The Wizard of Ads Interview – Roy H. Williams (Part 3)

In this third and final segment of our interview with the Wizard of Ads, Mark and Lorraine dive deeper on Roy H. Williams' thoughts on why positioning and his philosophies apply whether the marketing is B2C, B2B or D2C. Roy spends considerable time explaining:

•  why we are consumers regardless of where we're buying (work or home),
• why  the emotional environment of the prospect is so critical,
• why gross rating points is a farce in selecting media,
• why the portable people meter (PPM) is your better media planning gauge,
• why positioning is critical to supercharging your brand-building efforts, and
• why repetition of your message matters.

Spend 30-ish with Mark and Lorraine – AND Mr. Williams – to learn more about advertising, marketing, and positioning.

Transcript

Mark Vandegrift:
Welcome to the latest episode of the Brand Shorthand Podcast. I'm your host, Mark Vandegrift, and today we share the final part of our interview with Roy Williams, the Wizard of Ads. If you didn't hear part one or two of the interview we published the past two weeks, we encourage you to listen to those first two episodes. Today, we'll pick up discussing why positioning works just as well for B2B as it does for B2C or D2C.

Roy, you made a comment in your book that because we fight this with positioning and we have to tell people, well, guess what? Jack Trout and Al Reese were actually talking about a B2B principle with Naugahyde when they first started this, they were at Uniroyal. You write in yours that you were in Florida at a, you were presenting to a client and some guy spoke up and said, well, that works great for selling orange juice and blah, blah. But it doesn't really work well for selling a product to another business. Kind of riff on what you just said, the psychology of it and why it actually works maybe even better for those with small B2B budgets or trying to make a name for themselves.

Roy H Williams:
The thing is, this illusion that a person becomes an entirely different creature when they get in their car and they start driving to the office. So do they somehow, they no longer, so the exact actual phrase they used as they said, 'well, that works great for selling ice cream, but it doesn't work for what I do. I sell B2B.' I'm going, oh, so your customer doesn't eat ice cream? It's like your customer is this thing that only exists between the hours of nine and five, Monday through Friday, and they don't live in the same world with the rest of us. 

And so I used to tell people, I said, listen, there are certain things that people do first thing in the morning and they drive to work and they may have the radio on and they're thinking about the day ahead. They're not thinking about home. They're thinking about the day ahead, what they're headed toward. And I said, afternoon drive, when they get in that car and they're headed back home, they're no longer thinking about, or how they're thinking about the evening ahead, dinner and friends and what's on TV and what they're gonna do and conversation they're gonna have with their spouse. And I said, so, what I call the environment, the actual, what is the emotional environment? And the emotional environment when you're headed to work is a different emotional environment than when you're coming home from work. And I said, so when you're, if you want to talk to somebody about their business, talk to them in the morning as you're headed to the office, if you want to talk to something about the house or entertainment or a restaurant to go to, talk to them in the afternoon when they're coming home.

And I said, and then Saturday and Sunday is, of course, it's the weekend. Talk to them about anything you want, except business. Don't talk to them about business on Saturday and Sunday. That's not where their head is at right now. The emotional environment is different. And I said, so if you pay attention to what you're saying and how the reader, the listener, the viewer is feeling when you said it. And I said, you want to enter into an emotional environment when they're feeling what you would like them to be feeling when you deliver the message you're going to deliver. And I said, so the emotional environment matters. Forget the vehicle, whether it's TV, radio, or anything else, what's the emotional environment? 

And I say, so you can't go wrong with live sporting events. With live sporting events, a person's been waiting all week to see this. And it's like, I got all my favorite snacks, and I've been looking forward to this, and I'm feeling great. And so...yeah, enter into that moment. And no matter what the sport is, the only people watching it are people who love that sport. That makes sense? And so the emotional environment is great. They're identifying with this. They believe in this. And if you show up, you're part of things that are important to them. And I'm saying, so yeah, live sporting events are incredibly expensive. I don't care. It's an amazing emotional environment. And if I write an ad to talk to the people in that moment, that ad will work.

