Robert Stephens is the founder of Geek Squad and he knows how to grow a business from ground zero. He says, “Marketing is the price you pay for being unremarkable.” I’d extend that line of thinking to advertising and sales as well.
It’s the tax you pay for being unremarkable. Undifferentiated.
But most of the stuff in life is undifferentiated. We have our favorites, but when Fruit of the Loom is out of stock, we’ll easily slide over to the Hanes tighty-whities. Nobody loses much sleep.
All these undifferentiated products set the stage for heated competition, and some tremendous Super Bowl commercials. It’s the battle for your business.
Now, before you get too excited about entering one of these markets, remember, “competition is for losers.” That is a key lesson from PayPal founder Peter Thiel. The best products are so valuable, so differentiated, they create a monopoly, and they skip out on all that silly competition.
This is what we call a blue ocean, meaning sharks aren’t taking a bite out of you and your business. No blood in the water.
Those ads, that marketing spend, they are not a path towards differentiation, they are a path toward perceived differentiation. But depending on your work, that might be the best you can do.
Selling hamburgers? No monopoly there, so let’s play monopoly. That will buy us some time, sell a few burgers, and help us make the quarter. We can add a ball pit, a rewards program, and clean bathrooms. That will create some loyalty.
But it’s not a differentiated product. It’s unremarkable.
And the marketing tax doesn’t stop with the burger wars.
Ford vs Chevy, Budweiser vs Coors, Coca-Cola vs Pepsi; these are all undifferentiated products, trying to give the perception of differentiation. Attempting to build brand loyalty, fans. Fan is short for fanatic. These companies are trying to recruit foot soldiers to join their tribe and spread the word.
They are recruiting fellow Sneezers.
And in the short term, it can work. But like Zig Ziglar says, that type of motivation “is like showering. We recommend it daily.”
See, the luster fades and you are forced to keep spending on advertisements. And that is the tax. In that type of business, you pay the tax, or you go out of business.
These products, despite their tribes, are mostly interchangeable.
The Cola Wars: A Case Study
Advertising legend David Ogilvy said, “You can’t save souls in an empty church.” He made it his business to get the parishioners there, on time, ready for worship.
But this wasn’t Sunday service. It wasn’t the book of Matthew or the Torah.
This was the church of commerce. And the offerings, the tithing, was mandatory.
Royal Crown Cola, Jarritos Mexican Cola, Simply Cola, and (heaven forbid) Shasta Cola were all faced with this predicament. You’ve got to pay to play.
Which means the King and Queen of Cola, Coca-Cola and Pepsi, have less power than you’d think. They can’t cut their marketing spend, or they’ll get left in the dust.
It’s still just sugar water after all.
So, they pay the tax. The ransom to speak with their customers.
Big media feeds off these companies. Like Tony Soprano shaking down the local businesses for “protection” money.
Undifferentiated companies feel like they don’t have an option, and maybe they don’t.
Paying the marketing tax can work. You can grow through sales and advertising. But eventually, the competition becomes about just that, sales and advertising.
Instead of the best product winning, it’s the best campaign. Instead of the best service, it’s “sharp knives and steak dinners.” Don’t fool yourself into thinking the knives are for your filet.
The brand of corn chip customers select has very little impact outside of the halls of Tostitos. Lives are not being changed either way, and that is the life of the undifferentiated in a nutshell.
Hollywood Hero’s
In the 80s and 90s, Pepsi was throwing fuel on the fire. Five million to Michael Jackson. Another five million for Madonna.
They were running a familiar playbook of celebrity endorsement.
Coca-Cola wasn’t keeping up, they were sticking to the same slogans, stale and outdated. Their market share was shrinking and they needed an upgrade.
In the new world of media and entertainment, who is going to help them? Who could make the best advertisements?
Hollywood.
They brought in a juggernaut, Creative Artists Agency (CAA).
In 1993 “Always Coca-Cola,” replaced “Can’t Beat the Real Thing.” They ramped up TV commercials like never before, pushing the new slogan along with a rebranded image. Instead of pop stars like Pepsi, their advertisements were intended to connect through emotion. Conjure images of family, timelessness, and nostalgia. They wanted you to remember the good times you’d had with their product, and spread that feeling to friends and family.
And it worked.
CAA leadership also embraced new technology, launching one of the most memorable campaigns in Coca-Cola history, the animated polar bears and “Northern Lights.”
“In the second quarter of 1994, Coke logged a 6 percent gain in U.S. case sales and a 12 percent increase in profits.” Michael Ovitz, CEO of CAA, writes in his memoir, “We paved a two-way street between Hollywood and Madison Avenue.”
But the game hadn’t really changed. It was still more about the ads than the product. And when that’s the case, there is no doubt that you are paying the marketing tax, and you will be for quite some time.
The marketing tax is not just an expenditure; it’s a survival strategy.
The real challenge for businesses is to break free and swim towards the blue ocean where marketing becomes optional. Differentiation through innovation. Businesses that achieve this not only reduce their marketing expenditure over time but also forge more meaningful connections with their customers, paving the way for sustained growth.
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