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Terry Tateossian (00:03):
Today I have Mike Donahue here who is the founder of connect the dots, which is an advisory group in the marketing and technology industry. Mike was also formerly the executive vice president of the American association of advertising agencies, the four A’s. Mike was also the executive vice president, member of the executive committee, member of the board of directors of Saatchi and Saatchi. Mike, welcome and thank you so much for allowing me to pick your brain today. You are in my mind, a, an absolute treasure trove of creative thoughts and ideas and accomplishments and business savviness. And every time we have a conversation, I feel absolutely Wundermentand delight from all the things you’ve done and everything, you know.
Michael Donahue (01:37):
Well, thank you Terry. That’s, that’s a high hurdle, but I appreciate that. That’s uh, that’s very kind of you to say that.
Terry Tateossian (01:43):
So let’s talk a little bit about your experience in the advertising industry and some of the pioneering concepts that you have brought forward.
Michael Donahue (01:56):
Well, Terry, I grew up outside Philadelphia. I went to Villanova, got an MBA from Wharton, came to New York, worked at an advertising agency originally called dancer Fitzgerald sample, which became Saatchi and Saatchi. And I was always the person who was doing stuff sort of outside the dots. And of course that’s why I named my consultancy, connect the dots to bring them together. But probably the first really cool thing I did, which helped my company was I as a very young account person, I was invited to a brainstorming session that included, except for me all the senior people in my company, dancer Fitzgerald sample. And I had this idea to add a question to the standard creative brief, a creative strategy that would really help focus the advertising and hopefully create a loyalty among a critical target that would be loyalty beyond reason. And Mo, you know, it was creative strategy said, who do you want to talk to?
Michael Donahue (03:03):
What do you want to tell them? What do you expect them to do because of what you tell them and what do you need for support? But what I did, Terry, was I started with what is the accepted consumer belief? What is there among this audience that they have a perception that you can either reinforce if it’s positive or refute if it’s negative. And the example I gave my senior management was this. I did this probably in the early eighties when I was very young. Account person. I said in 1967 Ryan gold breweries introduced the first light beer was called gambling ERs and it didn’t succeed because foolishly they positioned it intellectually. It’s good for you, it’s, it has fewer calories and they lost the six pack a night guy right from the start. About seven or eight years later, bill backer, a wonderful creative guy who was the backer of backer Spielvogel agency, was charged by the Miller brewing company with introducing Miller light beer.
Michael Donahue (04:13):
And what he did was he re he knew what gambling owners had failed at. He traded on a consumer belief that is true. And here’s what the consumer belief was. The only people who would drink light beer are women and whips. So what did he do? He created a campaign that showed every well known athlete, whether a baseball, basketball, football player getting together, drinking Miller light and having a really great time. And as a result, he not only created the first successful light beer, he created the light beer category and not surprisingly, virtually every successful light beer campaign since then. And the most recent ones are probably the, the Budweiser stuff. Yeah. Have been based on humor, you know. So that was a, that was kind of interesting. So I, that was one of my first things. And then in 1988 like 31 years ago, I told my senior management, I was, by that time I was in senior management, uh, that we really needed to hire somebody who was an expert in data.
Michael Donahue (05:28):
And I was able to do that, although most people said, you know, who cares about data? This was 1988 and that person, you know, he helped us do a do a lot of things. But what’s interesting, that was also the year, you know, that this is 1988 was still digital, was not really happening. But I have a friend who started an agency in 1988 who’s, his name is G M O’Connell. And the agency was called modem media. And I introduced them at a conference about seven or eight years later saying this guy was so far ahead of his time that he named his company modem media when maybe five tenths of 1% of the world knew what a modem was. Now, what GM also did was he served the first digital ad for it once a wired magazine for 80 and T and I believe it was the fall of 1993 so he was way ahead of the curve in, in that.
Michael Donahue (06:29):
Yeah. So, and then I was fortunate enough Terry to when I left answer for his Gerald sample to go to the forays in 1994 a month after I joined the forays, the CEO of Procter and gamble, uh, ed arts came and said, the world is changing. It’s all about interactive television. Well, he was wrong about that. It was time inc had a pilot study going on in Orlando in 1994 but he was right about the whole new new media world, which began to take off about six months later when the federal government released network solutions, which is where you go to get your URLs to the public. Up until that point, it was controlled by the national science foundation, which had controlled it since the late 1960s when DARPA started. DARPA was the defense project that really kind of got the whole internet thing going.