And so that's not demographic targeting, is it? That's psychographic targeting.

Lorraine Kessler:
You know what's real interesting? What's real interesting about that is you might remember a few, I always did a column on the Super Bowl ads, but I don't know, five, six years ago, Nationwide on the Super Bowl ran that awful ad about children dying from unsafe things under the sink, and the tone was somber and scared. I mean, it was a disaster, right? Because they didn't take into consideration the environment. Nobody watching the Super Bowl is in that.

Roy H Williams:
Nobody's feeling those feelings. Yeah. Thanks for bringing me down, bud. Thanks for harassing my bud.

Mark Vandegrift:
My team's losing already, now I feel like crap.

Lorraine Kessler:
Yeah, but the thing is, demographically, you could see the media buyers saying, we're going to reach the largest television watching audience with this very important message. Everybody cares about kids. So you could see how it got sold. And it was just so off, so off.

Roy H Williams:
I agree again.

The message attracts the right people, repels the wrong one. If you want to reach frightened, fearful people, reach people who enjoy being frightened and fearful, okay? And I could name all kinds of shows where you could reach people who love to be frightened and outraged and fearful. And they love to feel those feelings. And so they listen to these shows and they watch these shows and they participate in these events. I'm going, okay.

So if that's how you roll and that's how you identify your life, great. I'll reinforce that for you. Here's some new things to be afraid of.

Lorraine Kessler:
Oh my gosh. Well, we never got to gross rating points. How are they one of the sacred cows that need to be slayed.

Roy H Williams:
Okay, so here's the deal, it's real simple. Remember what I said about repetition? Repetition matters. It just matters, okay? So all gross rating points, whether it's cost per point or cost per thousand, the first thing that is done is to take reach and multiply times frequency. Reach times repetition, that gives you gross rating points, okay? It was actually gross impressions, frankly. So we begin with gross impressions.

If you have one million gross impressions in a city of one million people, that's 100 gross rating points. The gross rating point, as you know, is 1% of the population reached one time. So a million people in the city and a million gross impressions, okay? So 100 gross rating points. Now here's a question. Did we in fact reach 100% of the people one time?

Or did we reach 50% twice? Or did we reach 25% four times? Or did we reach 10% 10 times? Or did we reach 5% 20 times? Or did we reach one sad bastard 1 million times? What did we do? Now, anytime, it's this illusion that if you multiply reach times frequency, reach times repetition, if you multiply those together, you have gross impressions, that's where you made the fatal mistake. Reach and frequency are not interchangeable.

Anybody who thinks they're interchangeable is out of their mind. They're insane. They're not interchangeable. And so any time you multiply reach times frequency to get gross impressions, anything you extrapolate from gross impressions is a freaking worthless number. You have literally no idea how many people you're reaching and how often you're reaching them. We reject any number based upon gross impressions, cost per point and cost per thousand are two of the extrapolations of gross impressions. 

And by the way, no media buyer on the face of the earth in 40 years has ever disagreed with me. But you know what they always say? You know, that's just how everybody does it. That's just how the industry is done. I'm going, doesn't have to be. We pull the data, we pull net reach, and we pull frequency separate. I can tell you exactly how many people we're reaching each week. Different people, unique visitors, so to speak. How many different people are we reaching? And how often are we reaching the average one of them? And I will not reach anybody if it's what's called a personal people meter, PPM, okay? 

Are you guys familiar with how Nielsen is monitoring broadcast today? Okay, a personal people meter, imagine a thing smaller than your cell phone, okay? And it clips on your belt or you carry it in your purse, and it knows if you're listening to the radio. And it knows what station you're listening to. It knows the split second you started listening. It knows the split second you quit listening to that station. You can't lie to it. And you carry this thing for six weeks. 

