Volume 70: Peloton kills kid, CEO should be fired.

1. Peloton kills kids, pets. Finally recalls product, stock collapses.

tl;dr: Unconscionable arrogance on full display.

Peloton was one of the darlings of the pandemic, briefly rising to a peak market valuation of around $50bn in December of last year. But things have been far from rosy since then for the brand made bizarrely famous for a terrible ad parodied by Ryan Reynolds, as today’s 15% stock slide and halving of total market capitalization since the December high proves.

First, there were terrible supply chain problems, recalls of dangerous bike pedals, a patent infringement lawsuit, and accusations of deceptive communications. No matter how good the exercise bike is, people simply aren’t going to wait six months to get one, which means telling customers that it’s coming, it’s coming…oh, it’s not coming was hardly a good look.

But that’s nothing compared to the stunning arrogance with which they treated the news that their treadmill product was killing children and pets. Just to put this into perspective, Peloton knew there had been at least 79 injuries caused by their treadmills, including a toddler left with severe and permanent brain damage, before a 6-year-old was finally killed back in March.

While the company chose to refer to this as “unthinkable,” it was clearly anything but. Based on the evidence, I’d call it “entirely predictable, even likely.”

Now, after your product has been implicated in the injuries of multiple adults, the permanent life-changing injury of one child, and the death of another, you’d assume the company would do the right thing and either issue a recall or provide every customer with a means of resolving the problem. I mean, a simple piece of plastic would likely be enough to stop people from being sucked under. But oh no. Their response was to blame their customers, initially refusing any remediation and stating that “The Tread+ is safe when our warnings and safety instructions are followed, and we know that, every day, thousands of Members enjoy working out safely on their Tread+.” Oh, so that’s just fine and dandy then. Thanks for the clarification.

So your product is great, it’s our problem that we’re not using it properly because, you know, keeping our kids and pets away from the treadmill is totally reasonable in a pandemic when everyone is stuck at home.

What a bunch of arrogant shitbags.

Anyway, yesterday, two months after a child died, and what the Consumer Product Safety Commission referred to as “intense negotiations,” that included the public release of an absolutely horrifying video showing a child being sucked under a treadmill (warning, it’s horrible), the company finally issued a recall notice.

I mean, come on. Why did this need to go down this way? Don’t they have any basic humanity? And if they don’t have any basic humanity, didn’t they at least have an idea of the impact this would have on their reputation, brand, and stock price? And if they didn’t know that, wouldn’t they at least hire a crisis communications and legal team who could tell them? I get the whole startup bro hustle-culture bullshit, but the result here is absolutely unconscionable corporate behavior and a dead kid.

I’ve talked before about how companies and their values tend to be connected by only the most tenuous of threads. So let’s put this situation through the Peloton values, shall we:

“Put members first.” Nope. “Operate with a bias for action.” Nope again. “Empower teams of smart creatives.” Well, considering we’re at our most creative as toddlers, that’s clearly another big fat nope. “Together we go far.” Are you kidding me?

Guess what? Even after all this and a recall, the product is still on the website, which doesn’t even mention that anyone owning the product should stop using it immediately and send it back. All they did was disable the buy button.

Peloton doesn’t just deserve to have their stock halve in value; the board should summarily fire the CEO and any other executives involved in this debacle. Meanwhile, customers should turn off their $40/month subscriptions until they start demonstrating that things are truly changing at a root and branch level.

I, for one, will never buy a Peloton product until major changes happen.

2. Actually, I’m quite fond of my toaster.

tl;dr: Three things worth reading in Marketing Week.

I have in the past been somewhat harsh on Marketing Week, referring to it as ground zero for the smuggest opinion writers in marketing, so you may be happy to hear that I stand by that statement, 100%. Oh, so often, it’s just absolutely insufferable.

But, just because you’re the dedicated home of the insufferably smug doesn’t mean you don’t occasionally publish things that are worth reading. Here are three that I think are worth your while.

First up, we have Prof Jenni Romaniuk, an Australian marketing scientist from the Ehrenberg Bass Institute, observing that the only way to grow a B2B business is to grow your customer base rather than sell more to your existing customers. While this might sound pretty logical, it must be blowing the minds of some B2B marketers as it runs entirely contrary to their stated strategies. You see, the challenge in B2B is that sales cultures almost always drive, and in sales cultures, the existing customer base is viewed as the ripest territory for selling additional services or new versions of existing products, which in turn creates the idea that you can grow by selling to them. From my own experience, Prof Romaniuk is right on this one. I’ve yet to meet a B2B client heavily focused on the existing customer base that isn’t also suffering from growth problems.

