Issue 291  October 10th 2020

Hello

My name is Edward Nevraumont. As Leon mentioned in last week's issue I am taking over responsibility for the newsletter as Leon and Simone take on the far more important responsibility of a new child. I am so happy for both of them. I will try my best to fill their shoes here at Startup Curated.

My general belief is that many business professionals get divided into two camps: Those focused on long term brand building, who are often not credible for CFOs, and those focused on performance marketing, who require short-term feedback and often miss on opportunities to create long term value. I have been on a mission to create a group committed to a "third way" - data aware, but focused on doing the right thing for the long term.

I have been writing a weekly essay at Marketing BS since May 2019. More recently I have added a weekly "briefing" covering "what a third way marketer needs to know from the past week".

This week's essay: Programmatic Advertising, Cookies, Tracking and Targeting

For now I will be sharing the weekly briefing here every Saturday. I hope you find it valuable. More to come over the next few weeks!

News

• Facebook: The social media giant is integrating its messaging apps. This will both make it more difficult to break up the company (as they explained in their “unrelated” 14-page public letter to regulators), but also make it easier to serve ads at a “market rate” by increased potential ad density.
• Facebook 2: Facebook has a new CMO. Two interesting things here:
  1. Alex Schultz is VERY different from their previous CMO. Usually a company of Facebook’s size is looking for a strong brand marketer and/or someone with experience dealing with regulators (“Marketing to Regulators”), but Schultz is not that. Schulz was previously VP of analytics, and presumably knows data really well, but has no significant experience in, for example, big budget ad campaigns (one of the requirements for the job was “has managed $500MM+ brand marketing budgets,” which shows how little job requirements matter on job postings). “His appointment signals Facebook may be taking a more analytical approach to promoting its products."
  2. Schultz will continue to report to Javier Olivan, the VP of growth, and will continue to work on “data crunching” in addition to his new role. It is not often the CMO reports to a VP and still gets to open Excel every day. This is an unusual strategy, and it is worth watching closely to see how it plays out
• Amazon: Introduced AmazonOne which lets you “Pay with your Palm”. Amazon is making it available to other retailers making this effectively a competitor to ApplePay and GooglePay (which let you pay with your phone) - but it is even more convenient. There are all sorts of privacy issues here, but convenience and friction reduction is incredibly powerful. And most people just don’t care about theoretical privacy problems.

Marketing/Advertising

• Influencers: Facebook has a tool, “Brand Collabs Manager” that allows you to find influencers. The tool lets you search for influencers and filter on things like gender, geography and interests. But it also uses Facebook’s “lookalike” tools to find “the best matches” for your company page, and then allows you to reach out to them directly through the tool. All for free. Taylor Lagace walks through how to use it with video tutorials. If any readers have used this, I would love how it went. It is on my list to try it for this newsletter.
• Prime: Amazon Prime Day was delayed due to logistic limitations related to COVID. The new day has been announced and will be October 13-14th. See my 2019 essay on the economics of discounting and why Prime Day is NOT about the selling of more products.
• Potato Chip: Swedish Brewery St. Eriks has produced the worlds’s most expensive potato chip - actually 5 chips selling for $75 as a bundle. The actual run is limited. Promotions like this are not about selling the chip - it is about the the PR from having the chip available for sale. This is the same idea as the arms race around the "most expensive burger in NYC" a few years ago. Apple tried this with the gold Apple watches to less impressive effect, but it is worth considering for any normally low-priced category. Quick checks tell me the world’s most expensive taco is take. As is the most expensive lemonade? But I believe there is still an opportunity to be the worlds most expensive protein bar…
• A/B Testing: Andrew Faris wrote a good thread on the problems with A/B testing. The big point: “Small changes give you small results". Amen.
• Ferris Bueller: Liftmaster re-tells Ferris Bueller’s Day off “if Cameron’s dad had had Liftmaster surveillance” (The new dad played by Alan Ruck - the actor who played Cameron). It’s getting some “Augmented PR” coverage, but not as much as something more controversial.
• Best ad of the week:

Business/Strategy

• Incentives: YouTube posted a tweet (since deleted) complaining about how too many creators drag out their video length longer than needed, perhaps unaware that this is how YouTube has incentivized creators through their own payment model… \

• Dis-incentives: States rolled out car seat requirements at different times. Discontinuities are great opportunities are “natural experiments” that allow economists to tease apart potential impacts. Nickerson and Solomon realized that car seat laws often require families who have a mid-sized car to upgrade to a larger car if they have a third kid. They found the extra $10,000 or so required was enough to decrease the annual probability of giving birth by 0.73 percentage points - driven entirely by a drop in third children. (Note: Car seats are estimated to save ~60 lives/year. Now we know they also “cost us” ~8000 births/year). NOTE: Our family upgraded to a minivan on the birth of our SECOND child, so we had no concerns about having a third (at least from a “can they fit in the car perspective”)
• Loyalty Programs: Byron Hobart explains why airline loyalty programs are worth more than the airlines themselves. Saying “loyalty” doesn’t make it about loyalty. See last year’s essay on the economics of Starbuck’s loyalty program.
• Slow then fast: The collapse of foreign student visas in the US \

COVID and the New World Order

• Surveillance: Software that monitors employee computers is up 4x this year since March. Essay coming on this topic in the next few weeks
• NFL: When things go back to “normal” will there be bent up demand? Or will people have adjusted to new habits? For the NFL the answer is mostly “B”. Viewership this year is down 7%. Unclear how much is a shift to streaming and how much is a lack of ability to watch sports in a group.
• Contract Tracing: Find the right app you should be using by country/state/region(the fact that it is different by state tells you part of the problem…)
• Cycling: Bike sales up are up 81% YoY nationally since March.
• Restaurants: NY state comptroller predicts NYC will lose half its restaurantswhen this is said and done

GPT-3/AI/Machine Learning

• Programing Conversion: Facebook has built a tool to convert one programming language into another. Pretty incredible.
• The State of AI: A very detailed annual report on where we are at now wrt research, talent, politics, commercial applications and politics. Predicting the future is hard, and even summarizing the present is not easy. These guys try.

Careers

• CMO Hiring: Adage reports CMO hiring is at a record pace this year. More and more businesses I have spoken to have told me that March and April were rough, but then the changes in the world has more often then not HELPED their business. And growth+changes means companies need smart senior leadership. This means you have leverage in your career right now. Don’t settle. (Read my career guide)
• Social returns to education: Academic success at Harvard did NOT predict income, but membership in the right social clubs did - up to +32%! - at least for students who attended in the 1920s and 30s where this study obtained its data. Most interesting: What club a student got into (which predicted income) was highly driven by random residential assignments as freshmen. This is the value of an elite school - the people you become friends with - NOT the alumni and definitely not the education provided.
• New Chip Accelerator: New Chip is a “remote accelerator” that invests in start-ups. They are looking for a CMO to support their portfolio. These are fun jobs if you are in the right point in your career.

Fun

• Nuclear Fusion: Fusion is how the sun generates energy and has always been the Holy Grail of green energy. Unfortunately it has always been 25 years away. Now it seems like it is less than a decade away. Most important news of the week if true.
• Wage Equality: The wage gap between unmarried men and women has dropped to zero by 2018. Married wage gap remains significant - and women really take it hard when they have children. But research like this is narrowing down more and more where the problem is - so people that care can focus their effort on the levers that might matter.

Keep is Simple,

Edward