Philipp Westermeyer: State of the German Internet | OMR Festival 2018 – Hamburg, Germany | #OMR18

Philipp Westermeyer: State of the German Internet | OMR Festival 2018 – Hamburg, Germany | #OMR18


[Applaus] Now we want to deliver some ideas, some inspiration so that you go home
with some operative insights. Last year, we decided that for a change I should, to be on the safe side,
kick things off and get up here and present myself for just 15-20 minutes a few charts so that there is something there for you that can help boost
your marketing endeavors. This year, we got together and discussed what’s going on right now
in marketing or online in general in Europe, in Germany
and in the world. I wanted to talk a bit about that and hope you can learn a bit. Then it’s the stars’ turn,
their keynotes from around the world. But we’ll start now and hopefully justify the price of admission. The State of the German Internet 2018 When we met last year here, we invented the GIX,
the German Internet Index. An index of
German digital companies, comprising listed German companies
in the digital sector, whose value is
at least EUR 1 billion. Since we’re marketing people,
we like catchy acronyms. The GIX. Last year our GIX was worth about EUR 50 billion. That’s the total value of listed
German internet companies. It wasn’t too bad then,
and still is today. Fortunately, all of these companies in the past 12 months
have increased their value all the way up to EUR 65 billion. There are even two new additions: Delivery Hero and HelloFresh now on board after going public
in the past year. Companies based in Germany. It’s an encouraging trend: The total value of our industry is growing. That good and I am
very happy to see it. But let’s take a look at the USA. Look to the west, where the famed
GAFA companies are located. Google, Amazon,
Facebook and Apple: the most important platforms
in our industry. And how did they do
in the past year? Last year, their total value
was €1900 billion. That is a massive figure,
bordering on the ridiculous. €1900 billion. Almost impossible
to imagine how much that is. I’ve been working
on this keynote for a while and it’s still hard to fathom. And how have they done
in the past year? They are now valued at over EUR 2400 billion, i.e. they added another
EUR 500 billion in value in the past 12 months alone. To put that another way, the entire value of
the listed digital German companies would fit an astounding 8 times within GAFA’s growth
in the past year alone. Incredible. In 12 months, they have dwarfed us
in just growth alone. Sure, you could say Westermeyer,
that’s not even worth a comparison. Maybe that funny little GIX
that you thought of is simply not the right
object of comparison. Maybe there is something more apt
to compare it to. Let’s look at another entity. What about the DAX? The German index of the most
valuable 30 companies in Germany. How are they doing compared to GAFA? And we have to say
that the GAFA companies grew by nearly an entire DAX. Or at least half of one. The entire DAX covered comfortably by these four companies
by their growth in the past year. Absolutely massive. Fundamental, gigantic contrasts in innovation, power, money, capital.
Simply astounding. And this year, for the first time,
we wanted to look east. In the East, in China,
there is also a kind of GAFA. It’s just got a different name. There it is called BAT:
Baidu, Alibaba, Tenzen. Those are the three
biggest companies in China. And when we look
at what’s going on over there, we see that here, as well, these companies are now worth as much as the entire DAX, i.e. three companies
worth more than 30. I think it is factually accurate to say,
that the German Internet, and of course everything
that is digital is Internet-related. But the German Internet is under significant threat from the East, from the West,
on all fronts. There are of course more platforms
that just these seven. There is a lot going on. The question for us is:
What can we do about it? Or what can you do about it,
maybe with our help, to stay in the game
and to keep up? In such a rigged game. We racked our brains. I think one of the first things
you can do to keep up with the world is to travel. Educated people, top thinkers,
they have always travelled to places in the search for inspiration. Goethe, for example, travelled to Italy to broaden his horizons
and find new inspiration. Where to today’s
thought leaders travel to? Of course, they all fly to
Silicon Valley. Our partners, our friends over
at Facebook told us that they receive
75,000 requests per year from organizations, from people who want to visit Facebook
in Silicon Valley. That’s ridiculous! 75,000 people
want to visit If they want to accommodate
all of these requests, then they probably need to hire
an extra thousand people. Doesn’t really make any sense. But people still go
and many actually get an appointment. What do they experience there? What can they possible do there? I think one of the first things to do
for people who go there is to update their social media and take a pic in front of the thumbs-up. That’s one of the first takeaways.