Michael Donahue (07:29):
And then it really didn’t take off until, uh, uh, the early nineties when it was made easier to use the internet, but at any rate, and then it took off. And, and of course it’s certainly a big deal now. You know, which reminds me, there was a very, I used to, when I was running conferences for the forays, uh, there was a man named George Gilder who was very well known and was writing all kinds of stuff. And I had him speak at my conference, but he had just written a book that was titled the world after television, you know, saying that it was, but in this book, he also happened as a side bar to say the internet is really going to take off. And Oh, by the way, within 10 to 15 years, there will be a new device called a smartphone. And when, and when Steve jobs introduced the smartphone, he, you know, acknowledged the Gilder had said that or way earlier each other back then. I don’t think so. Cause that was the period, I think when, when jobs was out of Apple, I believe. Yeah. But, uh, but now here’s one today. I don’t know whether this book is out yet, but I know for a fact that will be momentarily. George Gilder has written a book called life after Facebook and Google and his, his prediction is neither of them will be around in 10 years. Right. So, I mean, they’ll probably be merged. Yeah.
Michael Donahue (08:59):
A funny, when I had him speak at my conference, I found another man named Clifford Stoll who was teaching at Berkeley and I think he still does 25 years later who was skeptical about a lot of the stuff that was happening in the internet. And he wrote a book called Silicon snake oil, which I would urge you to read. And George Gilder was a typical, you know, business guy. He comes to my conference and jacket and tie. Clifford Stoll comes with flip flops and looking like he was right out of Haight-Ashbury in 1967. And, uh, we had dinner that night and the next morning as he was about to go speak. And the session was run by a man named Martin Nisenholtz, who was very early on on the internet. But at any rate, I said, Clifford, there are people who are afraid that George Gilder is going to have you for one. And he says, Michael, I said, he said, I think I can handle. Don’t worry about it. Well it turns out that Clifford Stoll was the most popular speaker and he had George Gilder for awhile.
Terry Tateossian (10:05):
So you’ve seen quite a bit of transformational phases in how advertising in general and branding in general has evolved over time. What have those transitions felt like as you were going through them?
Michael Donahue (10:21):
Well, in the agency business, the biggest transition has been, I grew up in a full service agency, uh, that was privately owned. And then in the mid eighties, the world went crazy and Saatchi’s bought my agency. And, and there was a, the Omnicom holding company was created with Doyle Dane Bernbach, Needham, Harper and steers, BBD and O and subsequently Martin sorrow put J Walter Thompson and a young and Ruba cam and Ogilvy together. But when they put all them together, they, it became, they were publicly owned companies, so they had financial stuff they had to do. And then, but they also said, well, what we can do is we can disembody the full service agency and have agencies that are specialty creative agencies, only creative agencies, agencies that are only media agencies. And the marketers never liked that. And today, if you look at what Mark Reed is doing at WPP, he’s sort of going back to the future and combining the creative, the media, the, uh, now with all the brand activation stuff, experiential.
Michael Donahue (11:37):
And, and because that’s, you know, that’s what marketers need. I mean, the kids today, both the millennials and the Screenagers, the generation Z Screenagers Screenagers, I call them Screenagers because they’re the first generation that’s grown up with, you know, with screens of all kinds, whether it’s a phone or a laptop or a desktop or a TV set or whatever. But what’s happened is that they are much more into experiences than they are into messages. And that’s, and anybody who’s in the marketing business, whether you’re in an agency, uh, you need to realize that the experiences are what they want. And you need to understand the kinds. And I mean, for example, I have a friend who started a momentum, which is the inner public group, uh, experiential agency and they’re very successful. And it was his agency that created small business Saturday, which talk about an experience. If you have gone on black Friday, which is the day before small business Saturday and gotten beaten up trying to get into, you know, black Friday, you’re going to feel, well, maybe small business Saturday, I can just walk down the street to my local store and have a much better experience. All about experiences.
Terry Tateossian (13:03):
So you high-end year, the emotional response to advertising and consumer engagement. Tell me a bit about that.
Michael Donahue (13:12):
Well, I was, when I was at the four A’s and I was the number two person, but I was always the one doing, you know, the new stuff like the internet. And one of my chairman Ken case, God rest his soul who was the chair who, uh, was the CEO of Doyle Dane Bernbach, DDB, uh, part of Omnicom said to me, he said, Tonya, here, you’re always the one that can find things new things. He said, I, I’m going to challenge you. He said, my creative team, especially the one in Chicago, and they were doing at that point, for example, the Budweiser, wassup stuff in a very successful, he said, they’re losing too many great ideas to the tyranny of low recall scores. You know, you’re, you do a an ad and you do a recall score and it doesn’t score highly enough and it doesn’t go anywhere.
