S2E4 - Identifying and Bridging the Marketing Gap Through Recession and Changing Landscapes with Michael Stich
By Shane Madden and Whit Harwood
CEO of CourtAve, Michael Stich, joins Shane and Whit to discuss the rapidly-changing marketing landscape, and the impact it’s having on how brands are being built. Learn how to identify and bridge an important gap in your marketing strategy, so you’re prepared for industry shifts.
Shane Madden (00:01):
Hi, all this is Shane Madden.
Whit Harwood (00:02):
And I'm Whit Harwood.
We're really excited to be back with season two of Off the Clock, the podcast brought to you by TPT Digital. TPT Digital is the full service vertically integrated digital marketing group of TransPerfect, the $1 billion language services and technology solutions market leader.
We're going to talk to some of the industry's thought leaders, movers, and decision-makers to discuss all things digital throughout the course of the season. So let's get into it.
Let's go. Hi everyone. Thank you so much for listening in today. This is Shane Madden from Off the Clock. Super excited that we've got Michael Stich from CourtAvenue on today's podcast. Michael comes to us with an illustrious career in the agency and marketing realm, and Michael, thanks so much for being part of today's podcast.
Michael Stich (00:43):
Thank you, Shane. So glad to be here. Thanks for the invitation.
Yeah. Happy to have you. So, I'm excited for this one, notwithstanding the fact that we're working pretty closely with you on the marquee brands and customers here in the US, but why don't we start with, can you give us a bit of background as to who you are, your past life, your current life? Yeah, just tell us a little bit more about yourself.
Thank you for asking. My name is Michael Stich. I lead up services for CourtAvenue. My background is, I was born and raised in Asia. My hometown is Hong Kong. I went to school in Boston at Tufts and MIT. My first half of my career was inside of technology. So I worked for technology companies and clients with Dell, Texas Instruments, and McKinsey & Company. I moved to Cincinnati about 15 years ago. Second half of my career has been on the agency side. Still very heavily focused within technology, really through a variety of waves of digital agencies, but have served within digital strategy and leadership roles for a variety of clients across industries. The agencies have included Bridge Worldwide, which is today part of alternatively Wunderman Thompson and Gray with WPP as well as Rockfish and VMLY&R. And just about a year and a half ago, peeled out of WPP leading the global Dell business for WPP to join CourtAvenue. And we've really enjoyed making this thing into a rocket ship. It's fun to build a new kind of company within this environment. We've really been much accelerated by COVID, but also through the acceleration of all of these sorts of transformation and acceleration changes that are happening within a lot of our companies and a lot of our clients. And it's just a great time to try to build something like this right now.
Yeah, that's pretty amazing. Well, again, thanks for coming on today and sharing your thoughts. And as I said, I'm pretty excited for this one. So, I guess my first question, for you, Michael, is as someone that has such a storied career in the agency, marketing, digital marketing ecosystem, what would you say… you're now at CourtAvenue, which, you know, relatively boutique, what would you say is the biggest difference between running a boutique agency as a CEO and being a senior executive at a big holding company like WPP in terms of customer value, in terms of internal kind of operations, all that stuff.
The old adage of, at larger organizations, you have all of the resources, but none of the speed and control, and at smaller organizations, you have none of the resources, but all of the speed and control, is true, but, you know, beyond the obvious, I think it's especially important to be able to be fast moving and imaginative in this environment. There's just so much change happening right now with the rise of new technologies and with so many companies going through such structural changes. So many industries becoming transformed that it's just a good time to be able to experiment rapidly and with some depth and with some credibility, you know, with some experience, I wouldn't necessarily want to wish this upon a less experienced play right now because there's a lot to bite off and go tackle. But for many of us that have more of an experience in some of these spaces, it's a great time to be able to move quickly and to try to put new things into practice. So those are the biggest differences. There's a lot of very well run, well managed operating networks out there. You know, we'd like to think that we're building the next generation of that ourselves.
So, I guess against the context of being a CEO of CourtAvenue, do you think the genesis of all of this digital transformation on the speed to market and just the sheer amount of change in how dynamic it is, do you think the genesis of that has been COVID?
No, I think there's a rise of new technologies that COVID accelerated, but the machine learning and 5G and IOT, augmented reality and virtual reality, you know, blockchain technologies were all there before COVID. And these kinds of technologies coming on have manifested in different industries in different ways, but in terms of the core experiences that we are now focused on creating for our clients and their customers, these were conversations and capabilities that were emerging well before COVID.
