AdTech Evolution No.5 | The Brand Death Conspiracy

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“You Are The Product. You Feel Something. That’s What Sells.”
— Draper

Thanks for tuning in.

This week - “the death of advertising” and why the notion is utter nonsense.

Push the product. Forget the brand. Feed the beast. Focus on clicks. Stand by watching as margins wither and Google and Facebook get richer. Those choosing impressions over brand have stopped caring about what they sell. Bad creative on a good product is like smearing lipstick on a prince. Lipstick on a pig never really fooled anyone - not for long at least.

Glut of brands.

Anyone who tells you advertising is dead might work for Google or Facebook. Google generated $28 billion in ad revenue in Q2, up 23.9 percent year-over-year. Facebook grew Q1 revenues by 46 percent. 

They love it when brands compete with mediocre creative. The crappier and less differentiated the brand, the more it spends on performance marketing. When many crappy brands compete for the same customer, more money filters back to Google and Facebook. The claim [that advertising is dead] validates spend on clicks over content.

Performance marketing creates a glut of brands. Why not carve out another toilet paper label - or hotel logo for that matter? Google and Facebook will put it in front of the customer. Your margin, my opportunity. Just make sure to pay Zuckerberg and Bezos their due and proper.

The proverbial race to the bottom ends with Amazon or Google or Facebook wringing out the last remaining margins, right before they reverse engineer your product to squeeze you out on market share.

Tesla has zero ad budget. Why? Because it has no competition - not because advertising is dead. Let’s see how they do once Mercedes and BMW finally wake up.

Brand is as much about quality as it is about association. People actually care about how they spend their money. It reflects on them. They want purpose. A cause. Individuality. All of that is still true. Brand X is nice because it invokes conversation. Where did you get that?

Travel is a hard sell.

It’s infrequent, irregular, expensive, amorphous. When is the right time the perfect time for ad exposure? No one really knows. Sometimes I'm Jekyll sometimes I'm Hyde. Are you selling travel as the service or as the product? Pitching it as a service has gotten some in trouble. Find the cheapest flight. Get their faster. Find the best deal. Best to bake all of that benefit into the product. Southwest is the product. Abercrombie & Kent is the product. Airbnb is the product. Stop selling travel like toilet paper. Start selling dreams. Make them real.

Thanks for listening, 

Luke

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LUFT worked with a private equity group managing approximately 3 billion in capital to assess an opportunity to invest in a niche luxury accommodations concept. The asset in question was a small portfolio of independently branded beach-front properties, catering to an upper-income clientele base with a passion for water sports. The buying team found existing cash flow and economics favorable, but wanted third-party validation of the concept to ensure long-run potential for growth and alignment with market trends.