If you were a basketball coach with a seven-foot-tall player who could shoot, would you decline to play him just because all the players on other teams in your league were only five-five?
Author David Rodnitzky poses this question while arguing that businesses have all sorts of unseen advantages like this. It can be identified and capitalized on. In his new book Unfair Marketing: Drive Marketing Success by Leveraging Your Company’s Unique Strengths, he explains how.
On Author Hour today, David discusses how you can outperform competitors by gaining better access to data, why it’s so important to capitalize on special relationships, and how even your brand can provide you with an unfair marketing advantage.
Jane Stogdill: Hi Author Hour listeners, I’m here today with David Rodnitzky, author of Unfair Marketing: Drive Marketing Success by Leveraging Your Company’s Unique Strengths. David, thank you so much for being with us today.
David Rodnitzky: Thanks, Jane, it’s great to be here.
Online Marketing Expert
Jane Stogdill: First, please tell our listeners a little bit about who you are and what you do?
David Rodnitzky: Sure, I’m an online marketing expert, I’ve been doing that for about 20 years now. I graduated from law school actually back in the late 1990s, and I moved out to Silicon Valley with the preverbal clothes on my back. In the early days of when I was here, it was the first .com boom and I got a job, because I was a warm body, at a startup. At that startup, it was crazy times, their head of marketing left the company and there was no one to do marketing so I just volunteered with no experience at all, and I was given the job.
Then I discovered this little company down in Pasadena, California, called Go To, which was the first company to offer pay-per-click advertising, which is the ads you see in search engines when you see the little blue links. From the advertiser’s perspective, you only pay for the ad if someone actually clicks on your link. I thought this was awesome, and that started my love affair with search engines and online marketing. I worked at a bunch of companies doing this and gaining a lot of experience up until 2008 when I decided to leave the world of being an employee and set off on my own.
I started what was then just a little consultancy, just me in a coffee shop in a little town called Pacifica, California. Then, over the last 13 years, the company has grown and grown and grown and today, we are one of the largest online marketing agencies, I guess on the planet. We have about 400 people, we manage for our clients, between two and three billion dollars a year of their advertising budget. The company’s called 3Q Digital and that’s my story in two minutes or less.
Jane Stogdill: Thanks. Now, the book title, Unfair Marketing, what does the phrase unfair marketing mean?
David Rodnitzky: In the 20 years that I’ve been doing this, I’ve seen a lot of companies, worked with hundreds of companies really, and I’ve seen some of those companies fail and I’ve seen some of these companies we’ve worked with become some of the biggest names in marketing and frankly in business, and worth billions and billions of dollars.
What I realized over those last 20 years is that pretty much every company knows the basics of marketing, so everyone knows that you have to buy advertising. These days, typically, online advertising in Google or Facebook, everyone knows about the four P’s of marketing, which is product, and price, and so on, everyone knows you should build a brand.
If you want to really have breakthrough success with marketing, you can’t just do table stakes, you have to do something more than that. What I’ve realized is that to really break through, you need to find something unique about your business that you can do that no one else can do. That’s the concept of finding your unfair advantage.
To be clear, I know when people hear the word ‘unfair’, they think sometimes, “Oh, maybe that’s illegal or unethical,” and that’s clearly not what I’m talking about here. The analogy I would provide is, let’s say that you’re a high school basketball coach, and it’s opening day of practice, and you’re assembling your team, and some kid walks in who is a freshman who is seven feet tall, has the body of an NBA player, and can shoot three pointers better than anyone else in the team. You’re going to have a great season and you’re going to go up against other teams and you’re going to destroy them. The other teams are going to feel that it’s unfair that you just happen to luck into the seven-foot player. Yes, it’s unfair but it’s also perfectly within your rights to take advantage of that person on your team.
The same is true for businesses. Businesses, if they know where to look, have unfair advantages that are analogs to the seven-foot new player. What I found is most businesses don’t know how to identify these unfair advantages, and then secondarily, they don’t know how to use them once they’ve identified them.
The book takes a marketing angle on this and asks what are the four or five things that every business should look for that are unfair advantages that they can use to make their marketing far superior to the competition?