Got it. I got to give a shout to Dan and Ben. Ben was obviously the person who's at CourtAvenue as a senior executive over there. He was the one that introduced us. And so, I have a great affinity and obviously a great loyalty to your agency and your company. So my next question is against the context of that being the case. So I've been in this industry for, what, 11 years, you know, run this vertical here at TransPerfect, which is, you know, a billion plus revenue company. I've seen this shift happening in the industry probably four or five years ago where the big consultancy firms were vertically integrating. So we saw, drove with five getting acquired by or merged or integrated into the Accenture business. And we see Deloitte splitting up Deloitte Digital, and we see, you know, the big consultancy firms establishing a foothold in the industry. What are your perspectives, or what are your thoughts in terms of why consultancies are not slow to win but, I guess, more reticent, or they're just not as fast paced or as dynamic when working with significant marketing engagements and opportunities for clients versus say, an agency like CourtAvenue, like what's the secret sauce? Why is that the case?
Let me start with client needs. And then sort of feed back my perspective of why that's the case, Shane, and by the way, feel the same way. A lot of love for Dan and Ben; love him and appreciate the longstanding relationship they have with you and with TransPerfect and very honored to have that carry over into this company as well. So thank you, Shane, for that. Clients, especially the ones that we're serving, the CMOs, chief growth officers, chief client officers, et cetera, of our companies have bigger jobs and sort of broader remits than they have ever had in their career. So you spend enough time in this industry you start to realize that, you know, sort of the tasks become harder, more strategic, more all-encompassing across the organization, but also that these individuals that I just described, they want to work with their agencies. Their agencies are used to both planning and executing great experiences that drive real growth and impact for their companies.
And that works really well. So, unless they have to, they’d prefer not to provide, you know, budgets over to larger consultancies because of that very need. Now you're absolutely right. There's been some really good moves from, you know, a variety of consultancies to buy and partner with agencies. I will say when I came into this role, I assumed that the consultancy and agency overlap was going to be very crowded and one that there was not going to be a lot of space. Actually, very pleasantly surprised to see that the opposite is true. That there's a lot of companies trying to be that merger of an agency and consultancy, but none of them are doing it very well. The consultancies have bought agencies, but they've struggled to keep creative talent. And they've struggled to integrate the agency processes into their traditional consulting services.
The agencies have struggled to move into consulting services just by like mind. They tend to want to protect their core businesses on both sides at the expense of properly merging and fostering the combination. And what we're finding then, and this is working well for CourtAvenue, is just by starting with a reset button and saying, no, we're just going to construct something that both creates great experiences for your customers and creates great capabilities for your company from scratch in a way that we know how those are well connected and tied together, such that we're able to provide services to both the customers and to the company that's working really well for us. And what we didn't expect was how under manifested or under-realized that value proposition is in the marketplace. We thought it was too crowded. It's actually not crowded at all. And that's because of the depth of the experience that we're able to provide coming together.
Yeah. It's such an interesting point in that intersection, the marrying of one business operating model with another. I'm seeing it on the, you know, on the ground and the trenches too. It's interesting. So I, we could talk about that all day. I have another pressing question. So, given the changing world order, the unfortunate war in the Ukraine, I'm hearing this term a lot, stagflation, right? So stagnation meets inflation. We've seen the Fed interest, you know, hike up interest rates, continued supply chain issues. It all spells, you know, worry sometimes for brands and companies as repenting, we're entering, you know, an imminent recession period. So what are your thoughts on what and how do marketing priorities and practices change given the forecast of what's coming down the pike.
I feel the same way, Shane, there's a lot of uncertainty. My hope is that for those of us that have lived through economic corrections before, I probably can't speak to how to manage through World War III, and I hope that we're not to that point, but what we can do is talk about, how do we think about economic softening and what are ways that we can manage through that. Obviously growth falls away to profitability, the ability to think through, if you will, defensible products and services that work inside of an economic downturn, both on the client side, as well as in terms of agency services, are really important, but, you know, I've been through both the dot com bust and the economic correction of 2007-2008 through both of those. Being on the right side of change and on the right side of history not only I think inoculates a lot of firms through those corrections, but also really accelerates them.
They just continue to invest into the dip. So what do we mean by that? We know that in the automotive space, that electric vehicles are on the right side of change, on the right side of history. We know that e-commerce is only going to grow and that as omnichannel e-commerce capabilities flourish, that they also grow more sophisticated and more automated over time. That's also on the right side of history, pick your industry there. We know that the digitization of healthcare is on the right side of history and that the ability to sort of unify data and create increasingly personalized experiences within healthcare that combine collaboration between healthcare providers and patients is a really rich territory that is only just getting started. And we're, you know, I think we're all pretty clear that the government's going to continue to spend.