Now, if you understand anything about statistical measurement? The Gallup poll, for instance, okay? So the Gallup poll, to measure 260 million Americans, requires 1,050 people in final tabulation is the larger the universe, the smaller the percentage of the universe you need to measure. The smaller the universe, the higher the percentage of the universe you have to query. So, and is it roomful of 100 people? You have to ask the entire 100. You can't just ask 50 of them and assume the other 50 is going to reflect the first 50. It doesn't work that way. You're going to be horribly wrong. So the smaller the universe, a universe of 1 million people, universe of 1 million people takes 390 people in final tabulation to reach 95% accuracy with, forget what the 5% variable. Forget the word. Anyway, it's basically the Gallup poll result. Now, when the Gallup poll wants to get super hyper granular, it's 1,500 people in final tabulation. It's very rare do they go above 1,050. So it takes 1,050 to measure the United States of America, but it takes 392 just to measure a universe of only 1 million people. So in San Francisco right now, every day, 365 days a year, they measure three and one half times as many people as it takes to measure the whole United States. 

And they do it, by the way, in little punk towns and little Dairy Queen towns with a Walmart and a Dairy Queen and a truck stop. They're measuring as many people in that town all day, every day, at least the size that it takes to measure the United States accurately. And so the sample sizes are staggering and the collection of information is unimpeachable, it's digital. Nielsen can tell you more about radio and TV audiences than Google can tell you about the pay-per-click audience. And see, nobody knows this. Nobody does their homework. Everybody has their fingers so far up their nose, they have a little bump on top of their head. I'm going, why? Why do so many people in America not do their homework and find out how things are being measured, how they're being presented, and what's being hidden behind the back of the seller of the media.

Mark Vandegrift:
Well, it might be the headlines. If you look at Ad Age and some of the other publications, all you hear is griping and complaining about the way Nielsen does things. I had not heard that and I've read a lot of reviews about changing the way Nielsen does things.

Roy H Williams:
Listen, people make stuff up. And you know who starts all that stuff? Anytime, yeah. It's the broadcasters. When they have a bad ratings book, they just trash Nielsen. And I'm going, Nielsen is unimpeachable. Nielsen is your best friend. And if you had a bad book, correct what went wrong, because it wasn't Nielsen that screwed up, it was you. Now fix what you did wrong.

Mark Vandegrift:
When did this change?

Roy H Williams:
Oh, about 12, 14 years ago. 

Mark Vandegrift:
Really? Oh my goodness.

Roy H Williams:
Yeah, personal people meter, Google it. I'm saying personal people meter, as I always say personally, it's wrong, it's portable people meter. I've been saying personal people meter for 25 years and it's actual portable people meter, PPM. So the PPM measurement, some cities are so tiny they still use the diary method. Now using the diary method, you need a three frequency every week, 52 weeks in a row to become a household word.

But using PPM, because there's no slip, there's no, there's no room for error. You don't, you're not counting on recall. You're not counting on a person to know what they did. Right. They, they think they did one thing. They did something totally different than what they thought. That's the reality of it. And so, because it's unimpeachable, it only takes about a 2.5 frequency each week. Raise 2.5 with PPM, portable people meter is the same as yesterday's 3.0 in a diary. And so we always check, is this a diary market or a PPM market? And the bigger cities are all PPM and have been for a long time. 

And so whenever I say, when you gather the data and you start looking at the truth, and whether it's TV or radio, any mass media. See, mass media is for people who have a long purchase cycle. OK? Now there's only two things that have a short purchase cycle. Only two. One is entertainment, the other is food. We eat every day, and we're looking for something to do, a way to distract ourselves every day. So the purchase cycle is really short, which means you can get ad results really quick with a short purchase cycle. 

Now with a longer purchase cycle, engagement rings. Air conditioning replacement.

Okay, new cars. You need to be the provider. Yes, exactly. Lawyers, okay, doctors. You need to be the provider they think of first and feel the best about when they need what you sell. Automatic unaided recall. So this illusion, well, boy, howdy, they're gonna go online. And I'm going, yeah. And if they type in my name, I win. If I wait until they get there and I'm just going to outbid everybody else? Are you kidding me? Do you know what it costs to get clicks for air conditioning companies in most cities? One click.