Jane Stogdill: Okay, how to do that? Let’s get into some of them, the first one, unfair data advantages. This chapter takes up a big section of the book, data’s a big topic. First of all, how can people know if that’s something they can take advantage of?
David Rodnitzky: I think every company has data that they have access to that no one else has, or they have more data than other people have, and that gives them an advantage. You’re right that this is a large part of the book, it’s probably 35 or 40 percent of the book because I’ve seen that this is the number one way that people can really beat the competition.
I’ll give another analogy here just to put it in I guess, layman’s terms. I’m probably dating myself here but there was a movie in the 1980s called Back to the Future Two. In this movie, there is a character who is the villain. He goes into the future and he gets a sports almanac, which is a book that has all of the scores historically of sports games, goes back in time and then starts betting on sports games and, of course, he knows the outcome of every game so he’s a hundred percent likely to win his bets. He becomes super rich and, of course, since he’s the villain, he uses his money to be even more villainous.
That’s an example of a data advantage. He has a book of information that no one else has and so when I look at companies, I start asking this question, “What is the information you have that no one else has that you can use to your advantage?”
The truth is, businesses have tons and tons of data available to them. Just to give you some examples, you have your financial data, what products are profitable, what locations are most profitable. You have product data, which products are selling better than other products. You have customer data, where your customers live, what’s their demographic profile, what their preferences are–then you have marketing data, which channels work best for you. Which messages drive the best conversations? All of this data is available to you.
Most companies, first of all, don’t know where to look for the data. Once they find the data, they don’t know how to organize the data in one place. They don’t know how to connect the dots between the data.
So, if I have customer information that my best customers are women over 40 and I have product information, my best projects are whatever blue widgets, sometimes they don’t know how to connect those two pieces of information. Then the last thing that people often don’t have is they don’t know how to take all that data, put it into reports and spreadsheets and sometimes software packages, and make it all actionable.
There’s a lot of steps along the way, I know it sounds complicated when I throw all these things out at once, but I try to break it down in the book into discrete actions, small steps that you can take to slowly build more and more of a data advantage.
The companies that really utilize this data properly are just miles ahead of the competition. Maybe I’ll give you a simple example and a more complex example. A simple example would be, let’s say that there are two advertisers who are running TV commercials and they both run on CNN and The Late Show with Stephen Colbert. Both of them have a thousand dollars to spend and they both put $500 to work, one on the Stephen Colbert Show and one on CNN.
One of the advertisers decides to create different phone numbers for the call centers for each show. Let’s say that The Stephen Colbert show is 800-555-1212 and the CNN show is 800-555-1213. The other advertiser doesn’t, he just has one call-in number. Both these advertisers end up spending a thousand dollars and getting $800 back in revenue.
The advertiser who only has one phone number concludes that TV doesn’t work because he just lost $200. He cancels all his TV campaigns. The advertisers who created two unique phone numbers, which is the way of segmenting the data, realizes that he got $700 of sales from The Late Show with Stephen Colbert and only $100 of sales from CNN.
What he does is he pauses CNN because he spent $500 and only made a hundred dollars. He doubles down on The Late Show with Stephen Colbert because he spent $500 and got $700.
This is an example of two advertisers. When advertisers learn to use their data intelligently and it gives them some advantage, literally, it can be the difference between buying ads and being profitable, and not buying at all because you think you can’t be profitable.
It’s a simple example. The more advanced example would be that advertisers who collect all this data properly and are able to track it, create apples to apples comparisons, and then create reports and systems where you can ask questions, they can get really granular and can drive huge advantages.
You could ask the question, “Do women in Florida over 40 who use iPhones in the morning buy more blue widgets or red widgets?” If you know the answer to that question, you completely change your creative and your messaging in your ad, you change how much you’re going to bid, and of course, you change who you’re going to target.
This is the kind of stuff that when you have this data and you use it properly, your competitors will look at you and say, “I don’t understand how these people are even advertising, we’ve tried this, it doesn’t work.” Yeah, you’ve tried it, but you didn’t use the data properly. That’s, in a nutshell, what the data advantage is.
Jane Stogdill: Data is very important as we’ve seen from all of the news stories on Big Tech recently.
