Future of Marketing: Part One

Today, we’re kicking off a special two-part series answering your questions about all things marketing. Scott puts on his professor hat and answers your questions surrounding common marketing misconceptions, the power of community-driven marketing, and what the future holds for the industry. Music: https://www.davidcuttermusic.com / @dcuttermusic Subscribe to No Mercy / No Malice Buy "The Algebra of Wealth," out now. Follow the podcast across socials @profgpod: Instagram Threads X Reddit Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Welcome to Sephora.

• 0:01Scott Galloway?

  I'm looking for a perfume that's not too perfumey.

• 0:06Speaker 00

  I got you.

• 0:06Scott Galloway?

  Serum moisturizer or moisturizer syrup.

• 0:10Speaker 00

  Let's get into layering.

• 0:11Scott Galloway?

  My concealer is making me look worse.

• 0:15Speaker 00

  Sounds like the wrong shade. Let's get you matched.

• 0:18Speaker 02

  There's only one store that really gets what you're going for. Get beauty from people who get beauty, only at Sephora.

• 0:25Scott Galloway?

  Hi, I, uh...

• 0:27Speaker 00

  Let's get you a basket.

• 0:31Scott Galloway?

  Welcome to the Prof G Pod's Office Hours. This is the part of the show where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind. Hey, Prof G. Hey, Scott and team. Hey, Scott. Hi, Prof G. Hey, Prof G. Hey, Prof G.

• 0:42Speaker 02

  Hi, Professor G.

• 0:45Scott Galloway?

  Today, we're kicking off a special two-part series. I did not know that. I guess we're in part one today. Answering your questions about all things marketing. I just got insecure. We'll answer your questions surrounding common marketing misconceptions, the power of community-driven marketing, and what the future holds for the industry. So with that, first question.

• 1:04Speaker 03

  Good day. This is Nick from Sheffield, Massachusetts. I have two questions. The first is, what do you believe to be the greatest fallacy today in marketing? I.e., the greatest misconception or misperception that you encounter? And the second is, why is B2B marketing so dull?

• 1:28Scott Galloway?

  Hmm, Nick. Why are you so sexy with that whispering voice? Jesus, what are we exchanging, like, nuclear codes here? Anyways, look, the sun has passed midday on the world of brand strategy. I worry that, and I've tried to dramatically alter my curriculum to talk about algorithms, APIs, new platforms, supply chain, which I think is sort of the new gangster attribute of a company, if you will. If you think about all the companies that really add a lot of value, it's usually about a supply chain innovation, whether it's Netflix going from DVD to streaming to now producing stuff in Madrid and Seoul. Amazon is obviously a supply chain story. I think almost all...

• 2:10Scott Galloway?

  Massive, if you will, you know, value accretions of supply chain. You're like, what about Nvidia, Scott? Well, that's supply chain too, bitch. How did we print money or create shareholder value? What was the algorithm for shareholder value from the end of World War II to the introduction of Google? Simple. Manufacture a mediocre product. And it doesn't matter because we had just leveled our competition, specifically Germany and Japan. And so we could, we could produce a mediocre product and then we would wrap it in these amazing brand codes of American toughness, or youth, or sex appeal, or European elegance, or paternal love, or maternal love, right? Let's turn 20 cents of peanut butter paste into $2 of peanut butter. Why? Because choosy moms choose Jif. And if you want to show your neighbors that you love your kids more, then it's worth it.

• 2:55Scott Galloway?

  This is maternal love. And these brand codes could be hammered away and cemented into our psyche using this extraordinarily cheap medium called broadcast television, where all of America spent five hours a day watching why Tang, which the astronauts drank, was good for you, right? All of these amazing associations, we were better at imbuing than anyone in the world. And that was the world of marketing, and there were marketing departments everywhere. And I worry now that the whole price promotion, product placing, the four Ps in traditional marketing is essentially training kids to go to work for Kraft, or General Foods, or Procter and Gamble, and be laid off two or three years later. Because where has the majority of capital gone? It's gone back into the product. Why?

• 3:39Scott Galloway?

  Because digital technologies have unlocked an opportunity to 10x products. The idea, the ability to unlock product quality and find the better product using digital technologies and these weapons of mass diligence called Google and TripAdvisor and all these other platforms, has essentially taken traditional marketing and kicked it in the nuts. So I think you're going to see a reallocation of capital, going back to the original notion around. CEO's job is to, or manager's job is to allocate resources to the greatest return. I think the greater return is pulling money out of marketing right now, and I hate to say it, and putting it into supply chain or actual product innovation using new digital technologies. But what about spending more money on Google? Yeah, that happened.

• 4:24Scott Galloway?

