Volume 36: TikTok and the languages of business.
1. Tik Microsoft, Tok Twitter.
Tl;dr: Forced divestment looks like it’s down to two.
The US government issued an edict earlier this month. Either fast-growing Chinese-owned social app TikTok has to sell its US operations by September 15th, or it will be banned in the US. (At which point, of course, it would immediately become a geek status symbol only accessible via VPN.) The purported reason? That it’s nothing more than a tool for the Chinese government's state spying on our children.
This led to the revelation that Microsoft had already been quietly in talks about buying TikTok…and so had Twitter. Let’s examine these two a little more closely.
Microsoft remains the most likely buyer and if they do it would represent a fundamental strategic move by Satya Nadella to shape Microsoft’s consumer franchise for the next decade. Many forget that Microsoft has historically operated as a brand portfolio modeled on P&G rather than a singular brand like, say, Apple. Something they’ve accelerated via acquisitions in recent times, through purchases like GitHub and LinkedIn, so acquiring TikTok fits neatly. The integration opportunity has less to do with what faces the consumer and everything to do with advertising, as Microsoft would likely bundle TikTok, Bing, and MSN into a single ad-network and then use TikTok’s rapid growth to try and break the digital advertising hegemony of Google and Facebook. If TikTok’s consumer growth were to remain constant, this would likely find some considerable success as many advertisers are desperate for advertising alternatives, especially to Facebook.
Twitter, however, is a much more interesting proposition. While buying TikTok is a pricey proposition for Microsoft, they’re more than big enough to make it happen. On the other hand, an acquisition by Twitter looks a lot more like a reverse takeover than an acquisition, likely heavily funded by private equity. It kind of makes sense if you think about it. Today, Twitter is an underperforming, under-scale business with a part-time CEO that hasn’t innovated in years and is going nowhere. Putting the leadership of TikTok across both, and bringing considerably more focus and proven innovation capability to the table has the potential to be a fascinating combo in the race to build a genuine competitor to the Faceebook empire. That is if they had any chance of pulling it off and if the government were to let them…
Which brings me to two very big questions this whole situation raises that might have tremendous long-term implications:
If the US government can arbitrarily demand the sale or closure of a foreign-owned business in the US, what’s to stop foreign governments doing the same to American companies? What’s to stop the EU demanding the sale (or closure) of Google’s European operations? Or China mandating the sale or closure of Apple’s business in China? Or anyone mandating the sale of Facebook’s assets in their country? Once you open this particular Pandora’s box, where does it end?
If the data the Chinese government allegedly gathers is so sensitive that it mandates the sale or closure of the entire US business, why is it OK for Facebook or Google or Amazon to gobble up more data on American citizens daily than TikTok does? If this data represents an acute national security risk, why are we allowing Big Tech to gather it without anything resembling regulation or oversight? And why would we transfer that power to Microsoft or Twitter without strings? Isn’t that just scary?
2. Talking the right languages of business.
Tl;dr: New LinkedIn report seeks to close the language gap.
After completing my MBA many years ago, I observed that it wasn’t a management degree but a languages degree. I’d previously had no idea that the different functions of a business use very different languages to talk about what are essentially the same things. As a result, being able to understand the languages of business has served me well ever since in pretty much every client situation I’ve been in. (My other observation was that an MBA doesn’t make a terrible manager better, it just makes them a lot more dangerous. But that’s a tale for another day).
So, it was with great interest that I read this report from the LinkedIn B2B Institute on how marketers can better “market” themselves to the CFO. It’s a pretty long read and in parts seems to worryingly dumb things down (do modern marketers really not know the basic tools of market research?), but overall I think it’s an important addition to a world where marketing and meaningful value-creation are being pulled further and further apart as the marketing function becomes ever more tactical and promotional in nature.
Of particular interest is the chart on slide 45 that translates important advertising concepts that are typically described in the most baffling of terms by the likes of the Ehrenberg Bass Institute into what the author refers to as the language of the CFO (but in this case I’d rather call “common sense.”)
It’s fascinating how just changing the language changes how you think. Instead of abstract concepts like “salience” and “brand halo effect,” we get to talk about margin protection and future cashflows. That’s more like it.