Top of the list. Another takeaway? Most of the managers and CEOs
go there looking like this. And come back looking like this. There is a definite,
optical transformation that most undergo
while they are there. But of course,
that’s all on the surface. What do people like information-wise? I think one of the main things
people learn the third takeaway is it is all about customer access. The people that
go there understand Everything in today’s economics
is dependent on access to customers. That is a major biggest buzzword. Airbnb, for example, is not successful because it owns amazing hotels or because it owns amazing flats
—they don’t own any real estate. They have incredible customer access
and they can broker bookings. Or UBER. They don’t own
any amazing cars. They can just connect nice cars
and nice drivers. It’s success is only and always
dependent on customer access. That is what makes
platforms so successful. And it is absolutely essential
in the digital age. That’s what you learn there
and it’s true, too. And if you take a look
at some pics from city centers, They used to be
the epic center of customer access. You used to walk around there
and pop into a store or two. And brands tried to acquire customers
via any available channel. It has to be said that nowadays customer access is very strongly
leveraged by some companies and is catalyzed
by a host of companies. There are companies
who are suddenly right there between customers
and advertising companies. The GAFA companies have customer access
and are incredibly clever. There’s nothing more to say about it
than they are simply smart. They just say, “I am Google, Facebook, Amazon, I have customer access, you can too but you have to bid for it
on my platform. That’s how it works.
And it works ridiculously well. And it is just the world
in which we live. I really don’t find it good or bad,
it’s just the way things are. And we have to adapt. I think there are a host of paths
to effectively adapt, to react successfully. Not to demonize the situation,
but to adopt approaches that helps us be as successful
as possible in this economy. And that’s what we are going to discuss
in the remaining 20 plus minutes. I would like to give you
five ideas or show you five paths that I think
can help you get ahead in this economy. Number 1. I think “horizontalization”
is key today. What do I mean by that?
Let’s take a closer look at Zalando. They started out selling shoes. You all know that. Then at some point they realized
that to sell more shoes we have to spend a lot
to acquire a new customer. Our costs are high, on SEO, affiliate
and all our other channels SEA, Google ads,
just to buy new customers. If we have to do that
then it makes more sense when we sell them more things. We should leverage our
customer base for more than just shoes. To that end, they have been offering
fashion for the past couple of years. And they pushed it further,
the next logical step: Beauty and cosmetic products. Robert Gentz, the founder of Zalando,
will be up here shortly. We’ll be talking a bit
and he’ll tell you himself that horizontalization is key to better
monetize customers. Next example: top companies
from Silicon Valley do the same thing. Uber started off as a shuttle service. Nowadays, they are of course
primarily a taxi service. But to get even more out of
their customers, because they also have to pay for them, They have to pay a ton
for app installs. Not even Uber gets
its installs paid for. How did they push it further? They introduced Uber Eats,
their food delivery service. Or let’s look at eInsurance.
Who doesn’t know eInsurance? One of the most successful
German Internet companies ever. An unlisted company.
They are no longer called eInsurance, because they no longer
only sell insurance. Now they compare prices
for everything. Now they are called Check24
and promote themselves with the very apt claim:
Check everything here. You can check prices here for anything
and thus provide customers more and get more from their customers. It’s no longer just insurance, now you
can compare electricity and gas prices. I am certain that the energy companies
pay quite a bit to Check24 to be able to compare their prices. That’s one aspect that can help,
expanding your product range horizontally. The next path: Retain. Once you have a customer,
you have to do everything to retain them. Now more than ever. And yes, last year I tried to say that
the most important factor here is an excellent product.
And that’s true. There is nothing more important than
an excellent product. But let’s assume,
we have an excellent product. What can we do then? One of the best things to do then
is to set up a subscription model. We are living
in the subscription economy. Everyone is trying to sell
their stuff as a subscription. We’ve all seen it in practice, Netflix and Spotify have subscription
models for music and entertainment. Now there are even razors
available on a subscription basis. HelloFresh is
a subscription-based company. Subscriptions are everywhere. Kayla, who’ll be on stage later, one of the most successful
sports influencers on the planet from Australia,
offers sports subscriptions. Another example:
the automotive sector. One you wouldn’t really expect. Polestar by Volvo is only
available via subscription. Porsche, too. You can grab their app
and for EUR 4000 you’ll have a subscription to a Porsche,
or several Porsches. The Porsche subscription. Or our partners here from Audi
now also say that “It’s not about the car—own the experience.” The customer experience
and not the car is decisive. Subscriptions are everywhere. What could be more relevant
from a marketing perspective than getting everyone to sign up
for a subscription? It’s certainly no easy feat. What’s also relevant
is having a sound CRM game. Customer relationship management. While we were working on the charts
we asked ourselves what are some excellent
examples of CRM? To be honest, there wasn’t
too much out there. But then we did start
hearing about Booking.com. They do
a good job with CRM. So I took a look
and their CRM looks like this. Actually, we should be bombarded
by non-stop pings, because you constantly receive
some kind of emails from booking. It’s completely over-the-top. Always the same thing:
you’re flying to place A. Need a rental car? That’s a logical thing to offer.
Nothing too groundbreaking about offering a car rental
to a flight customer. And then to start inundating you
with random destinations and to stay present everyday
for your customers. That’s ok.