Next, we have this gem looking at empirical evidence supporting the theoretical/case study-based analysis of Binet & Field, much-lauded in the advertising community for their attempts to demonstrate that creativity and brand-building ads really do matter. Here, the analysis seems to show that while the overall thesis is sound, the empirical reality is much messier at the edges because some businesses can run an activation-focused model for longer than previously thought before it ultimately stalls out, and others find brand-building risky. Again, I’d say this tallies with my own experience, especially with startups that struggle figuring out what to do once their programmatic, performance-based models stall, which they consistently do.

Finally, we have the CMO of Yum brands, who sounds like an absolute trip, ranting that purpose isn’t marketing because nobody ever fell in love with their toaster. Or something. Anyway, I can categorically state that I’m quite fond of my toaster. I drag it from house to house when I move and was upset enough to fix it rather than buy a new one when it finally stopped working (If you can call shaking and vigorously banging on a toaster in the garden while shouting at it and magically hoping it will begin working again “fixing”). Anyway, it’s worth reading and somewhat lines up with a study quoted recently by Bob Hoffman that states that “70% of consumers said brand activism has no influence on their buying decisions.”

However, I think the real problem inherent in this arena is that, unlike Eskimos, who really do seem to have hundreds of ways to describe snow, we have only one word for “purpose,” which creates abject confusion when it’s used to encompass a spectrum that broadly runs from “advertising campaign” to “operating system for my business.”

Anyway, I’m not saying Mr. Yum Brands CMO is entirely wrong, but I’m not going to say he’s right either. The whole purpose thing is a spectrum, and since the brands he represents all sell diabetes in a foil wrapper, he’s kind of by definition going to sit all the way over at one end of it.

3. Ad holding Co’s versus consultancies is all well and good, but independence is where the action is.

tl;dr: It’s time we acknowledged where the interesting work gets done.

WARNING: Self-serving thesis ahead.

Advertising holding companies duking it out in a battle against the consultancies for client dollars is a popular narrative, but not only is it false (the consultancies won, the advertising holding companies just don’t realize it yet), it also misses the most interesting trend-line, which is that the best talent has been leaking from both for years. While much of that talent has moved client-side (more on this in a minute), a significant proportion of people have also gone independent. Either as one or two-person boutiques or to create or join larger agencies or consulting firms. What’s particularly interesting about the shift to independent status is how much more dynamic and interesting the businesses of independent agencies are, how many appear to be genuinely trying to create a better work/life balance, and how much better, in general, the work appears to be as a result.

This should hardly come as a surprise. As pretty much anyone working at an agency who has any skill at their work and capacity for selling soon comes to realize, the agency usually needs you a lot more than you need it. This was certainly true of me and almost all of the peers I came up through the ranks with, who’ve almost to a person moved on from holding company-owned agencies.

This shift to independence is particularly interesting when considering the other area talent has been moving to - namely client-side positions. What companies have been steadily doing over the past few years is shifting their marketing functions from managers of outsourced external agencies toward an increasingly operational role, which has necessitated the in-housing of talent.

Relative to the client landscape becoming more operationally oriented, the ad-holding companies have been left wanting because they don’t have structures that include the necessary flexibility to resolve capability overlaps, plug gaps, solve specific one-off problems, coach or mentor client teams, and deeply lack the necessary incentive structures to play collaboratively (irrespective of what they might tell you, the holding companies all demand their agencies grow amid a backdrop of flat marketing budgets, which inherently creates a conflict of interest between collaboration and the pressure teams are under to “grow the relationship.”)

Independent talent, on the other hand, should be ideally suited to augmenting in-house teams, coming in to add value in specific areas, delivering at both a high degree of skill and a lower overall cost because they aren’t supporting the weight of a holding company and all of its inefficiency, dysfunction, and incompetence.

However, while this is a logical and obvious opportunity, most large corporations (and some smaller ones) haven’t yet figured out how to tap into it effectively. Because of all the problems highlighted above, client-side procurement teams have systematically attempted to squeeze inefficiency out of holding company-owned agencies by sheer dint of force. Insisting on onerous terms, transfer of liability, “pricing transparency,” 90+ day payment terms, etc.

Unintentionally, of course, the net impact of these policies is that it means they’re accidentally optimizing themselves for the largest, most expensive, least flexible, least agile, least talented, least efficient, and worst partners. Oops.

I can say from personal experience that even when someone at a large company really wants you to work with them, it’s almost impossible to do so as a small business trying to navigate the complexity, cost, and onerous terms placed upon you by their procurement teams.

However, you have to believe that it’s just a matter of time before this changes. It’ll only take one or two progressively minded large companies to realize that through something as simple as changing a few procurement rules, it can tap into a whole new world of highly talented, top-tier people who aren’t going to cost them the world, and aren’t under pressure to keep “growing the relationship,” irrespective of whether or not it’s in the clients best interests. After all, all most independents want is to be paid in a reasonable timeframe, not have to hold a million different insurance policies, and not have to indemnify a massive corporation. It’s not exactly asking much.