Scott Galloway: This Technology Kills Brands
Video published June 1, 2017, by L2inc.com: Scott Galloway on digital winners & losers:
- Winner: Voice technology--Amazon Alexa, Apple Siri, Google Voice Search--all of which are accelerating the decline of brand
- Loser: Brands as Amazon.com and Walmart.com compete to lower prices
- Loser: TV networks, which are getting desperate as viewers keep declining
Slides:
(0:26) “The Rise of Voice Platforms - Comparing Voice Related API’s,” Christian Rebernik, February 2017.
http://bit.ly/2ruUmLI
(1:01) L2 Analysis of Keyword Tool IO Data.
(2:13) Amazon.com and Alexa.
(3:54) “‘Roseanne’ Revival in the Works,” The Hollywood Reporter, April 2017.
http://bit.ly/2oGEtlm
(4:00) Nielsen.
http://on.wsj.com/2rgaoZh
(4:09) “NBC Wins 2016-17 Season In Ratings Demo; CBS Takes Total Viewers,” Deadline Hollywood, May 2017.
http://bit.ly/2rJDjq1
YouTube transcript:
0:02 Here at L2, we're not afraid to talk about technologies that we think have been overhyped and are more fluff than substance,
0:08 whether it's VR, the Internet of Things or 3D printing.
0:10 The technology that is probably in our view the most revolutionary
0:14 and is going to shake brands to their core?
0:16 Voice.
0:17 Voice technology is getting tremendous traction.
0:20 Alexa is in 4% of US households, Siri handles over 2 billion commands a week
0:25 and 20% of Google searches on Android handsets are input by voice.
0:30 Who loses? Brands.
0:33 Voice-based ordering eliminates the need for packaging, design and end caps -
0:38 all the things brands have poured billions and decades into perfecting.
0:43 The decline of brand began with the advent of Google
0:46 and every day fewer people put a prefix of a brand name in a Google search.
0:51 And the same is going to happen with voice commands.
0:53 Our research reveals that over the past year, non-branded product searches have increased in every CPG category.
1:00 Prediction: the decline is going to accelerate.
1:04 The death of brand is here and it has a voice,
1:07 specifically Alexa.
1:10 Buy batteries.
1:11 Amazon's choice for batteries is Amazon Basics AA batteries 48-pack. It's 13 dollars and 60 cents total including tax.
1:20 Would you like to buy it?
1:23 No.
1:23 I also found a 20-pack of Amazon Basics AAA performance alkaline batteries. It's seven dollars and 61 cents total, including tax.
1:31 Would you like to buy it?
1:33 No.
1:34 That's all I can find for batteries right now.
1:37 All right.
1:38 Check your Alexa app for more options.
1:40 So there's nothing that unusual about a retailer taking advantage of their custody of the consumer
1:46 to trade them off to a private label brand -
1:48 which is what Amazon is doing here
1:50 because when you go on the site in fact you do find that Alexa has more options.
1:54 There are several branded batteries.
1:55 It's just Alexa, without having to bother with the consumer seeing a brand or packaging,
2:00 has decided to omit or let other brands disappear from your selection.
2:05 Also, the pricing is different on Alexa to voice commands than it is on the main platform.
2:11 It seems as if they're taking advantage of this lack of transparency to charge more.
2:16 We'll see.
2:17 I feel insignificant sitting in front of this.
2:24 So just as the media was fascinated with the fight between Muhammad Ali and Antonio Inoki, the famous wrestler 40-plus years ago,
2:40 the media is missing the point today
2:43 and focused on the fight between Walmart and Amazon, who compete against each other, but not really directly
2:48 as Walmart owns the rural customer and Amazon is clearly going after the urban wealthy.
2:52 The real victims here? The people hurt by Amazon? Likely brands -
2:57 specifically CPG brands.
2:58 Amazon's algorithm finds the lowest unit price for a given product and then applies it.
3:04 If Costco sells a 10-pack of toilet paper for $10, Amazon notes the price per roll is $1,
3:11 forcing Walmart, which aims to have the lowest price on 80% of its products, to do the same
3:16 which in turn, Amazon and Walmart force their manufacturers to lower their price,
3:22 telling them to stop marketing and start cutting prices
3:25 which is the equivalent of a payday loan in the world of marketing:
3:28 it works in the short run,
3:31 but over the long term you end up broke.
3:32 If you don't play ball,
3:34 Walmart will limit your distribution and create its own rival products
3:37 and the Amazon algorithm will literally kick you off the platform in a nanosecond.
3:42 A continued loser: TV networks.
3:44 What best captures the vibe at the recent upfronts?
3:47 A stunned and silent audience
3:49 based on, no joke, the announcement that ABC was bringing back Roseanne.
3:53 Desperation has a name. It's TV.
3:56 Fox registered a 2% gain in viewers this season - if you include sports.
4:00 If you don't, viewership fell 19%.
4:03 ABC viewership declined 8%.
4:06 The network boasts five of the top ten shows in the adult 18-to-49 category
4:10 but only one of them is new.
4:12 The rest are aging franchises, including Grey's Anatomy and Modern Family.
4:15 When ABC launches Modern Family they own it and it's a point of differentiation.
4:19 However the only thing keeping these guys from death's door right now are assets they don't own
4:24 that go to the highest bidder - specifically the Super Bowl, March Madness and the Olympics.
4:29 What happens when, and it will, one of the Big Four -
4:33 Apple, Amazon, Facebook and Google -
4:35 begin bidding on these assets because they can monetize it elsewhere with their infinitely cheap capital?
4:40 You're going to see an incredible decline in television.
4:44 It's surprising how long things take, then shocking how fast they can happen.
4:49 TV is about to enter the shocking phase.
4:52 The only people left watching broadcast ad-supported TV are going to be the poor and the technologically illiterate.
4:59 A few weeks ago we referenced a wonderful nonprofit, Lifeline Syria, that is helping resettle Syrian families in Canada.
5:06 Unfortunately there are now more donors than there are families,
5:10 as Canada has suspended the exemption that allowed these families to immigrate.
5:14 We have instead decided to focus some efforts and raise some money on a wonderful charity called Gather for Goats,
5:20 a worldwide benefit for Syrian refugees living in the desert in Jordan to provide a sustainable source of nutrition and hydration for children in the area.
5:30 Specifically we're going to raise some money and buy some goats for some good people.
5:35 It's strange, it's innovative and we'd like to think it's generous.
5:39 Not bad things to have on your tombstone.
Gather for Goats:
https://gatherforgoats.com
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