Michael Donahue (14:02):
And he said, that’s, it’s sort of crazy because people respond first, emotionally, and then rationally. So he said, I want you to see if you can find any research that’s being done or it could be created that measures emotional response. So I dove into it and I’m not a research person. So I turned it over to the advertising research foundation, which was co-created by the forays and the Ana in the thirties and I said, here’s the challenge. And they immediately went to NYU and worked with their neuroscience group because NYU as a and M began to develop, you know, ideas where you could measure emotional response. There was a wonderful television show 10 15 years ago, a Brit actor whose name I forget and it was called lie to me and it was all about he had technology that he could look you look at you and know by your facial expressions whether you were being truthful or not.
Michael Donahue (15:03):
And that of course that stuff’s out there now and now there are, you know, there’s a company called realize which re REA L E Y S run by a young Danish guy and you can now measure emotional response. And what happened was initially if you went to a marketer and said, I care about emotional response, they would say, you are a charter member of the lunatic fringe. Come on now. Well that’s changed to the point where I was on a panel a few years ago with a marketer from Glaxo Smith Kline and said, I really believe in emotional response, but I wish my creative partners and the agencies would use these techniques so I could get some ideas that would get beyond, you know, initially, but rate. So emotional response has kicked in. There’s a man named Carl Marci, who now heads the neuroscience group at Neilson, who I worked with in the early days of emotional response back around 2005 or six and he sold his company to Nielsen for 150 million bucks.
Michael Donahue (16:06):
So I’m not a bashful person. So I reached out to Carl Marci and said, Carl, I started this whole thing. Why don’t you adopt me? Okay. So anyway, but so emotional response and then consumer engagement started because a friend of mine that was about emotional response started in the early two thousands and then the consumer engagement started a little later than that. And I put a bunch of people together because what happened was it became clear, and especially as you know, with not just television but the internet, that between the time somebody had a chance to see an ad and when they did something, there was something we called the engagement zone and we define consumer engagement as turning on a brand user or a brand prospect to a relevant message in an appropriate context. And it never got off the ground because all the media said we have the appropriate context.
Michael Donahue (17:00):
The marketers didn’t lean in on the, on the early patient. It sort of went away until my friend Randall Rothenberg at the interactive advertising Bureau in 2009 or 10 said, you know, I’ve always liked your initiative and I’m concerned that we’re not getting as much money in digital media because we’re not measuring between the time somebody has a chance to see an ad and when they do something in that engagement zone. So we messed around a little bit. McKinsey did a free study for a supply pilot study and they said, well that’s all cool, but you better go back earlier in this whole, uh, ad distribution chain. So we created something called making measurement. Makes sense, which was a collaborative effort among the Ana, the interactive advertising Bureau and the forays. And we put a team together and two agency people, David Cohen and Linda Thomas Brooks in the very first meeting said, you know, you talk about opportunity to see, but the ad gets served. That doesn’t mean it has an opportunity to be seen. We need to have a measurement that measures how viewable is that ad and that’s how viewability started and now it’s become a bigger deal. That was my God, that was seven or eight years ago.
Terry Tateossian (18:21):
Well now it’s everything, right? How often does your ad gets seen? What the response is, what happens at the conversion points? Um, yeah, I mean you, you’ve basically kind of described to me the beginning of your career where you were literally in the Madmen kind of error to what’s happening today.
Michael Donahue (18:43):
No, I was a little late later than madman, but still I was in it. But I have some great client stories. Uh, I had a client who, uh, was a really tough client, but a very fair client and he said, Donahue, you’re my favorite account person of all time. I said, man, coming from you, that is a real compliment. He said, now here’s why you always tell me what I need to hear, even when I don’t want to hear it. And actually, especially when I don’t want to hear it. So I, that was how I ran my, around my business life. But I also, I run my business life on the premise that a nun I had in high school who was talking about small people five feet, one, I’m walking down the hall in high school one day and she says, mr Donahue, you think you’re pretty smart, don’t you?