David Rodnitzky: Right. It’s invaded our politics as well, and then we had the situation several years ago where people were using data in Facebook to make very precise ads to try to influence people in the election, and apparently, it worked very well.
Jane Stogdill: The next unfair advantage is around knowledge–the idea that there are experts who have micro-specialized knowledge and that this can be preferable to generalists, is that right?
David Rodnitzky: Yeah, that’s definitely part of it. I think you’re right that part of it is finding the specialists to work for your company. The way I see this is everyone will tell you that hiring great people is important to their business, but most people don’t really have a process to really make sure that the experts that they’re hiring are really the best experts.
This section of the book talks about how you create knowledge advantage by being really rigorous in your identification of who you should hire, the hiring process, and then retaining those experts. You’re right, from the identification of expertise, the first thing that I always recommend that people do is figure out exactly what you need.
We are living in a world of specialists today and every company is different. A startup that is selling chocolate via online orders to millennials is going to need a fundamentally different set of marketing experts than Lock Heed Martin who is selling surface to air missiles to the US government. The first step is just identifying exactly what type of marketer I need.
The next part of that process is figuring out who is good and who is not good in terms of their expertise. A lot of times, people sort of look at a resume and go, “Oh, you went to this really good college, and you’ve had 10 years of experience so you’re probably good enough, let’s hire this person.” My recommendation is to be much more specific in terms of how you hire.
I like to ask people to share case studies of their success and what I’m looking for is not just the ‘what’ but the ‘how’. So, someone who says, “My company increased their revenue by 30 percent by doing better advertising on TV.” Okay, that’s great. How did that happen? Listening to people explain what they did to be successful is really important in hiring.
Then, I think, the last thing that is really crucial is making sure that you’re constantly assessing whether your knowledge advantage truly exists or not by constantly questioning whether your team is the best that they can be. A lot of people who hire teams have what the psychologists call confirmation bias, which is because I hired the person they must be good. They refuse to do any testing to assess whether that is really the case and there are plenty of ways to quantify the knowledge advantage that you think you have.
Examples would be setting very clear KPI’s, key performance indicators, that you hold your team accountable, and make sure that they are hitting them. Having an outside firm come in and do an audit and assess whether you’re using best practices, and sometimes even doing a bake-off. You could hire an outside agency for example and give them part of your advertising and see if they can outperform your internal team.
Yes, knowledge is something that seems very subjective, but if you can make it quantified and objective, and go back to your data advantage and you use your data properly, you give yourself an advantage over the competition.
Jane Stogdill: Constantly question yourself and your biases. Now unfair access advantages, this is about special relationships you might have and be able to take advantage of?
David Rodnitzky: Correct, so the way I think about this is whenever I watch a movie, sometimes these days you see the son or daughter of a famous actor who is now an actor themselves and, of course, they may be very good actors, but you know that they got a lot of auditions because their parents stepped in and said, “Hey, my son wants to be an actor. Interview him and I’ll be in your movie.” That’s an example of unfair access.
The person who is the best actor in the Topeka, Kansas High School has a far less chance of succeeding in Hollywood than the son of Tom Hanks, or whoever.
As a business, you also have access advantages that you can exploit. I’ll give a couple of basic examples, a really simple one is that if you have connections to people in the media, you have a better chance of getting interviewed and getting free publicity, so access to publicity would be one of them.
In the advertising world, which is where I mainly spend my time, I found there are some interesting access advantages that are not immediately apparent. One is that there are forms of advertising where you literally can’t buy the ad unless you know someone who’s selling the ad. If you have a connection to someone who is, let’s say, selling Super Bowl commercials, you have the ability to run ads where other people don’t.
A lot of these advertising platforms also will run tests to see if the new product that they’re launching works and oftentimes, they’ll give away free advertising to people that they know, trusted customers to run those tests. So, you can literally get free advertising by just knowing who you’re connected to and leveraging those connections.