Right. One of $4 printed in the last 20 months.
Sure. So, I think that's a, you know, the digitization of government and the modernization of the government is also very rich territory. We're very thankful to have the relationships that we do with the rapid sustainment offices, a part of the Air Force. You know, there, I would say it's about picking the right spaces and being really strategic around your mix inside of the downturn, such that you emerge on the other side of that in good shape to scale up into the future that's going to go forward.
You said a couple of things there that I just want to unpack. So the first is healthcare. So my understanding is healthcare represents 18% of GDP in the US, which is trillions of dollars. So I think you mentioned personalization of healthcare and improving that UX and customer experience across the board and getting that strategy in place will allow companies to be on the right side of history. Is that what you mean?
It's part of it. I think there's so much to be money within the health and wellness space. I could argue though, we're seeing not only sort of this continued democratization of a control and power moving to the end user, to the consumer. Healthcare is no different than that. I think we're also starting to see a bit of a pendulum swing back to, you know, sort of the expert and the rise or the resumption of the expert as critical voice within the purchase path. I think we're seeing that inside of healthcare, we're seeing that inside of veterinary care, we're seeing that in beauty—hair stylists—and we're seeing it in a variety of dealers. We're starting to see that both the digitization of the channel, if you will, if you want to call that a channel, with a rise of misinformation on the consumer side, is leading to new forms of opportunities for collaboration between those experts and those providers with end users. And that's certainly true within healthcare as well, which speaks to a lot of great opportunities to help those healthcare providers, including our client UnitedHealthcare Group, really modernize and continue forward with those digital exchanges with their patients and with their companies.
You talked about misinformation or disinformation, and obviously the news we're recording this on 4/26. So, April 26th, the news yesterday breaking that Elon Musk’s offer to privatize Twitter has been accepted by the board. So, I don't want to get too caught down the weeds and moralize things here, but from a business perspective, you know, someone that runs an agency, what are your thoughts on that?
What I think Elon's going to do is clean up the bots and thread availability of the platform to all types of people for the sake of free speech. The economic model, he's going to play with, he's talked about subscriptions being available. He's talked about forming the ad model to be something that looks and feels a bit more like some of the other larger, faster growing social platforms. So, I think all of that is true. How does that actually play into the real marketing mix, the real media mix of large advertisers? That remains to be seen. And I think, you know, the differentiating value proposition has to be true. Ultimately the eyeballs will follow. So, it comes to how well that becomes a platform that is increasingly compelling at not just a, you know, sort of a mouthpiece for the famous with a bunch of misinformation all littered throughout. It really comes down to how authentic can it become. And then for that matter, what the ad model looks like over there. So it's a watch this space. I don't think I'm ready to say it's going to be the next generation of anything. We have to see if he can succeed there.
Got it. Authenticity and changing the ad model. That actually leads me beautifully into the next question I have for you, which is, in your perspective, or from your perspective and what you're seeing at CourtAvenue—and we can use Kia, if you want, as an example, as a shared client—why do you think that at this juncture companies are renewing their investments or even reprioritizing their investments in digital platforms, whether it be social ad tech, MarTech, any stack, it doesn't really matter. I'd be interested in your thoughts.
I love this question, Shane, and this is another one that I don't think we saw coming into this even two years ago, but there's a massive set of new reasons to re-outfit digital platforms and websites, et cetera, because of how much more important they are to companies than they were even 24 months ago, the rise of commerce, you know, within Kia. We're so thankful that we've got the relationship that we have with them, but, you know, dealer integration is a really important priority for them, the rise of ownership experiences, and that's especially true. It's out of automotive and the rise of electric vehicles accelerating the ownership experience is being particularly important. That's true as well inside of high-tech industries like Dell and Epson, as much as it is automotive and others as well. The integration of social content and the integration of increasingly new and relevant and modern branded content is growing increasingly important. In this day of, you know, too much information, brands matter more than ever before.
And having a purpose, especially for the younger generation, is really important for that to be both relevant and modern and rooted inside of modern culture. So all of those are good reasons to relook at the platform and for it to work harder for the organization. And I would just say, you know, thank you, Amazon. Thank you, Facebook. Thank you, Google. Consumer expectations have risen. Like we are all expecting highly personalized experiences with perfect information, with our decision making, with ultimate convenience. And a lot of websites don't work that hard. I don't want to say we can combine all that into a corporate site, but sort of drawing from our specific users and what we can do with them, building from best practices that we make choices to go off and build is part of the game. But you know, it is timely right now to think through what more can a site do for a company? What more can these platforms do for corporations?