Michael Donahue (19:32):
And I said, well sister, I, well she says you are very smart but I just have this advice. There are two kinds of knowledge in the world. Mr Donahue. Yes sister. There’s the kind of knowledge you have and the kind of knowledge, you know, where to find which one he thinks more important. Well, I’ve lived my life on off, you know, I have pretty good knowledge but I’m going to go, I’m going to continue to learn. And then another one is one of the great behavioral things of all time. When I was running the all the Sara Lee businesses except the food business, I was running legs and Haynes and champion and coach and all those. I had an early senior client who uh, and I were out drinking one night and he said, how are my young people doing Donahue? Cause I would work with the assistant brand managers.
Michael Donahue (20:18):
And I said, well there you go, you, you hire highly dominant people and they’re really good. But sometimes I don’t think they would know a good idea if it hit him square between the eyes. So Donna here you have to understand the rule of three. I says, all right, nearly. I said, what is the rule of three? He said the first time you bring me an idea, I’ll probably call you a tow. He grew up in South Carolina and calling somebody a toad is not a compliment. The second time he bring me the idea, I’ll probably you with a glassy eyed stare, but the third time you bring them in the idea, it’s my idea. Okay. So to make that, you know, so one day I’m sending it home and I love music and ZZ top, I hear a new ZZ top song called she’s got legs and my biggest brand was legs hosiery.
Michael Donahue (21:10):
So next to that was on a Saturday. On Monday, I told my creative director and he said, that’s a great idea. We gotta, we gotta get the legs people to accept that. So we take it to the senior marketing guy. He didn’t call us a toad, but he basically, you know, effectively did, that was the first time, the second time he did transfixed us with a glassy eyed sear. This happens over a period of several months, but there never was a third time, Terry, because he calls me a couple of weeks after the second time and says, Donahue, you know, that great idea. I’ve always liked from day one, she’s got legs, Neely, that’s my friend is only about the real three says, tell Donahue and, and, and his creative guy, go produce it and run it. So we did. And it ran for a long time. It was, she’s got legs, she knows how to use them, you know, just using all the, all the ZZ top words. So, you know, and the point is if it’s their idea, uh, even even if it’s your idea and they want to do it, Hey, don’t let your ego get in the way.
Terry Tateossian (22:10):
Absolutely. I mean, I’ve experienced that quite often myself. You do have to kind of insect your ideas into other people and let them come back to you with it, which is
Michael Donahue (22:21):
absolutely, you know, another, another thing that I try to do, and you know, I have written these 58 stories and this, this is, this is one of them. The one I just told you is one of the stories. But here’s one that I think is something that people need to do and they’re don’t, they don’t do it enough these days, in the late seventies the editor of time magazine had a young intern working for the summer and he says, I want you to go interview the photographer who was the war photographer on the front lines in Vietnam. So this young woman went and met this man and said, my boss wants me to interview. But I just have to say that you must’ve had a death wish to go to the front lines every day to photograph all that carnage. And he said, no, I didn’t because I always knew the difference between an acceptable risk and an unacceptable risk. And she said, what are you talking about? He said, well, if I were shot and the bullet had my name on it, then I was probably, you know, doing something that was acceptably risky. But if I were shot and the bullet said to whom it may concern, then I think I was probably taking an unacceptable risk. And he said, young lady always know the difference between being brave and being acceptably risky. Yeah. Okay. Yeah. Yeah. So that’s, that’s, you know, words to words to live by.
Terry Tateossian (23:57):
Tell me a bit about the changes in the ad industry or the advertising agency world over the years.
Michael Donahue (24:06):
Well, I think the biggest change happened in the mid eighties when it went from privately owned companies to publicly own companies. And the prices paid, especially for the Ted Bates company were really, really high. And what was interesting, it sold in may of 1980 let’s see, 1986. Yeah, it’s all my may of 1986 but six months before it’s sold to the Bates agency Martin sorrow who ultimately ran the biggest agency holding company. WPP was working for the Saatchi’s and they wanted to buy Bates. So he went and interviewed, um, the, you know, the, the management and came back and said to the Saatchi as well, I think it would be a good buy. They want 250 million. I think if we offer them two 25, it’ll be a good deal. And that was in November of 85. He left shortly after that to start WPP. Then in the, in the first several months of 1986, the Saatchi’s came and bought our agency dancer for sterile sample.
Michael Donahue (25:20):
They bought a backer Spielvogel and then the Omnicom holding company started with Doyle Dane Bernbach, BBD and O and Needham, Harper steers. So the Saatchi brothers who always wanted to be number one panicked and they said, we’ve got to buy Bates. So in may they went and they bought Bates for $525 million, not 225 and there were many people at Bates who were men, became millionaires. And a lot of marketers said, that’s crazy. What are we paying these guys that they can sell their company for 520 and that began, that was the first basically spike in the can we really trust our agencies. And then it went on from there. Um, you know, and they moved away from commissions being paid to, you know, fee-based. And then they dismantled the full service agency and broke them into parts of it. And it all just continued to go downhill where marketers just didn’t trust agencies and they thought that the holding companies overhead never really, and they didn’t see the value of holding companies.