Mark Vandegrift:
Probably above $20 a click.

Roy H Williams:
Yeah, it's like $35 to $60 a click. $35 a click to $60 a click. Wait a minute. I can make you a household word for 30 cents per person per year. How many people do you want to own and carry around in your pocket and just have brainwashed to call you when they need air conditioning repair? I have clients right now that run $40 million businesses, $100 million businesses.

Okay, eight of them have already sold a private equity for anywhere from $360 million to $500 million. Okay, companies that started as a little tiny companies, which like, you know, doing like five or six million bucks, other than like 40 to 100. And here's what's interesting. Once the mass media gets hold, all they have to do is buy their own name. It's a high cap click high, high conversion, high average, average sale, high profit margin and unbranded keywords. 

If they type in air conditioning repair, or they type in diamond engagement ring, those are unbranded. And you're looking at low conversion, low average sale, low profit margin. I'm all high cap. They type in the name of my client. My client shows up. My client gets the click, the sale, high conversion, high average sale, high profit margin. 

$40 million company spending less than $20,000 a month on Google in a category where other people are spending eight times that much to drive the same volume. Why? Because they're buying unbranded keywords because they don't have a brand name. They did not position themselves. They did not differentiate themselves in the mind of the customer. We're on the same page, right?

Lorraine Kessler:
Yeah. Well, yeah, and I'd even say that, and I think Bob Hoffman says this, and this sounds like I'm not a positionist strategist, 

Roy H Williams:
Love me some Bob Hoffman.

Lorraine Kessler:
...but what's that? But yeah, I mean, I love these contrarians, because I think what you're doing is, and we don't hear enough of this, you're attacking assumptions. And we all know the little joke about assumptions, right? And they're big ones.

They're big ones that our clients already have or are conditioned. I want to know what the gross rating points are. Tell me how we're targeting. But he makes a big point. I think he's right. Familiarity is first. I've got to know your name. Now, if you really want to optimize, to me, you want to octane on that, you better have a difference so that I not only know your name, I kind of now have a reason for my heart to tell my head to buy you, right? Yeah.

Roy H Williams:
Exactly. When the heart and the mind will follow and people, there's nothing is an intellectual product. Most of the time, it's an emotional product. In 1994, I was invited to London to DeBoers in London because we were controlling a meaningful chunk of the diamond sales in North America. My absurd little firm, not just diamonds, but Rolex watches. Okay. We sold more Rolex watches than any ad firm in the world. And you know why?

A Rolex is identity reinforcement. If you want to know what time it is, look at your cell phone for free. It keeps better time, okay? The truth is, it doesn't cost, you know, forty or a hundred thousand dollars to know what time it is. It just doesn't. And the same thing, it's like, guys, this is a rock that you guys dug out of the dirt in South Africa for free. It's a pebble. And it's kind of like, you know why, you know why a man buys a diamond for the woman he loves?

Lorraine Kessler
Advertising.

Roy H Williams:
It's not because it's the hardest substance in the world, and it's not because it's worth money. It's because he's imagining that look on her face. Don't describe the diamond, idiot, describe that look on her face. It's easy to sell a man on the woman he loves. It's just unbelievably easy. And it's kind of like, it's not about the diamond, it was never about the diamond. It's about the girl, idiot. And it's kind of like, does that make sense?

Mark Vandegrift:
You wrote about that, your home video chapter, where you end and say, 'Frankly, you're just not that interesting.' One of my favorite lines right there, the way you take us through Jacques Cousteau and how he shows the same thing a home video does, but in a different perspective, that brilliant, just brilliant.

Roy H Williams:
Thank you for that. Anyway, the idea of gross rating points is that anytime you multiply reach times repetition, it's a pointless number. You cannot multiply those together. You have to keep them separate. And that's true. By the way, you know how we determine reach? Reach is determined by budget. The non-negotiable is repetition. 

