All of this intensifying change in how products and services are sold in terms of consumer engagement and motivation was vividly on display when I attended the most recent Coachella Valley Music and Arts Festival. As a lifelong music fan and musician, I attend the event every year, and started doing so well before it evolved into a trendy, spring break destination for young people across the country. In the beginning, it was mostly about the bands. Some were prominent, many were not, but for music lovers, it was paradise. Now, of course, Coachella has taken on a life of its own. The acts have almost become secondary, a backdrop to the larger social gathering taking place, one in which being there isn’t nearly enough. Even more important, it seems, is telling the world about it. All of this is both fed by and supports a gigantic online narrative, as the thousands of Instagram, Snapchat, Facebook and Twitter messages ricocheting through the social media universe over the last few weeks can attest.
The smart folks in corporate America have taken notice, prompting Coachella to take a decidedly more commercial turn in recent years. While some bemoan the uptick in commercialism, in a vacuum it’s neither good nor bad, it’s merely a sign of the times, and there’s no question this advertising disruption and transformation is being driven principally by demographics, with the millennials driving the bus.
Consider the following:
• Millennials invariably want to be a part of a community, to participate, to see what everyone is wearing and even what they are drinking;
• What’s more, they don’t care about TV in the traditional sense, almost at all. Most of the shows they watch can be viewed either online or don’t have commercials, like ‘Silicon Valley’ or ‘Game of Thrones’;
• Traditional TV and radio ad campaigns that gobble up millions and run for 15 or 30 seconds during highly rated programming are largely useless in reaching this key demographic.
All of which means large events like Coachella and organic social media communities comprised of people with similar interests and tastes are becoming more important than ever before, and companies interested in brand building need to adjust their marketing and advertising strategies accordingly.
One company that appears to have done just that is Victoria’s Secret, a subsidiary of L Brands, which recently said it will no longer mail out its once-celebrated catalog. Not only was it wildly expensive to produce, but for a variety of reasons it was becoming less relevant every day, having gone the way of the compact disc. (Also, it was probably more popular among men than women – and that’s a problem). So rather than spend millions to make and distribute a catalog, the company demonstrated its new approach by instead sending a group of its models to Coachella. Believe me, they were hard to miss. People, of course, took pictures, which then went viral, blanketing social media platforms and winning exposure from a host of other lifestyle-focused online sites that was comparatively dirt cheap to generate and more targeted to its audience.
Companies that sponsor professional athletes are using similar tactics. While network and cable television represents diminishing value to advertisers, live sports continue to have tremendous pull because most people watch them in real time, making them one of the few ‘DVR resistant’ pieces of entertainment content remaining. That means when prominent athletes such as Cam Newton or Stephen Curry arrive at the stadium or arena wearing a pair of Beats headphones or an Under Armour hoodie, those images, which get displayed on TV and splashed across social media, are as good as any 15-second television commercial. To some extent this has always happened. Michael Jordan was a walking Nike ad for years. They were synonymous. Even today, for many, it’s hard to think of one without the other, but now, with social media, this phenomenon has been taken to another level.
The big losers in this equation are the companies that are either in traditional TV or radio and have not adapted to the app world like Viacom or Ford and GM, which spend tens of millions on TV ads with less and less effect. Obviously, the winners are the social media platforms themselves, especially the ones that enable photo sharing, which is hugely powerful among young people, like Snapchat, Instagram, Facebook, Twitter, as well as Google.
Aside from that, the future will belong to the companies that are smart enough to create or infiltrate events where young people with discretionary income and a set of shared tastes want to be. To put it another way, companies need to go where the consumers of today are, not where they expect them to be, in front of their television.
By Ross Gerber
Ross Gerber is CEO and president of Santa Monica, Calif-based Gerber Kawasaki, an investment advisory with approximately $435 in assets and holds investments in all of the companies mentioned in the article.