Then, another one that is actually very important these days, is that if you have the right connections, it sometimes means that you get better customer service and better advocacy with your partners. To give an example that’s specific to the world that I live in, it sometimes happens that companies that are advertising on Google and Facebook will get blacklisted by Google and Facebook and this can be for very good reasons. We had a customer many years ago and Google has a policy against showing bullets in display ads and graphical ads. They don’t want to see pictures of guns and bullets in display ads and this company, by mistake, served one.
Google sent them a letter saying they will never advertise on Google ever again, and they came to us and said, “Can you help?” I investigated what they were talking about, and we concluded that it was an honest mistake on their part and that they were a really good, upstanding company. Because I had access to Google, I wrote to some people at Google and said, “Listen, I think this company is a legitimate company. Here is what they did wrong. They know they did it wrong and they are not going to do it in the future. Can you give them a second chance?” And they did.
Today, this was 10 years ago, this company is probably spending somewhere around $10 million a year with Google, and it’s a huge part of their business success that they’re able to run at Google. If they didn’t have a connection to me and if I didn’t have a connection to Google, they would be shut down as a business. Those are examples of access advantages, and they can be very powerful, as the example indicates.
Jane Stogdill: What do you tell the marketing equivalent of that top talented actor from high school in Topeka, who might not have advantages or might not know how to locate them if they do have them?
David Rodnitzky: Well, I think a lot of it is just working the connections you have, first of all. I mean you don’t have to have a connection. You don’t have to be Tom Hanks’ son to get an access advantage. Your high school music teacher or theater teacher may have been in a Broadway musical 20 years ago and someone in that Broadway musical is now casting in New York City. Part of it is digging and finding your connections.
Another example would be, let’s say you’re the local car dealer. You have a local car dealership and you happen to know the head coach of a local football team. That is not the same as having access to the president or to Tom Hanks, but it is a form of access. Part of the challenge with creating an access advantage is just to index all of the different people that you know, not just for connections but those people’s connections, and start to figure out how could this be a benefit to my company? And then not being afraid to ask.
It doesn’t have to be a massive, huge, important connection, it could be a small connection that leads to a bigger connection that leads to a bigger connection.
Jane Stogdill: Okay, great. Unfair brand advantages, how can people leverage their existing brand recognition to create what you call unequal playing fields?
David Rodnitzky: You know, a great brand is like a rising tide that lifts all boats. A great brand will help every aspect of your business. So, in terms of the knowledge advantage that we just talked about, you are far more likely to get a really talented top expert to join your company if you have a brand that they believe in and that they think they want to be associated with.
From an access perspective, the same is true. If you don’t have a connection to Google, but let’s say, you have to get some advocacy with Google. If you’re Pepsi and you reach out, you’re far more likely to get someone to respond to you even if you don’t have any connection points, than if you’re Bob’s Discount Soda that no one’s heard of, and the same is true with publicity. If the Wall Street Journal is writing an article on soda pop, having a brand is going to get you into that conversation and potentially get you a mention much more so than companies that don’t have a brand.
Again, because I am in this world of online marketing and I’m in this world of Google and Facebook advertising, I’ve also seen how powerful brands are in these categories as well. So, just to give a couple of simple examples, one example is the way that Google and Facebook determine who shows up the highest or who’s ad gets shown on Google and Facebook is a combination of the amount someone is willing to pay for that click and the clicks per rate, which is the percentage of people out of a hundred, who click on that ad.
If you’re a brand, your click-through rate is going to be higher, which means that the amount you have to pay per click is going to be lower. Not only that, your conversion rate, which is the percentage of people who end up purchasing something from you after they click is likely going to be higher as well because people trust brands. Brands can actually have a huge unfair advantage in their Google and Facebook advertising because they end up paying less per click and getting more conversions per person who clicks through. That’s a really difficult advantage to overcome if you’re just starting out, and you’re going up against the brand.
The other thing that I noticed is that sometimes, brands just get free advertising because people want to be associated with the brand. As an example, I’ve seen this at tradeshows. Imagine that you have to choose between going to two tradeshows and one tradeshow is sponsored by Google and Facebook, and the other was sponsored by Discountspianotuners.com.
I’m sorry to Discount Piano Tuners if that exists as a URL but you know, you’re going to go to the one with Google and Facebook. As a result of that, the tradeshows will give big companies massive discounts and sometimes even just give them free sponsorship because they want to be associated with that brand.