  I think that will likely slow down. It'll still be greater than the rest of the industry, but they have managed to bid up their prices through monopoly abuse. And I think people are figuring out that it's no longer the deal it used to be. It's still a better deal than broadcast advertising. What does that mean? It means the CMO is like a second lieutenant in Vietnam, and that is their lifespan is going to be pretty short. It's going to be CSO, Chief Supply Chain Officer. I think the CMO is kind of already dead. They just don't know it. And I used to work with CMOs all through the 90s when I was running my first firm profit. And effectively, their job was to create this intangible kind of notion of, sort of, these intangible associations. And also their job was to convince everyone that they were somehow the Yoda of the brand,

• 5:07Scott Galloway?

  and no one else was allowed to even talk about it, that the whole brand thing was a Faberge egg, and only people, only certain people could use certain words around the brand. And if you smudge the egg, it might be a career-ending injury. It's also fucking arrogant. What does that mean if you're working in advertising? Boy, am I going on here. It means if you already have momentum and you're doing well, you probably should stay put. I would argue if you're under the age of 40 and you don't, you don't see, like, you're not skyrocketing at your current agency, I would say, thinking about, I would consider getting out of that business and getting in on the client's side to things that are more closer to the product, if you will. Anyways, I think that's a great question. I need to answer the biggest question, and that is the misconception.

• 5:48Scott Galloway?

  The biggest misconception in marketing is the following, and that is the belief or the misconception that choice is a good thing. It's not. Choice is a tax on consumers. Consumers don't want more choice. They want to be more confident in the choices presented. That is the basis of the category of retail that added more shareholder value in retail than any sector in history, and then especially retail. Why? I don't want every yoga pant available. I don't want to go on Amazon and see 300. Some people do, obviously a lot do. But what I really want is someone with much better taste than me in Vancouver to pick the three best yoga pants. Anyways, next question.

• 6:27Speaker 04

  Hey Scott, I'm Philip, a German-speaking podcaster currently doing an executive MBA. This weekend, we discuss in class that companies and universities should be communities. Additionally, creators often refer to their audience as a community. What are your thoughts on using communities as a marketing tool to create and retain customers and turn them into ambassadors? Keep up the good work and thank you for answering my question.

• 6:51Scott Galloway?

  Oh, sure. I mean, you know the answer to this, Philip. It's powerful. In my brand strategy class, I have a series of constructs. And I'm like, you may not remember me, you may not remember the class, but you need to remember these constructs. And I think I have about a dozen of them. And they're essentially models to kind of sort through the basics of marketing. And one of those models is called the clock model. And that is from 12 to 4, when the consumer enters or a stakeholder enters the franchise. That's pre-purchase marketing, advertising, PR, sampling, you know, conventions, whatever it is, thought leadership that raises awareness, creates hopefully intent to buy. 4 to 8, the bottom of the clock, is distribution. Like, I walk into a Lexus dealership and I think this is a nice experience and it makes me feel better about the car.

• 7:34Scott Galloway?

  The ultimate kind of 4 to 8 is Apple's gangster decision to take $6 or $7 billion a year out of advertising and put it into these 500 temples of the brand called their stores. I mean, I think, actually, I think that may have been a more important move than the iPhone, although the iPhone is the one that harvests all that brand equity. But these stores, think about where you used to go to buy electronics, like a Verizon store with bad lighting and a guy named Roy. It's sort of where, I don't know, it's sort of, it was just awful, right? Or, I mean, Best Buy does a good job, but it's not really aspirational. There was nothing aspirational in one of the largest categories in the world, technology. And Apple came in and said, why don't we make it feel like on Armani store, that's like the coolest. I'd like to live in an Apple store.

• 8:16Scott Galloway?

  I think if they had a coffee shop, it would, everyone would just go, hang on. I think it put Starbucks out of business if they started a coffee adjunct just called Apple Up or Apple Caff. Apple Caff, I like that, but C-A-F-F-E. Ooh. Hashtag trademark, Scott Galloway. Anyway, that's the distribution, that's 4 to 8. 8 to 12 is post-purchase. Loyalty programs, customer service, right? You go into Nordstrom and if you're a customer there and you've bought something, they are just going to take the return no matter what. FedEx, once you ship the product, you can track it. That was sort of the gangster move back in the 90s. I remember sending all my applications in for business school and freaking out because of course I waited to the deadline and I could go on the FedEx site and they had invested billions of dollars at that time.

• 8:58Scott Galloway?

  So tickets say, well, assigned by a woman named June Allison at the University of Pennsylvania Wharton, who will soon get about rejecting you. Reject, thank you, Joan. Come back, Scott. Okay, community. Post-purchase, Harley owners groups, affinity programs, loyalty. Kind of empowering or illuminating or activating your community is just huge. And one of the reasons we try and do events and try and write back, and I try to be, it's actually easy for me to be nice to people on the street, is you want a community of people who are your evangelists. It's just no, when you have a small company, what's the most important thing? Well, the core team of amazing players that you give them much equity to do and literally

• 9:42Scott Galloway?

  nail them to the ground, that's number one. But what you also need is those first few clients. I was in the services business and I always said, our first three clients have to be just fanatical about us. We have to over-serve them. I don't care if we lose money. I don't care if you have to go on vacation with them. I don't care what it is. They have to be evangelists. So if you can create a community of evangelists or people who have sort of a goodwill towards you, and there's ways to activate that, obviously it's hugely important. Something NYU does not do well, does not do well. There's not that same sense of camaraderie or community post-purchase, if you will. So thinking about how to illuminate or really engage or activate this community and give them opportunities to get together. One of the things we're talking about for all of our podcasts is doing a series of

