Eddie Yoon “Perspectives on the future of advertising” Founder, EddieWouldGrow
August 16, 2018 by Screenmag
Today Will Andeer sits down for another interview, this time with Eddie Yoon, founder of EddieWouldGrow, to discuss his perspectives on the future of advertising.
ANDEER: What brought you to write Superconsumers?
YOON: I remember a podcast with Salman Rushdie where he gave advice about writing a book. The advice he gave was to not write a book for a few reasons. The odds of success are very low. The likelihood that someone else has written about it is high. And finally feedback can be tough, as you expose yourself to hurtful critiques or even worse, as he uniquely knows. He said the only situation in which you should even consider writing a book is if you have a message to get off your chest so you can sleep at night.
I thought a lot about his advice when the opportunity to write a book was offered to me. And I realized a few things. About eight of my clients had doubled or even tripled their businesses within five to eight years and grown a collective $8 billion dollars in part due to the growth strategy work I had helped them with. I kept seeing the same patterns throughout, making me realize growth was a lot simpler than people realized. Finally, I realized the greatest joy I found in my job work sharing these epiphany moments about growth strategy and superconsumers with others and then seeing them put it into action and create amazing outcomes in the marketplace.
In my prior role as a senior partner at a consulting firm, these epiphany moments and great outcomes could only happen so fast. If I put pen to paper, then perhaps many more could occur, which is why I wrote my book Superconsumers with the Harvard Business Press. What has been intriguing is the interest in the book beyond traditional consumer businesses where I did most of my work. Executives in a wide variety of industries have reached out and the book had global interesting, having been translated into Czech, Chinese and Russian.
ANDEER: A lot of people I’ve talked with have seemed really interested in why the money has disappeared in advertising. What are your thoughts? Are companies cutting their marketing budgets?
YOON: At the macro view, it looks like the economy is growing at three percent. But that doesn’t mean everyone and everything is growing precisely at three percent. Some companies and categories are growing and some are dying.
Previously, a product, brand or a company got outdated and would decline. What I am seeing now is that there are whole categories that are losing relevance. For example take cereal. The cereal category has been declining over a decade by billions of dollars. Protein is all the rage. As the cereal category shrinks, do we really need two cereal giants in the future? My guess is only one will survive in the long-run.
But it’s not just individual categories facing headwinds. The entire big food industry is struggling, in part due to macro trends. A few years ago for the first time consumers spent more money eating out than they did buying groceries. Why did those lines cross? People aren’t cooking as much. Cooking might become like sewing, where very few people make their own clothes because it is so much easier to have someone else do it.
There will always be some people who cook because they enjoy it. My analysis has been that things like the food network that you would think would make people want to cook more has actually raised the bar and made people intimidated by it.
The percentage of people who love to cook and cook frequently for their families has been cut by a third in the last fifteen years. If you look at that it explains why grocery stores are struggling. That explains why big food and beverage companies have been struggling. A lot of their CEO’s have been fired or quit because sales have been dropping. Is it a case of they’ve done something wrong? More than likely it’s that we just spend more money as consumers eating out than we used too.
So as big food struggles to grow, marketing budgets will bear the brunt of this.
How do you change that? That is a really hard tide to turn!
Think about the beer companies. People still drink alcohol, but they are drinking more wine and spirits then they do beer. The beer companies have some of the biggest ad budgets. The wine companies are much more fragmented. There is not an equivalent to Budweiser in the wine category. So what happens to the people who make beer and have the biggest advertising budgets when people decide to change what they want to drink? Their budgets have to go down.
Those dollars are switching to the wine companies but it would be like replacing Lebron James with a hundred junior high school basketball players. None of the replacements are big enough to support or replace the amount of advertising dollars of the giant.
Another example is the automotive industry. The University of Michigan recently did a study that found that the percentage of 16-year-olds that have drivers licenses has been cut in half over the last 20 years. A 16-year-old is three times more likely to have a smartphone than a driver’s license. That is going to impact car sales and auto makers who are big advertisers.
Financial services firms also spend a lot on advertising. But my guess is that the marketing return on investment is going down, because it is so much harder for big banks to connect with consumers. A lot of consumers, millennials especially, hate banks! Banks caused the financial crisis in 2008, but very few of them have been held accountable. Why put your money in a checking or savings account, when you don’t earn any interest? The average US household pays hundreds of dollars in banking fees without fully realizing it because they are low balance, overdraft and other penalties that nickel and dime you.