Michael Donahue (26:35):
And then of course it continued to sort of deteriorate. And then probably the most recent, you know, spike in March of 2015 when a former employee of WPP stood up and said there’s a lot of bad stuff going on and marketers not knowing where their ads run and all sorts of money being and that just accelerated the whole trust thing. So, uh, but I, I wrote a blog along these lines, Terry that said there are three key words in our business these days. A four letter word, a five letter word and a six letter word. The four letter word is data and everybody needs data. The six letter word is intent. And that is, you know, what’s your intent in using the data and doing the right thing in the digital media supply chain. And if you’re doing it the right way and your intentions good and you’re using good data, then you can get the five letter word back into the business. And that’s trust. But that’s an issue that can, and I think, I think there we are going to find over the next few years that the agencies who are changing enormously because they have to and the marketers who are, you know, are having to transform to, they’ll, they’re, we’ll find a way to get back to, I believe the kind of relationship that existed back in the commission days in the fifties, sixties and even seventies but it’s going to take some transformational changes on both the marketer’s part and on the agency’s part.
Terry Tateossian (28:16):
Yeah, I mean I, I see a lot of it happening already. Um, because a lot of marketers understand that this point, how digital ad spend actually works. You have a lot of companies that are removing the intermediary so that black box kind of gets opened up and you go straight to the ad buy process. You have the data producing conversion points and conversion rates and you can track and measure things a lot better. A lot of people are understanding key performance metrics a lot better. And you know, we have that information. So the marketers from different brands are now keeping agencies a lot more accountable and you know, we have to produce the backup of what we did, what the metrics were as far as the brand loyalty aspect of today. How loyal do you feel our marketers to their agencies and then in reverse consumers to their brands?
Michael Donahue (29:16):
Well, marketers are not as loyal as they were in the days. Well, I once wrote a blog told the golden age of marketing was the fifties when television really took off and the ads were not all that great, but they drove great consumption. And then I said, well, what we’re in the 2000 tens is the teenage of marketing because digital just doesn’t have the same power to create and sustain brands. So I think marketers are, are hooked on all the digital performance metrics, some of which are accurate, many of which are not. But the thing is, it all has to start with a message or an experience to a either a current user or a prospect that gets them interested in a brand. And then hopefully the messaging and all the experiences they have, get them loyal enough to a brand that they want to transact at the bottom of the funnel, top of the funnel is you’ve got to get people interested in your brand before they go to the bottom of the funnel and buy something from you.
Michael Donahue (30:26):
And there hasn’t been nearly as much emphasis in the last, since digital became powerful in creating the messaging that really does attract people to a brand. I mean, one of the problems going back to my point about you know, the accepted consumer belief, you really need to understand what the perception is, what the users have about the brand, how it fits into the current culture. And today so much Terry is, is you know what started as seemed like a, a warm feeling. It’s become a critical thing. And that’s what’s called purpose branding. A brand needs to be able to tell, especially the Screenagers and millennials, that they’re not just in business to sell them something, but they’re doing something else to help them along and you know, to help the society along. And when that first happened, the, you know, the old fashioned guy says that’s just a warm feeling.
Michael Donahue (31:20):
Well now even the old fashioned guys can look and see that the brands that are doing that, like a, you know, a lot of Unilever’s a major player in that area and Proctor and gamble is to, are doing well because their users see that they’re, they’re giving back in some way. And that is probably, you know, the whole purpose branding is probably maybe the best way these days to create brand loyalty. I mean you need to be able to say something important, but even if you don’t have the best messaging but you have a decent experiencing, but if your message can also come across as here’s our brand, our purpose, you probably are going to create brand loyalty.
Terry Tateossian (32:04):
To me that sounds like the evolution of emotional response marketing almost, right? Cause we’re, we’re looking for people to attach themselves to a particular purpose and if a brand comes along with that, great.
Michael Donahue (32:18):
Sorry, I think that’s, I hadn’t thought of it that way, but I think you’re right on. I think it is. I think the linkage between emotional response and purpose branding is definitely there. Yeah, it could. Yeah. That’s a, that’s a very, very good point. Yeah. I think you’re right.