It’s also working for them. Booking.com is
very, very, very successful. But as an example of CRM,
I don’t find it all too inspiring. So, then I started wondering, What else is out there? What have I personally noticed
as a good example of CRM? Then I thought of this: A vacation farm in Tuscany, where I was with my family
several years ago. And the owner writes every year
around Christmas letting us know
how the horses are doing, what’s going on at the farm
and if we plan on visiting again. Very personal, very authentic,
very emotional. At some point, my wife said to me
why don’t we go back? And if I am honest,
I wouldn’t mind either. Pretty good CRM. But at very small scale and it can hardly be scalable. I know, but still very personal
and authentic. If you ask me, good CRM
needs to be somewhere in between. Between this here and what
we just saw from booking.com. I think that CRM is one
of the core areas for growth with some clever marketing. We’ve only scratched the surface and it hasn’t yet been done well There are hardly any examples of
excellent CRM. There is potential
for so much more. Take a look
at improving your CRM. Some of my female
co-workers have told me that Asos is doing
some interesting things with CRM. They send out push notifications. They’re supposed to be a good example.
They have very nice products. Anyway, my point here is
that for good CRM, I had a hard time finding
good examples. What else? Another thing that
would certainly help if there was a way
to stand out. With your marketing.
Stand-out marketing. It’s sounds stupid
on the surface, I know. Excuse me, Phillip. How can I get ahead in marketing? By standing out. Not really the most useful thing.
But what do I mean by it? Let’s take a closer look. One way of standing out
that is a clear recipe for success is by being provocative. Our age is characterized
by provocations. I won’t say if it’s good or bad,
it’s the way it is now. We are living in times
of provocation. And here’s what I mean. The next successful brand
from my hometown of Essen, Germany, is called Naketano. I am sure that some of you
wear their stuff. One of the most-successful
German fashion brands in the past decade.
Naketano. No one really knows
the founders. But they thought to label and name
all of their products in a very unorthodox fashion. For example, Tittis Galore.
Bitches and Sons. They all have very provocative names. It is a provocation to
name their clothes in such a way. And because of that, and as they cleverly sell their stuff
on a variety of platforms they have been able to close the gap
to established fashion brands. The charts behind me show the amount of Google searches
well-known German fashion brands, like Tom Tailor and S.Oliver. If you look at Naketano,
they now have a higher volume. And have maintained that level
for a few years now. From out of nowhere, with very little marketing, just with provocations. And then if you look and see
that at the end of last year, they had another spike
in search volume. How did they pull that off? They simply claimed that at the end of this year,
they’d be closing up shop. It’s absolutely absurd. We took a look, the company is valued
between EUR 180 and 200 million. It’s a couple of guys in Essen,
who own the shop. I will eat my hat
if they close that thing. Never going to happen. I’ll bet that when we see
each other next year Naketano will still be around. Maybe there will be new owners, but they will never close it down. But they claimed that they would
in a public statement. It had major traction in the media.
The search volume went up. All through provocation. Who else is good at provoking? Our partners, and yes our friends,
I know the founders now a bit, True Fruits,
humorous colleagues over there. They sell smoothies and drinks,
now available in all supermarkets. And they are also known for these,
sexually connotated ads. A very successful campaign,
it must be said. I recently spoke
with the founder of Fritz Cola from here in Hamburg
and he was also all about provoking. Said it makes sense to use clichés,
because they work. And because they worked so well,
the founder of True Fruits decided to cast
his genitals in steel, here they are, and make them public
and talk about them. Also a pure provocation. But he didn’t do that
just to provoke, no way! He also decided to make
a steel version of his package so that he could
give it away as an award to other entrepreneurs who provoke
and stand out by doing so. So that’s how that works! What else can you do
to stand out in marketing? One development
that we’ve seen is the CEO of a brand
must also be the brand. How so? It has been commonplace
in the past few years in the fashion
and high-fashion sectors that the founders of brands
also embody the brand itself, communicating it on all platforms
around the world. There are people that are simply
synonymous with the brand in fashion. All of these people here represent and communicate their respective brand
as a means of standing out. It’s only because of these people
that their products are so valuable. A hand bag alone
is not worth that much, but if it says Coco Chanel
then it becomes that valuable. It has nothing to do
with Google or Facebook, it’s only because of
Coco Chanel. Standing out as a founder,
it’s a practice we’ve seen from fashion. And it’s this page from the
fashion marketing playbook that a host
of other companies have ripped off, especially tech companies. It’s common now to see CEOs
who stand out. This guy was a book seller,
but now he is a global icon. Jeff Bezos, who can affect
capital markets all by himself. Iconic founder figures. The next iconic founder
is this guy: The English professor here
with his commerce platform. Jack Ma. It’s the exact
same playbook. Or this guy: he’s the CEO of
T-Mobile in the USA. He used to look like this.
Now he looks like this. He completely embodies
the T-Mobile brand in the US. On all platforms, on all channels.