There are a lot of ways to think if you have a powerful brand. By the way, you don’t have to be a Pepsi or Google or Coke, you could be the best local car dealer and that is a brand within your local area that you can leverage. So, thinking about how you leverage your brand to get better conversions, lower cost, free advertising, better access, better people, this is all something that a brand helps from a marketing perspective.
Jane Stogdill: Interesting and it harkens back to the celebrity analogy as well. Celebrities get all of the free stuff even though they can afford it all.
David Rodnitzky: Exactly. It is the Oscar gift basket where the celebrities are getting $40,000 watches that they definitely could afford on their own.
Jane Stogdill: Right. Okay, and so finally, what are the different unfair money advantages and how can people leverage those?
David Rodnitzky: Money is always a good advantage to have and going back to all the prior unfair advantages that we talked about, money benefits all of them. If you have more money, you will have the ability to invest in better technology for your data and better data scientists. If you have more money, you can pay people more money. You have a higher chance of hiring people who give you knowledge advantage. Money can buy access.
Literally, you can hire a lobbyist to give you access to Washington, DC. But you can also hire, as an example, I talked about with the company that was blacklisted. You could hire a great agency to advocate for you, to give you access where you need it. And of course, money can be used to strengthen your brand and make you more powerful as a brand.
There are a couple of ways that I think are in the ad space that I talk about that are maybe some of the more hidden ways that money could be advantageous. One of the ways is to lose money to make money, and this is known as a loss leader in the marketing world. This is the example where you might see someone say, “Try my product free for the first 60 days then if you like it, we’ll bill you on a monthly basis.” You know, if you have a war chest of money, you could afford to give people two months of trial.
You are going to see in your advertising on Google and Facebook and other places, you’re going to see just like we saw with brand. You are going to see a higher click-through rate, which makes you pay less per click, and you are going to see a higher conversion rate, so you’re able to show up where your competitors can’t and if you’re going up against that competitor, you will see a higher conversion rate, and end up signing more customers because you’re able to take that money risk in your advertising.
A second really great example of how money can be an advantage is that you can play the long game. What I mean by that is when you are calculating how much you can afford to pay for your advertising, you can figure out the lifetime value of the customer, and we call it for short, LTV. What is the customer going to spend with me over the course of their lifetime? And you can make your decisions whether to buy or not buy an ad based on that LTV rather than the immediate purchase.
The example I’ll give to explain how powerful this is is Amazon. I saw data a couple of years ago that suggested that every year, the average Amazon Prime customer spends about $2,000 on Amazon. It’s probably higher now, this was an old statistic. I figured that the average Prime customer is sticking around probably for at least five years, so you are talking about $10,000 of spend that a Prime customer spends on Amazon.
Now, let’s imagine that someone types in “buy a pencil,” on Google and that pencil costs 30 cents to purchase. If you are optimizing to that particular purchase only and you said, “I need to make at least 50% on every single ad I buy,” at the most you could spend is 15 cents on that purchase and that would work only if 100% of the people end up buying the pencil. Your maximum bid to show up is 15 cents.
If you are Amazon and you know that even 5% of the people who click on ‘buy a pencil’ end up becoming a prime customer and those customers shore $10,000 now, 5% of $10,000 I think is $500. You could literally spend $500 to acquire someone, that customer who is buying a pencil.
That’s how having money and thinking about money and having a war chest and being patient can make a huge difference in your business. Those are two examples, and there is more but those are two where it’s hugely powerful to be able to have that war chest. If you have it, you should exploit it because your competitors who don’t have as much money as you are not going to be able to compete.
Jane Stogdill: Well, David, this has been such an informative and interesting conversation. Thank you for joining us.
Again, listeners, the book is Unfair Marketing: Drive Marketing Success by Leveraging Your Company’s Unique Strengths. In addition to reading the book, David, where can people go to learn more about you and your work?
David Rodnitzky: You can go to my company’s website, which is 3qdigital.com and that is the best place to start.
Jane Stogdill: Great, thank you so much.
David Rodnitzky: Thank you, Jane.