Lorraine Kessler:
So you go for repetition and narrow the reach. You're better to reach a smaller audience more times. Right, OK.

Roy H Williams:
Absolutely. Lorraine, here's how we like to tell it to people. Do you want to reach 100% of the people and convince them 10% of the way? Or do you want to reach 10% of the people and convince them 100% of the way?

Lorraine Kessler:
Right. And I have made this argument with defeat all around. So it really inspires me.

Roy H Williams:
Now see, the reason, the difference between our careers is, I insist on dealing with owner-operators. The split second they sell to private equity, I resign. I will not move into a committee situation. We have one rule, my partners and I, unless we can look directly into the eyes of a person who has unconditional authority to say absolutely yes, we won't work with you.

We won't work with your helper. We won't work with your gopher. We won't work with your intermediary. If we do not have direct ongoing 100% of the time, I'm never gonna talk to anybody but you. And if you ever want somebody to listen in on that conversation, they don't get to talk. They just get to take notes. I'm not gonna answer to them. They answer to you. Now, me and you are gonna have a conversation. I'm not gonna try to convince these other idiots. They work for you, they don't work for me. I didn't, wasn't hired to convince these morons. Get them away from me. Okay?

And so what happens is when you, that's part of the upfront agreement. And so if I have direct, unconditional, absolute relationship with a person who has unconditional authority to say absolutely yes, let's do that. They don't have to check with anybody. If that relationship is passed, we do not work with them. We just don't work with them.

Lorraine Kessler:
What I love, too is when you work, let's just say, with a non-owner, and you're working even with some really good marketing CMOs, what happens is all of the numbers that you hear come from media. They don't, no one's talking about your business and, you know, how you're using that money and is it a better value to do pay per click versus what we just heard Nielsen does, or doing unbranded, that those conversations don't happen because it's almost like a diversion, if you will. We're gonna have you look over here because we kind of like it over here, we play over here. And that's marketing lingo. And so in a way, I think your academy's a genius move because what it does is it educates these operator-owners to take what they're good at just looking at the numbers and results and saying, I'm going to equip you to ask the right questions and to guide the ship in the right way. So I think that's really brilliant. Now there's another media. Yeah, there's another media. 

Roy H. Williams:
What was the third idea?

Lorraine Kessler:
Well, the third idea is media mix, but before we get to that, so it is media mix, keep that in mind. But one of the things she talked about, you kind of alluded to, which I also thought was a really great concept when I read a book on this, and I think it was by Efron, on recency, right? It's not just frequency, it's recency. As the cereal box is empty every week, and Thursday is the shopping day, then I need to be there on that day and not be going away for a long period of time and then jumping back in. So, I should be funding based on recency more than reach, which again was another argument or challenge we've had when we've had these discussions.

Roy H Williams:
I agree with that, but remember, I'm there reaching this identical same individual at least three times within seven nights sleep every week, forever. 

Lorraine:
Yeah, that's what you, that's recency.

Roy H. Williams:
I've had clients I've been reaching. I've had other cities where I've been reaching, it's like, and cities where I've had a client for a number of years, they could be elected mayor if they just wanted to run, because they're just literally incredibly famous. And it has to do with just relentless repetition. You can run, but you can't hide. They're absolutely a household word.

That has to do with recency. It's like you hear about them constantly. There's never a window of time when you're not reminded about them. And because it's so astoundingly cheap, mind-bendingly cheap, and people don't know this, because they assume, well, I want to target, I want to target, and I want to get that data, I want to hold my advertising accountable. And it's like, whenever you do that, you're just leading people into pay-per-click. Do you know what a bounce rate is?

Bounce rate is bots. It's bots and paid to click If you look the paid to click industry, which is not illegal by the way. It's not none of that's illegal Last year they reported to the US government they paid thirteen point four million dollars in wages to people who were paid to click ads on what's called the expanded network Okay, PMAX. That's the expanded network. Linkedin has an expanded network And so when you're on PMAX, you're not on Google search. You're not on the search bar at Google. Nobody's typing something in on Google. No, no, no. You're not on Google. 