3. Target the highest common factor rather than the smallest of differences.
Tl;dr: Segments of one and similar nonsense.
Many years ago, I worked with a retail bank and helped it become more successful in attracting new customers (It won something like 1 in 3 of all new accounts opened in its footprint). One of the observations that led to this was the sheer complexity of competing bank offerings. In checking accounts alone, competitors had an average of 7 different accounts segmented to suit specific customer groups. The problem was you needed a PhD in Mathematics to figure out which of these accounts might best suit you and it was utterly confusing to try and comparison shop. When we looked at the customer research and data, we saw that competitor segmentations were predicated on very small differences. Yes, these were nominally different segments but scratch the surface and their needs were strikingly universal. So, my client engaged in a counterintuitive strategy for retail banks: They eliminated products to concentrate as much meaningful value as possible into just one or two in each product category, which was then supported by mass marketing spending. And it worked. Really, well.
Fast forward about 12 months, however, and the executive team had hired McKinsey to evaluate their business and go to market strategy fully. And lo and behold, McKinsey did a segmentation. I think you can probably imagine my reaction when the consultants presented their recommendation to re-prioritize all product innovation and marketing activities around 20+ “primary” segments that they then bragged had been simplified from over 100 to fit the strategy. I was livid. I mean, the entire basis of my client's business and brand success was based on their focus on people’s universal needs, and here was McKinsey recommending they just blow that up and do what everyone else was doing instead. Luckily my clients and I were on the same page and it never happened.
But it does happen, every day. Marketers across the field have become obsessed with segmenting audiences based on the tiniest of differences, with the “Holy Grail” being one-to-one personalization. But one-to-one marketing makes little or no sense in the real world, to the point that Gartner thinks it will ultimately go away entirely because it simply doesn’t work and is incredibly hard to manage.
So, I found this article pretty interesting. I’m not particularly a fan of the writing style, but much of the argument resonated with my own experiences, especially aligning brands to bigger definitions of their opportunity rather than limiting them with smaller ones, and noting that personalization can only really have an effect if your brand is already well known to a lot of people.
4. Disney takes hatchet to Century Fox. Ends up with something much…less.
Tl;dr: 20th Television seems like it’s missing something.
I’ve written before about how Disney, upon acquiring most of Fox's assets, has been working to remove all mention of the word Fox. It’s not clear if this removal was a stipulation of the acquisition or whether it just represents prudent brand management on the part of Disney not wishing to associate its brand with something as divisive as the Fox name. Either way, they’re getting rid of it.
With the movie studio, the resurrection of the original studio name, 20th Century Studios makes a lot of sense. It’s a simple shift, retains the equity and most of the distinctive qualities of the 20th Century Fox brand, and as a change is notable more for its restraint than its boldness.
Fast forward to this week, and it appears that Disney is taking the whole removing a word approach to naming one step further and rebranding their television studio “20th Television”. I’m sorry, but what the hell kind of a name is that? As smart as 20th Century Studios appeared to be, 20th Television just seems to make no sense. Not only does the name itself seem nonsensical (I can’t help wondering where the 21st television is, or what happened to the previous 19? Murdered in their sleep? Government experiments in creating a super-human television now escaped and running wild?), it doesn’t even fit neatly with the studio name anymore as a part of a portfolio. Which then begs the question, why?
Here’s my guess. This naming choice has nothing to do with what makes sense or what is right for the market, but is the fruit of internal infighting and compromise. Somebody in the central Disney brand team wanted to name it “20th Century Television” to fit with the architecture precedent set by “20th Century Studios,” but somebody in a leadership position in the business refused to be called 20th Century because it’s old and they plan to “dominate the new century.” So how to reconcile these two positions? Well, probably after weeks of fretting, gnashing of teeth, and the frantic creation of alternative options, somebody eventually just admitted total defeat and said “what if we just knock the Century out and call it 20th Television?” And the exhausted protagonists all just nodded to each other wearily over Zoom and said “great idea. Let’s do that” But it’s not a great idea, it’s a shit name.