Terry Tateossian (32:32):
What are some brands right now that are just hitting it out of the park? Like they get it, they’ve got their together and they’re just destroying them.
Michael Donahue (32:43):
Competition. Well, there’s a whole category of brands that I think have as a category the best advertising and insight and it’s been that way for 10 to 15 years. It’s the insurance category. You think a Geico, Allstate, farmers, all those are really, they’re entertaining. They might of course in Geico has said the same agency for 20 years and they have gone from spending, I think $200 million when the, when the account went to Martin, they now spend a billion and a half, you know, and it’s, but it’s not just, you know, 15 minutes will save you 15%. They create wonderfully entertaining stories that people can relate to. So I think they’re successful. And then Allstate does it the other way where the guy, you know, trashes everything and you’ve got Peyton Manning, you know, and, uh, but, uh, they’re not purpose brands though. They’re just wonderfully positioned messaging brands. But Unilever’s, um, what’s their women’s brand, their wonderful women’s brand that they showed real people, not models. [inaudible]
Michael Donahue (33:54):
yeah, they’ve been very successful. Proctor’s been successful with a couple of their brands by focusing on mothers and how important mothers are. So I’d say Unilever and P and G are really good in the purpose of branding and then all those insurance companies are doing well because they’ve got a wonderful message. You know, I’m progressive, uh, flow. I mean, they’ve been running that for 10 or 15 years and that’s, and those are, they’re all very successful companies. And I think in every, every one of those cases, they have the same agency they have when they created that campaign.
Terry Tateossian (34:27):
So that all kind of ties back to data. They’re looking at the psychographic or value graphic profiles of their audience space. And
Michael Donahue (34:36):
some of it is, uh, you know, I told you my story about the accepted belief. Um, the second story which happened in the mid eighties, I had a friend, God rest his soul named Phil Dusenberry, who was acknowledged to be maybe the best creative guy of all time, certainly. And I told him though my story about the accepted belief and he said, I took a piece of business away from your agency in 1985. The date was April 2nd, because it was down to Dan’s surface Joel sample where we had said, no, we weren’t Saatchi by that now and uh, and baby DNO. And you had done all the great, where’s the beef stuff the year before? So you were a Mark, you’re a marketing agency perceptually, but then you had great creative and we’re a great creative agency, but we didn’t have much of a marketing perception.
Michael Donahue (35:25):
But on the way to the final pitch, I’m thinking, what can we do? And then it hit me. This is your accepted belief, Mike. He said there’s a belief out there, true that I can use to create a line that will create a position for this client that should last for awhile. The perception was you can’t use the American express card everywhere. On the way to the final pitch. Phil wrote the line visa, it’s everywhere you want to be April 2nd, 1985 here we are, 2019 and BB DNO still and every commercial with it’s everywhere you want to be because they took advantage of a negative perception and they refuted it by making sure that indeed everywhere you want to be, you can use visa now to Amex, his credit, that statement, you can’t use it everywhere is not as true as it used to be, but there are still places that won’t accept Timex.
Terry Tateossian (36:30):
Yeah, absolutely. I mean, I mean that, that’s definitely the first thing I think about when I think of Amex is you know, accepted it. You still have that perception in your mind. How about emerging industry or emerging brands that are coming out right now that were not available or not even possible even as of two years ago?
Michael Donahue (36:51):
Well, I think most of those brands are in what is now called direct to consumer. And you know, the brands that I grew up with, uh, very few of them were direct to consumer. Proctor and gamble sells its brands and Unilever through the big grocery stores. But now you can buy stuff, you know, where you see an ad on a subway, you can, you know, take down the URL and order it directly. And those companies are growing. They’re not all going to succeed. But there have been a couple of light in the shaving category that had been monstrous successes, much to the chagrin of Proctor and gamble, which paid $57 billion for Gillette in 2005. And once again, the Screenagers and millennials are leaning into those brands. And the beauty of those brands is that you buy them, you know, if the message is right, you buy them.
Michael Donahue (37:49):
And oftentimes, uh, you know, the, and the sales go up pretty quickly. You don’t have to pay the middleman. So I think that category will continue to grow. Now what many of them are doing where we Parker’s, one of them, they started out as Adidas C but they also have opened up retail. I mean, and I think know that’s a lot of those companies will do it both ways. But I think that whole category of companies and it’s all over. It’s, it’s, you know, it’s mattresses, it’s cosmetics, it’s alcohol. I mean it will be in and you know, you’ll be able to buy cannabis brands I’m sure. Direct to consumer. Well you can, I mean, you know, when you know, so it’s a, it’s a big category. It really is.
