recommend the concept of a tiger team to bridge this particular organizational structure gap: While your core teams focus on day-to-day activities, the tiger team is tasked with spotting new opportunities, spreading information across the organization, and developing cross-team context. If you’ve staffed core teams with specialists, tiger teams are the realm of generalists. Three to five tiger folks could rapidly analyze information from disparate data sources, distill a recommendation, and explain the recommendation to relevant teams, which can then take the actions that can do more to increase overall organizational agility than many multiyear, multimillion-dollar digital transformation efforts. We’re increasingly recommending structuring the tiger team as a separate reporting chain (usually on a “special projects” remit) with a dedicated budget and different incentives than core teams.
How can marketing agility be used for good? Look no further than Ocean Spray, which found itself the beneficiary of 2020’s second most viral TikTok video, courtesy of Nathan Apodaca, chill skateboard vibes, and Fleetwood Mac. Marketers around the world held their breaths, alternating between wishing they were in Ocean Spray’s shoes and fretting when it seemingly took too long for Ocean Spray to recognize the virality or act. While on the surface it seemed like Ocean Spray was about to pull a Sherwin-Williams, instead it was busy figuring out the right response: gifting a truck to Mr. Apodaca, recording its own homage starring Ocean Spray CEO Tom Hayes, and generally striking just the right balance of being in on the virality without appearing cheesy or opportunistic. As put perfectly by TikTok’s advertising team in its own TV (!) ad: Good vibes only.
Marketing agility may have a new, perhaps unlikely champion in Warner Media, which announced that it is moving its entire 2021 blockbuster slate to HBO Max, effectively obliterating theater release windows. This presents an interesting marketing opportunity: To date, big-budget studio movies largely relied on generous customer acquisition budgets but little, if any, repeatability. Yet with HBO Max, Warner now not only has a direct way to communicate with its viewers (over email, notification, hero carousel, etc), it can also work to cultivate an audience of super fans, try merch tie-ins and promotions, and incentivize viewer loyalty. It can go from promoting a single film to promoting a whole slate, akin to how sports teams have individual stars but also promote the fan relationship with the whole team itself. This shift from title to slate likely also means completely rearchitecting its marketing technology, processes, people, and possibly partners – what an exciting proposition.
With the marketing and advertising disciplines obsessed with measurement, how do we measure the value of increasing agility? When Sherwin-Williams tallies up the cost of exposure and the lost opportunity, what number will it settle on?
Thanks for reading,
Ana & Maja
Sherwin-Williams paints itself into a corner
Ocean Spray’s near-perfect response to sudden virality
Peter Kafka’s interview with Warner’s Jason Kilar following the slate announcement/industry earthquake
Rishad Tobbacowala’s timeless 2013 keynote at the 4A’s Transformation Summit
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Founded in 2015 by Ana and Maja Milicevic, principals & industry veterans who combined their product, strategy, sales, marketing, and company scaling chops and built the type of consultancy they wish existed when they were in operational roles at industry-leading adtech, martech, and software companies. Now a global team, Sparrow Advisers help solve the most pressing commercial challenges and connect all the necessary dots across people, process, and technology to simplify paths to revenue from strategic vision down to execution. We believe that expertise with fast-changing, emerging technologies at the crossroads of media, technology, creativity, innovation, and commerce are a differentiator and that every company should have access to wise Sherpas who’ve solved complex cross-sectional problems before. Contact us here.