Florian Heinemann on the Future of Digital Marketing and Brand Building

This is the second part of a two-part interview with Florian Heinemann, co-founder and managing director at Berlin-based early-stage investor and company builder Project A Ventures and former Co-CMO at Zalando.

You can read the first part of Zalando’s marketing strategy and automation here. It is not required to read the parts in any specific order.

Stefan: In the digital space, if you think of great brand builders, what would be some of the names that come to your mind?

Florian: It’s the traditional American names: Warby Parker, Harry’s and these kinds of people.

In Germany, a company called Scarosso has done a good job on the brand-building side. They launched an Italian shoe brand. Germans launching an Italian customized shoe brand. I think, in terms of brand building, on their website and with the stores, they have done very well. They have six real stores where they sell their products. I think they have done a very good job on the brand-building side. The American e-commerce companies mentioned above are also all very good brand builders.

Is it all about the positioning or what exactly is it they do well?

At the start, it’s not all about the positioning. The product you sell needs to be a good product for the target group and really fulfil their needs. Storytelling cannot compensate for a product that doesn’t fit perfectly. Scarosso does a very good job on the product side. The people are extremely happy with the actual product. That’s a precondition you need and then you need a story that really fits well and has hype around it. That’s what the people at Harry’s and Warby Parker are doing extremely well. They’ve created a good product of good quality and then they created a very good story and positioning around it. The consistency between the product and the story is the third component of it.

Either you’re lucky and the thing goes viral or you apply solid traditional media planning to it, but applying media planning is not like magic. If you don’t have proper positioning and substance, it will fail. A lot of stuff fails.

Many vertically integrated brands fail because they don’t do the first two steps right. I wouldn’t start doing broader media before you’re sure that the first two components are right. It’s not just traditional media planning that works if the first two components are right, PR usually works better too. You see that with Harry’s for example who are very good in the field of PR. You could also do that in a systematic way. Rocket has become a lot better at this by the way. Rocket has become very systematic in terms of PR in Europe at least. PR can save you a lot of money if you do it the right way.

You need to be good on all four pieces: the product, positioning and storytelling, media planning, and the PR side. All these four components can be very systematic.

If you look at some of the early-stage start-ups, what are some companies that have impressed you with how they have been able to build up their brand? What exactly about them impressed you?

One start-up in our portfolio called ZenMate, which is a virtual private network installed via a plugin in your browser and help you encrypt your traffic directly through that browser. Encryption costs you speed and they compress it to compensate for that effect. All traffic goes to one server infrastructure and they have servers in 10 destinations or 10 countries, so you can decide that it look as if I were in the US. In this way, you can use Twitter for example in Turkey or you can watch American Netflix although you are in Germany.

By now, they have generated 9 million installs with minimal marketing money. They have been very good at initiating a viral campaign. This also highlights what we spoke about earlier; it doesn’t only apply to e-commerce. They’ve done a very good job at making security or failed security a very easy to access products. They’re growing 40,000 installs per day across Chrome, Firefox store, iOS and Android.

They also have a mobile app doing the same thing and that’s all via viral or social approaches. They have been very smart about using Facebook, Twitter, PR, and about having a very good product that people talk about quite a lot. They benefit immensely from what is happening in Turkey, Iran and these kinds of countries.

It impressed me the most how they’ve made security easy – not so much the campaign itself. It has always been a hassle to do and it’s very technical, but they’ve just made it into one-click install plugin, and it looks great. The strong product focus has enhanced its marketing efforts and the virality of the product a lot. The best campaigns or the best marketing programs are based on simple and beautiful products.

I listened to a talk lately that was very interesting. It was a speech by a Russian social media guy called Vaynerchuk on a conference in Germany. He said he always spends 80% of his time on what already works, such as Facebook or Google and 20% of his time on new platforms such as figuring out Twitter or Pinterest. He was one of the first ones doing Facebook App-install ads in the US. That really gave him an advantage. His advice was to always try new platforms where there is some kind of reach. For example, not many people use Instagram for visual products, but there’s a lot of reach on this channel and you can generate a lot of reach for very little money. Vaynerchuk said that he now tries to find out how to market on Snapchat. How can you do marketing on Yik Yak? The message we could probably get across is “always be among the first on the platforms that generate reach and try to figure out the best marketing strategies”. I think that’s a very sensible approach.

One thing is when the product is a marketing channel in itself, but that is obviously very product-specific. What do you think of the trends that will define inbound marketing in the next 1-3 years?