Terry Tateossian (38:33):
What do you see coming in the industry?
Michael Donahue (38:36):
Well, I think you’re going to see, and as I told you, I’m involved in a company called black label cannabis, which is, you know, seeding, planning and harvesting cannabis in Subsaharan Africa. And what it’s doing is, is, is talk about a purpose brand. The deals that we have with black label cannabis in Subsaharan Africa, they have to pay the seeders growers and harvesters an amount that’s multiples of what the average wage per hour is in Nigeria. The average for the lower class and those countries are incredibly split, is like 50 cents an hour. So they’re w are where they’re going to be. We’re going to be paying $5 an hour with the stated objective, Terry of creating a black middle class in Subsaharan Africa. Very cool. Very interesting. And also what we’re going to be doing is once cannabis is legal here in the States, the THC version, hemp is already legal, uh, the CBD version.
Michael Donahue (39:37):
Once that happens, and farmers understandably start converting some of their food, growing land crops to cannabis, we have enough land in Africa that will start going food. And the, even some of the, you know, the bad actors in Africa who you read about are, are very much leaning in on black label cannabis. First of all, the two people who run it are both brothers. They’re both black eyes and they are not trying to mess it up because they would rather have two black brothers take control of the cannabis business in Africa than have the Chinese do it who are trying to take over Subsaharan Africa. So there’s all kinds of stuff. Yeah. Okay. I mean, and that’s, that’s a cool company. I mean it, uh, you know, it’s, you know, once again that is a purpose brand in the sense that you want to make sure those people are making money.
Michael Donahue (40:31):
And then, you know, a black middle class, the differentiation between the up there is a, there is a significant upper-class in Subsaharan Africa, my friend who co runs this company and the two of these guys went to a meeting in Nigeria and everybody at the table was plaque, but they were the only two people who are not billionaires because there is a, there is a, there is, but then on the, at the other end you’ve got the 50 cents an hour folks, right? So if you can somehow start to move them up, that will be, you know, it’s a wonderful thing. And uh, I mean it works at so many different levels. It works, you know, obviously from a social level, from a human level, from a, you know, if you’re making $5 an hour and you’re used to making 50 cents an hour, you’re going to be able to be able to spend more money on things that you can’t spend at 50 cents an hour.
Michael Donahue (41:23):
So it’s so cool stuff going. Well, I think Cola graphy will Oh, has the potential, especially because Apple owns, I think, the major patents in whole lager, and they’ve had them for over 10 years. And when, when Steve jobs was still alive, they got them. I think that holography has a chance to supplant virtual reality as a wonderful way to experience things because it needs a lot of technology development to do that. But I could see Apple introducing a television set where you can watch things in 3d whole holographically without putting on a mask. And that’s the, the VR. VR is wonderful, but you’ve got to put those things on your face.
Terry Tateossian (42:13):
So do you think VR hasn’t taken off as quickly as most people thought or a lot of people thought as potentially maybe whole log graphy will down the road?
Michael Donahue (42:22):
I think so, but I think if Apple is able to be successful where they enter as a television set or just able to integrate it and other kinds of experiences, then I think you’ll have other companies leaning in and developing. I mean, they’re not going to be able to steal Apple’s patents, but I’m sure there are other patents on whole lager V that I don’t know about. Yeah. I think it can come along. It’s down the road, but I think whole, I think holography could be a really big deal within five years. Yeah.
Terry Tateossian (42:50):
How do you envision the applications of photography actually working? Like where will we see how long?
Michael Donahue (42:56):
Well, I think you could, you could very well, you know, uh, you can have a whiteboard that you could project holographic images on so you can have an experience. We’re looking at a whiteboard and accepted. It looks like it’s three dimensional and you don’t have to put any kind of stuff on your, on your head to see it. I think you could see crazy stuff like people buying clothes that could have holography technology that you could just flip something and all of a sudden your blouse show something that’s three-day. I mean that’s
Terry Tateossian (43:30):
so ho holographic closing that project out
Michael Donahue (43:36):
things is all over the place that you could have the whole log graphy as as yeah, exactly.
Terry Tateossian (43:41):
I’m envisioning homography even as a, you know, the, the, the tra, you know, the traditional star Trek stuff where you have a hold of graphic person where you can have conversations with, you know, and uh, Elvis and uh, those type of, but yeah, I mean, I think the practical applications of holography are just mind blowing.