It's video games in the middle of the night, and it's all kinds of little private networks because it gives the providers, not just Google, but LinkedIn and Bing and all of them unlimited inventory, literally unlimited inventory. And it's not on Google, and it's not on LinkedIn. It's on these expanded networks, which are these illusionary things. Now, they split the money with people who are clicking these ads on the expanded networks. So this is, by the way, reported to the government. $13.4 million paid to people paid to click ads, not just bots.

It actually paid to click. And they're paid $1 US for every 1,000 clicks. Now, take 13.4 million times 1,000. Straight up click fraud by actual human beings being paid in the Sudan and in Ethiopia and in Egypt and emerging economies. They're being paid a US dollar to click 1,000 ads on these expanded networks. And so last year, they know. They actually know...about $66 billion was spent for online marketing. These were not customers. And so everybody's used to the bounce rate. 

And I'm saying, hang on a second. Is it a customer that actually had intent to purchase that came to your website and was there for one second? If they're there for one second, we call it a bounce click. Nope, that's called bots and paid to click. It is straight up click fraud.

And so when you start looking at, did you know that the largest of the companies that can identify, track and block, click fraud. There's five companies that can do it. And the largest of them only has 15,000 customers in the world. It's CHEQ.ai, C-H-E-Q.ai. And there's another one that's really good called CeaseClick. C-E-A-S-Eclick.com, ceaseclick.com. Both of them are really good.

There's six million businesses in America with employees. There's 17 million sole proprietors with no employees. It's just Ralph of Ralph's Radiator Shop, Ralph speaking. There's 17 million of those. There's six million businesses just in the US. And the biggest of these companies only has 15,000 clients. Okay. And so on all my websites, I've got cheq.ai blocking the fraudulent clicks. You can't imagine how many clicks they block every month of people that have lots and paid to click. And why does nobody know about this? Because it's in nobody's best interest. Mark, Lorraine, if you're getting paid the percentage of the spend, why do you want people to spend less?

Lorraine Kessler:
Oh my heavens. Yeah, absolutely.

Roy H Williams:
And whenever you opt out, by the way, you don't opt into these expanded networks, by the way, you're automatically opted in. And when you opt out of the expanded networks, they lose their mind. They will schedule a call for you with a counselor to tell you why you're making a horrible mistake. I'm totally serious.

Lorraine Kessler:
Please, I don't need more counselors.

Mark Vandegrift:
Well, we get that. We actually get that when we don't include the display network. We get calls because all we care about is the SERP. All we want is the search engine results page, the SERP. And when you opt out of a display network or anything else, they absolutely, we get an email and they want to tell you what you need to do.

Roy H Williams:
They lose their mind. You're gonna pay so much more per click, oh, your cost per click is gonna go up. Yeah, but it's actual human beings. And it's like, your spend will go to half, you'll spend half as much money, but your results will not go down in the slightest. If you discontinue the expanded networks, okay, your results don't go down, but your cost per click goes way up, but your spend goes to half.

Mark Vandegrift:
Roy, I want to do a check on time here. You've already given us an hour and a half and we only scheduled you for an hour.

Roy H Williams:
Well, listen, I'm sorry that all of my answers are so long-winded. 

Mark Vandegrift:
I was on the edge of my seat with every one of your answers. So, I'm sure our listeners will be too.

Roy H Williams:
Listen, Mark, Lorraine, I've enjoyed it enormously. I have huge and profound respect for what you do. And I do endorse and believe that you are the world's #1 positioning agency.

Mark Vandegrift:
Thank you.

Lorraine Kessler:
That's great.

Roy H Williams:
I'm privileged to be talking to you.

Mark Vandegrift:
That completes our interview with the Wizard of Ads. We hope you enjoyed this three-part interview with Roy Williams. Please like, share, comment, shout it from a mountain top and subscribe. Next week, we'll wrap up our first podcast season with a summary discussion of Roy's books and a recap of season #1. Until then, have an amazing day.