I think Movie Pilot is a great example. They have built one of the largest web entertainment websites in the US. That’s where it’s really heading. They built a platform for people who really know a lot about specific topics – in this case, movies or films – and curate it. My feeling is that it’s really about the platforms. It will be more and more difficult to create a completely independent platform, e.g. have your own specific blog. The inbound marketing channels will rather be via the platforms that generate reach, because all the platforms we just talked about have incredible reach, whether it’s Instagram, Tumbler or Pinterest. Twitter is a different case with less reach, it is very difficult and it’s not growing that fast anymore. But Pinterest for example is growing extremely fast. Then you have Facebook and Instagram of course, they are all growing very strongly.

The most successful marketing techniques will be the ones that benefit from these platforms. As long as you do things that help them keep attention of the users on the platform, they will allow you to do that for free. It’s providing platforms with engagement and they know they can place the ads around your content.

Movie Pilot built, I think, 30 million uniques in 2 years in the US. That’s huge. Facebook gives them the platform for free because they say, “well these guys generate so much reach and engagement that we can monetize through our ads and get data.” That’s perfect.

The same thing goes for Onefootball, which is a football app. Facebook allows them to do a lot of marketing stuff on Facebook without monetizing that because they provide engagements. For me, the underlying theme is really picking the right kind of platforms and doing stuff that improves engagement on that platform. This will give you reach, and speaking of reach, that’s how BuzzFeed works. It provides a competitive advantage if you understand that better than others do.

You have been in the entrepreneurial field for quite some time; what would you say are lessons you have learned the hard way?

You always have to have a very good feeling of what your monetization strengths are on a per-user or per-user-contact level. We and several other businesses have had the problem that if your relative monetization strength is too low, you will not make a business successful. The important thing to remember is that monetization strength is not absolute, but always relative to other people going for the same users.

In some businesses, the monetization per user is just lower than in other business models and that simply cannot work. If the relative monetization is too low, there’s no way of having a systematic marketing approach. The moment that happens, it’s just very difficult to scale.

Although I thought I understood this, we have been engaged in that kind of business again. That’s the thing about comparison businesses for example; sometimes you might not be able to get the same monetization as other business models get for the same user. In finance, for example, I would argue that there are insurers that simply can make more money per user. In other comparison verticals, the actual business models you compare can make more money per user. It’s very difficult then to sustainably and systematically grow a business. That is something I definitely learned a few times and have understood by now – hopefully.

We are getting towards the end, what is some good advice that you got early in your career that made a big difference later on?

One thing is to always stay experimental and always stay curious to try out different things. It’s always about finding new channels, finding new angles and staying experimental. I think if you stay open and flexible in your thinking, that’s the safest way to keep differentiation. Many people are too focused on optimizing their existing activities rather than always trying to find new ones.

What would be sort of like 2-3 books that you recommend to new or younger marketers?

I have to admit I don’t read any marketing books.

(Laughs) isn’t that a bit ironic given your previous companies? [Edit: Florian sold AbeBooks to Amazon].

Absolutely. I read books but not these kinds of books. I read them for pleasure. It’s always better to talk to people and to try things out. I think a book on digital marketing is somewhat ironic. (Laughs).

It is indeed moving fast. I know you follow some blogs; maybe you can share a bit about that?

I read things like AdExchanger, ExchangeWire, and Search Engine Watch. But for me, it’s really about talking to people and trying new things. I get a lot more out of these kinds of conversations and visiting conferences where I know that people have the same curiosity-driven mindset and are willing to talk about it. I would rather recommend people to find other people that have the kind of mind-set I just talked about, and then exchange ideas, and just trying it out. I think that’s a lot better than reading too much.

Final question; if people want to hear more of your thoughts or meet you, online or offline, where will they have a good chance of catching you?

You may follow me on Twitter where I have around 3,000 followers and I post quite a lot of articles. The same goes for Facebook. To meet me offline, I speak every 6-8 weeks at a conference, mainly in Europe, which you can follow through the Project A website as well as on blog posts that I write for our Project A Insights blog. That is something that I regularly do; either about e-commerce or in the online marketing field. This is probably the best way to catch up. Then, there are quite a few videos. That’s the cool thing about going to conferences – many of these conferences publish videos of my talks. There are quite a lot of talks online right now.

Thank you so much for your time Florian, it has been very insightful. I’m sure that our readers will find it interesting!

In case you missed the first part of this interview, where Florian goes in-depth on the learnings from building Zalando and marketing automation, you can read it here.

Photo: Benne Ochs (http://benneochs.de/)

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What have you successfully experimented with and what channels or platforms do you think will drive the future of acquisition and retention?