• 10:27Scott Galloway?

  events or a tour next year, because when we meet people and you're nice to them and they see you live, they just feel more cemented, they feel more engaged, they feel more intimate with the brand. So yeah, you know, you knew I was going to agree with you. The question is, what is actionable here? If you were to roll out or unfurl the brand clock in terms of resources, you want to have a bias. Now, what's that bias? You want capital to be slanted downhill. What do I mean by that? You want to have a bias against pre-purchase, kind of a mediocre bias against distribution, and you want to have a bias towards post-purchase. Why? Because pre-purchase is over-invested because it's cool. I used to go back to New York. And advertised with Conde Nast because I wanted to have lunch in the Conde Nast cafeteria

• 11:10Scott Galloway?

  with my friend David Carey because the people were hot and I got to see Anna Wintour and they would invite me to these cool parties and I felt cool. And you get to hang out with good-looking people who wear black and invite you to cool parties when you spend money on pre-purchase, mostly agency people and magazines and media companies. Purchase is kind of fun. That's stores, expensive but kind of fun. Post-purchase is boring. That's slipping a pizza under the door to a bunch of MIS guys building CRM databases. It's not romantic, it's not sexy, and guess what? The inverse correlation holds here as it does with careers. The less sexy, the greater the ROI. So I want you to have a bias towards post-purchase loyalty programs, database marketing, CRM, and also community, if you will. Thanks for the question.

• 11:53Scott Galloway?

  We have one quick break before our final question. Stay with us.

• 12:02Scott Galloway?

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• 12:44Scott Galloway?

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• 13:04Scott Galloway?

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• 13:49Scott Galloway?

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• 14:12Scott Galloway?

  Welcome back. Question number three.

• 14:14Speaker 05

  Hey Scott, I'm a 40-year-old freelance film professional working behind the camera as a cinematographer. I've managed to navigate the industry's challenges in recent years, primarily by working on broadcast and internet commercials, even as the industry as a whole, including film, TV, and reality content, has scaled back. With high-quality videos now achievable on consumer-grade cameras and personal phones, do you think there still will be a need for professionally-made commercial and marketing campaigns from a branding perspective? Or are we likely to see a decline in demand for my services? Alternatively, could the growing need for video content across numerous mobile platforms

• 14:56Speaker 05

  ensure ongoing demand for professional production? Essentially, will my skills be needed in 10 or 20 years?

• 15:04Scott Galloway?

  Anonymous, you're at exactly the wrong age or the tough age because it's not like you're 25. If you were 25, I'd say get the hell out of Dodge. But if you're 40, it means you're probably pretty good at what you do. You have some professional credibility, some awareness, some momentum, contacts, and that's tough around whether you should shitcan that and go be a commercial real estate broker or something. Not suggesting you do that, or do something else. And so if you've done well, I would say, all right, what are we going to do if we want to stay in this industry? The term I would use, or the statement I always make is that AI is not going to take your job. Someone who understands AI is going to take your job. And that is, you need to become a warrior around where there'll be growth in the industry. And that

• 15:46Scott Galloway?

  is getting 80% of the production value for 20% of the price. So I'm a small firm that wants to put together promotional videos, or thought leadership, or video assets. And I'm not going to hire an agency who's going to show up and storyboard it and do all the school shit and take me out to dinner and charge me a quarter of a million dollars before I even see a reel. I think those days are gone unless you're a super high-end, high-budget production luxury brand or automobile company. I just think that's going away. But I'm a guy who understands the newest technologies and can string together kind of what I'll call the Old Navy of video production. What do I mean by that? I can give you 80% of the gap for 50, not even that, 50, 20, 10% of the price. So I think

• 16:29Scott Galloway?

  you've got to become a ninja warrior in terms of these new tools that take costs out and figure out a way to use. I don't know if it's Firefly. I forget what the other visual one is that everyone's talking about. But you have got to get very good at AI and be able to spin up assets at a fraction of the cost. You have got to go back to school, if you will. Get really fast with these technologies with one objective. How do I produce something of 80% of the quality that I have produced in the past for 20% of the price? That should be your goal. What technologies, what skills do I need to garner such that I could do that? It is not easy. It is not easy. And there will always be signs of hope to hold on to the old days, but make that transition. You're still a young man. Anyways,

• 17:12Scott Galloway?

  you want to be the Old Navy, if you will, of cinematography. Thanks for the question. That's all for this episode. If you'd like to submit a question, please email a voice recording to [email protected]. Again, that's [email protected].

• 17:38Scott Galloway?

  This episode was produced by Caroline Shageran. Jennifer Sanchez is our associate producer and Drew Burrows is our technical director. Thank you for listening to the Prop G Pod from the Vox Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn. And please follow our Prop G Markets pod wherever you get your pods for new episodes every Monday and Thursday.

• 18:00Speaker 06

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