Michael Donahue (44:04):
They really are. They really are. If you are in New York on West 26th street, there is a, a facility called the holographic studios, which is open to the public. And I haven’t been down there yet, but I plan to go sometime pretty soon. And, uh, I think the person who runs it or owns it is a pioneer in homography. Now whole longer fees, not a new thing. It’s been around. In fact, I think holography might’ve even preceded virtual reality, but it just never really took off on a, uh, but you know, if Apple is working on holographic projects, then you know, just looking at the history of Apple, whether it was the Mac in 84 or the, uh, iPhone and 2007, uh, you know, you can see where that could go.
Terry Tateossian (44:54):
Yeah. I can’t wait to see where, where the next couple of years will go. I mean, a lot of people are predicting we won’t have these, you know, the phone devices anymore and uh, everything will be projected onto something, which is I guess where that’s coming from. Now. My last question for you is ad tech. Talk to me a bit about what do you envision in the pipeline for that market? What should we expect to happen? I think
Michael Donahue (45:21):
what you’re going to see and the whole ad tech area, digital media supply chain, you’re going to see a back to the future model within the next couple of years. In this respect. If you are buying ads in legacy media, you know where your ads run, you know how much you’re spending. There are auditing technologies to make sure that what they tell you actually happened. So those things happen. I think what you’re going to see, and I have a friend who has started a company called RESA digital where you’re going to see a totally transparent digital media supply chain end to end where the marketers and hopefully the agencies buying for the marketers will buy um, uh, ads on sites where they know that there really are humans there. Because right now only about 20 cents of every, not 40 cents, which you’re here, but only about 15 to 20 cents of every market or dollar that goes on a screen goes on a screen where, where humans visited 40 cents goes on a screen, but lots of that, maybe another 20 cents of that 40 cents goes on screens where, where there aren’t any humans, lots of art.
Michael Donahue (46:40):
So I think, uh, and this company that I’m telling you about has, it’s, it’s going to be up to about 70 cents of the dollar will go on a screen. And there are lots of companies in the middle of the media of the digital media, supply chain, SSPs, DSPs, DMPs, ad servers, ad exchanges, which don’t need to be there. I’m not saying that any one of those categories will go away, but I think a lot of the companies in those categories who, you know, have a nice business but probably are not delivering to the marketers what the marketers are spending to get that. So I think that you’ll, you’ll see a crunch down digital media supply chain. I, I have a friend named Dave Morgan who has a company called Simon media, which is using algorithms to buy television and is doing very well. But he has a friend, Terry Khawaja who runs a company called Luma partners and they something called the LUMAscape, which has a zillion different, you know, companies in the, in the digital media supply chain.
Michael Donahue (47:46):
And as this, as the supply chain crunches down, I went, uh, I, I’m always the one that asks a question at, at, at Dave Morgan’s salons where he had Terry one night and I said, I know Terry, I said, Terry, you know, you guys are talking about, and I believe that this whole supply chain is going to crunch down a lot. You know, you’ve got the companies, big companies like Oracle buying really great companies like moat. And then you had Oracle buying BlueKai and you know, and I said, Terry, is it possible that this big conference you have every year 500 must attend LUMAscape people? Do you think it’s possible that maybe within a few years you’ll be able to hold that conference around a dinner table?
Michael Donahue (48:31):
Because there’ll be so few people in the space. Right. And he basically looked, he didn’t say, he said he laughed at me, but I know if he had said what it was on his mind, it would have been a great advertising line that goes back to the sixties and that would be Mike, you really know how to hurt a guy. But anyhow, I sat through this total quality management presentation and at the end of it, it was eight hours. I walked up to the guy presenting and I said, I don’t mean to disrespect you, but everything you said here is common sense. He said, you’re right, but it’s not common practice.
Michael Donahue (49:08):
So when you can take common sense and make it into common practice, you can have a pretty good chance of having a successful business. But there aren’t a lot of people who focus on doing that. So the ones who do succeed,
Terry Tateossian (49:24):
Those I think are extremely wise words because I think nowadays, for whatever reason, we lack common sense and that lack of common sense is translating into no practice. Well Mike, thank you so much. I really appreciate your time today. Yeah, absolutely. How can people find you?
Michael Donahue (49:47):
Well, my email address is MichaelDJd[email protected] and my phone number is (917) 679-1692 so if anybody thinks that I can help them advise, you know, in my advisory group. Yeah, reach out to me. Sure.
Terry Tateossian (50:06):
Sounds good, Mike. Thank you.
Terry Tateossian (50:09):
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