The lens through which you have experienced the world is also the lens through which you ultimately view the world. Thus a person who spent decades in marketing could argue that almost everything is a subset of marketing. But sometimes it becomes a bit of a reach.
Last year I read Ken Auletta’s Frenemies book which detailed how technology was changing the media landscape & impacting ad agencies. One of the companies repeatedly featured in the book for taking innovative new approaches to marketing & promoting their brand as being cutting-edge was GE. They currently trade at about $10 a share, down from about $30 a share a couple years ago when the book was being researched.
Intel had built an in-house ad agency, was building dancing robots, etc. … and in the process let TSMC get ahead of them in being able to produce chips with transistors at a 7 nanometer density while Intel is still at 10.
Kraft Heinz recently slid 27.5% after missing their estimates & slashing their dividend. They wrote down the value of their Kraft & Oscar Mayer trademarks by $15.4 billion. After years of 3G’s zero-based budgeting they failed to keep up with changing consumer tastes. It is hard to sustainably cut your way to success.
Other than accounting, it seems they have no idea what they are doing.
“I’m a terrified dinosaur. I’ve been living in this cozy world of old brands [and] big volumes. You could just focus on being very efficient and you’d be OK. All of a sudden we are being disrupted in all ways. We bought brands and we thought they would last forever. Now, we have to totally adjust to new demands from clients.”
3G co-founder Jorge Paulo Lemann
Last May Warren Buffett mentioned the ongoing battle between brands & private label brands offered by retailers.
Barrons published an article mentioning the direct-to-consumer trend could drive ad growth for Google & Facebook.
“As direct-to-consume brands become more confident in their ability to drive repeat business organically,” he wrote, “we believe the willingness to pay for the initial customer acquisition naturally grows, which could serve to continue to grow ad revenue derived from these verticals over time.”
Evercore ISI’s Anthony DiClemente
After under-funding growth for long enough, cutting the business to the bone, the only solution is … divestures. Maxwell House is one of many brands which is up for sale.
Mood at the company, which saw its shares plummet nearly 30 percent on Friday, is dour, say people familiar. It is taking a no stone unturned approach to which brands it should or could unload, they say.
CNBC
There was a huge hint they were going to bomb the quarter about a month ago, when they ran a custom Superbowl ad campaign targeted to Pornhub for their new Devour food brand.
In the age of the #MeToo movement & all the spiels about “brand safety” in the advertising world one would have to be utterly tone deaf to broader cultural trends to run such an ad campaign. There’s no way a risk-adverse roll up play consisting of old line brands intentionally creates custom ad campaigns targeting porn unless they are desperate.
When a company starts running cutting-edge ad campaigns on Pornhub or introduces their version of Shingy, they may not yet be a short (after all, subpar performance can be announced with increase share buybacks or a company can position itself for buyout to only later become a writedown by the acquirer) but buying out of the money put options ahead of earnings releases might not be a bad idea.