So this'll be my last question. I think the backdrop of this is very much, if we look at any of the DTC brands that really exploded over the course of COVID with, you know, purchase power increasing such a reliance on e-commerce platforms, et cetera. So, if we look at those share prices as just generally the trading value of companies like Rent the Runway Allbirds, DTC, right? It seems that as the world's starting to normalize again or embrace the new normal, shall we say, the value of those DTC brands is somewhat diminished as compared to right in the thick of COVID, which makes sense. So that's the backdrop of this question. So, my question to you is, and I'd love your thoughts on how is omnichannel changing versus direct to consumer and where do you see direct to consumer going?
I see a lot of parallels between the DTC space and the dot com boom. I see, you know, sort of the challenge to smaller organizations to get to profitability as a first order as a first priority. The DTC economics are not always easy. So there were many dot coms that did quite well; in fact, the largest companies in the world or former dot coms from that time. But there were many that ended up getting consolidated and getting integrated into, and ultimately even taking over some more legacy businesses 20 years ago. I see that same sort of pathway here. I think the DTC model is one that the world now understands and comprehends. I think the ability to replicate it is including all the tools and platforms that can be used for automation of it are still relatively understood and well known.
That's why I talked about the rise of the expert and for that matter I see retail, traditional retailers, Target, Walmart, others, seeing some good success in their digital e-commerce experiences. And so I guess where I would go with this is, if you're going to be a lasting DTC in this environment, then you really have to have a niche consumer segment that you are uniquely advantaged to serve. And that might be because of a cost position, an experience, a value proposition that you have that makes you defensible. But I think in an environment of profitability, focus, and consolidation, there's a lot of headwinds within the DTC space right now that will lend themselves towards consolidation and ultimately influencing a lot of omnichannel plants and experiences within larger organizations. Doesn't mean that there won’t be new ones coming on, but, you know, sort of the pendulum swinging back a bit. Right?
So, in summary, what you're saying is, if a brand by virtue of its value proposition, business proposition, doesn't have a mode such that it's protected, you would fear for that DTC brand.
And we've architected some of these, you know, sort of small DTC midsize, a hundred million to a billion-dollar brands to billion-dollar category brands. There's different jobs to be done and different playbooks that you can, you can do, you know, in Unilever’s case, if you are Sir Kensington versus Dollar Shave Club and Seventh Generation versus Dove, or you know, some of the larger brands, there's different things that you might do as you grow up a brand in size that looks and starts with a DTC model that moves into something that is increasingly omnichannel and that ultimately moves to all channels. And I would say for those DTC brands that are bucking up against that sort of 50 to a hundred million dollar ceiling that they have to hit before they have to move into omnichannel, good time right now, to think through, you know, who are your bedfellows, so that you might be able to create your own cohort, your own, you know, conglomerate CPG or your tie up. Because again, I think the economic headwinds are going to be upon us here. Think inflation exacerbates this because DTCs tend to be less price sensitive, right? In increasingly price-sensitive environments, scale-based manufacturers have an advantage as well.
Got it. Yeah. It's really, really compelling insight. So Michael that's… we could talk all day. I really do appreciate it. So, thank you so much for coming on. Before we let you go, can you give your agency a shoutout and just let people know how to contact you guys and some of the great work you're doing.
Thank you. Shane. So, go ahead and reach out to me, Michael.Stich@courtavenue.com. As I mentioned, we're creating sort of the next-generation holding company; we call it a collective of companies that include a combination of best-in-class digital agency services, brand building consulting services. That also includes performance marketing and full technology stack implementations. We're very thankful to have the clients that we do across Kia, Epson, Taylor Guitars, Dell, UnitedHealthcare, the Air Force, a variety of others. And we think we're one of the fastest growing agencies in the US because of a combination of the services that we provide, which are progressive and integrative, but also because of the depth of the experience of the people that we bring on. So very thankful for the team and very thankful for the clients and feel free to reach out to me; love to have a conversation with any of you.
Good deal. I really appreciate it. And for any of our listeners, just to reemphasize, so, CourtAvenue are a current partner of TransPerfect. And we partner together on some of our key brands. We know the team over there really well, former WPP leadership, and so really comfortable with them. So, Michael, thank you ever so much for coming on. Really appreciate it. And let's stay in touch. Thanks, everyone.
Thank you, Shane. Really enjoyed it. Thank you.