New brands and businesses will enter banking because consumers aren’t loyal to banks. Amazon is looking into it. At any given time Starbucks has over a billion dollars loaded on their app. Consumers have said I so dislike banks that I would rather park my money at Starbucks, which is basically an interest free loan given to Starbucks for an okay loyalty program.
All of these category headwinds are trickling down to many advertisers and ultimately the ad agencies and film producers shooting a commercial.
ANDEER: What do see in terms of the changes in the commercial film and advertising business models?
YOON: Technology and DVRs are often blamed as the culprit hurting advertisers. This is true, but it isn’t the sole disrupting force. We live in an environment where people don’t trust big entities anymore like government, news media and big business.
If you are a big company with a great product or a great commercial, consumers may not buy it just because of their fundamental lack of trust. How do you trust a legacy food company that has been around for decades, when obesity has risen steadily over that same time period? Is it fair to say that food companies have made us fat? No, that is overly simplistic. But there needs to be an acknowledgement by big companies that they bear some responsibility for what consumers are dealing with today.
Most people discover new products these days through word of mouth, be it a yelp or amazon review or someone that you trust. The ability to persuade now is a lot lower than it ever has been.
There are companies that still spend a lot of money on advertising. What marketers have figured out is a harsh reality: they’ve lost the ability to persuade new customers to join and/or unhappy customers to stay. All they can really do is remind customers who don’t mind them that they are still around. So they are shifting to more fifteen second ads than fewer thirty second ads, focusing more on quantity than quality.
ANDEER: What types of advertising do you see working in today’s marketing efforts and data?
YOON: Everyone loves a good story, be it an underdog story or a story of transformation. Every category and a lot of brands have stories that exist. There is somebody that buys a lot and cares a lot about your category. These are superconsumers, which is the core of my book. The reason why “supers” care about a category is that its made their life better in a macro way that you don’t necessary associate with the category. If you can understand that story and retell it authentically, then other people might feel they have that need too.
Too many marketers and ad agencies want to tell their own stories. They have to find superconsumer stories, and share those.
Look at Brinks as an example. Aside from their business to business security expertise, they have a consumer business that offers prepaid cards. You can’t spend more than you have in . your account and it is not tied to a bank, so you can’t make mistakes and ruin your credit. They charge you a set monthly fee that is transparent, versus nickel and diming you. People love it and what it does is it puts a cap on how much it costs to have a debit card or checking account.
I remember hearing stories of people that used it as a way to manage their money better. One story was of a women in particular who does really well as a professional photographer. She’s participating in the gig economy, but doing very well and is happily self-employed. However, she doesn’t have a steady paycheck with direct deposit. So her income is lumpy and a traditional bank doesn’t really make any sense for her.
So she turned to Brinks. It didn’t penalize her for her lumpy income stream, like a traditional bank would. And because it forces discipline, she actually gives credit to Brink’s for improving her credit score. She said, “I was better about my money. I noticed a difference about my money habits and it made me feel better about myself. My credit score went up which allowed me get an auto loan and buy a car which helped my career”.
She described a story of how her life went from good to better and the brand played a meaningful role in that. When she tells it, other people might say “Oh, I wish my credit score was higher too,” and then sign up for Brinks.
The future of advertising looks a lot more like marketers and ad agencies filming documentaries than trying to be Steven Spielberg.
Finally, advertising spend will grow when companies are growing. The majority of a company’s growth occurs in higher growth categories. For ad agencies to grow, they will need to be strategic and proactive about cultivating companies in strong categories and play the role of documentarian with the key superconsumers versus hoping that their legacy clients can swim against the current.
Eddie Yoon is the founder of EddieWouldGrow, LLC a think tank and advisory firm on growth strategy. Prior to this he was a partner at The Cambridge Group, a strategy consulting firm that helps Fortune 500 CEOs drive growth by unlocking consumer demand. His work over the past two decades has driven over $8 billion dollars of annual profitable growth in consumer packaged goods, durables, robotics and energy. Eddie is one of the world's leading experts on finding and monetizing superconsumers to grow and create new categories. He is the author of Superconsumers, published by Harvard Business School Press, which was recently named one of the Top Business Books of 2017 by Strategy + Business. He contributes regularly on consumers, future demand and growth strategy to the Harvard Business Review, he has appeared on MSNBC, has been quoted in the Wall Street Journal, New York Times, Fortune Magazine, The Economist and Bloomberg Businessweek and has been a key note speaker at conferences in Asia, Australia, Europe and the Americas.