That is marketing via the CEO. Or our friend Gary, who’s a frequent
guest here at OMR. Gary Vaynerchuk. The wine merchant.
The modest wine merchant. And last year here on stage,
he appeared like this. The digital marketing media icon.
TV star. Or what about this dude? Now I am on a beer bottle. I let my colleagues from Warsteiner
talk me into it. I just want to say right here. I am not a rockstar. I don’t want to be considered one.
We are OMR. I also get it that a company CEO projects the values of a brand. In our case, I hope you view it
more as ironic, and as a joke. And not as someone,
trying to join these ranks. That would be absurd. Path number 4.
What else can we do? We can fundamentally
rethink digital PR. To me, along with CRM, PR is the one aspect that offers the best chances
of truly standing out, of doing things
differently than others, especially digital PR. A considerable number of companies
still implement very average PR measures. They dispatch press releases in the hopes
that they’ll be printed off. The practice is fine,
but it’s nothing more than ordinary. To me there are a few examples
of excellent PR. One such example is this: Sending a Tesla piloted
by a puppet to Mars by rocket and playing David Bowie tunes
as a message to aliens. What a load of shit. First off, that thing is never
going to reach any aliens. Usually, rockets are filled with junk
so that they can fly up there. And now they’re sending
expensive cars. It is nothing more than absurdist PR. There is no point to it.
Except as a story. The story of a Tesla hurtling
towards Mars. It made waves around the world.
Incredible publicity. And then naturally, Elon Musk
posted about it on Instagram
and then it really took off. 1.5 million likes
almost immediately by people who think
wrecking cars is cool. It generated
thousands of comments. Generally speaking, if there is someone
who embodies modern PR then it’s Elon Musk. So, we wanted
to take a closer look at the make-up
of his digital PR and try to understand
how he does it. It’s by no means a coincidence. There is a clear strategy
behind it by Elon Musk. We were able to identify
four factors that he uses to create such engaging PR. The first factor is frequency.
He posts incredibly frequently. In the past year, Musk posted
over 1000 tweets on a wide spectrum of topics. On everything from SpaceX and Tesla,
his companies, to private matters,
to the Boring company, which drills or excavates tunnels
and also belongs to him, all the way to matters on AI. High frequency. Factor number 1.
Factor number 2: Absurdity. The more absurd,
the higher the engagement. We talked about the car before,
but he’s got even more absurd PR. For example, for whatever reason,
in addition to his tunnel excavation company,
to selling tunneling equipment he began producing and selling
flame throwers. Flame throwers. What the hell?
Who needs to sell flame throwers? Well, he plugged them
with his posts that the zombie apocalypse
is coming. Essentially tapping into
this hugely popular meme from the US. You’ve probably all seen it
in one form or another. So he decided to piggyback
off it and said, “Ok, it’s coming soon. You need flame throwers.” And people started buying
flame throwers. Absolutely insane, to be honest. But it made news around the world. That the Boring Company
that was for sale received tons of media play,
although, just like the name says, it’s a boring company. But the ridiculous move worked. Absurdity, don’t overlook it. Factor 3.
Agenda setting. It seems quite obvious to me
that Musk methodically chose topics that he knows
gain significant traction. One such topic
for him is AI. He cautions against it.
He’s very critical of it. He makes frequent statements
on the topic even though it’s not
his main subject. He has all sorts of operational
matters to attend to for all his companies. And he positions himself
as if he was this AI expert. But he takes on this AI thought
leadership role. By doing that he becomes
a contact person for the topic. It’s my area
and I am an expert in it. Very clever, because it keeps him
and his company in the conversation about this future topic.
Completely intentional. The final factor: high authenticity. He posts authentic pics
of himself of how he was as a child,
of his mom, of his girlfriend, of his brother. It’s a portfolio of things
that combines complex AI things and absurd subject matter
and then his mom and his family. That’s the recipe for good PR,
but how has it benefitted him? I’ll show just how
he’s profited form it. It’s ridiculous. These companies here are the top 10
in the world for innovation based on the perception
by German managers. It’s based on a survey
that was conducted. Coming in at number 6
is Tesla. Nowhere near the top 10,
Volkswagen. Now let’s compare that to what companies around the world
actually invest in innovation, in research and development. It looks a bit like this. Volkswagen spends the fifth most in the world for R&D
and for innovation. And it’s not even mentioned
in the survey before. And Tesla, number 171
when it comes to budget is perceived as number 6. All as a result of Elon Musk’s
incredibly effective PR. I am certain that a large portion
of the Tesla’s market capitalization is a result of his PR
and it’s a billion-dollar company. What else can you do.
Other than rethinking digital PR. You can take a page out of the
marketing playbook. This time from the events sector.
I know a bit about events. The people over at Apple
put on a heck of an event. Once a year, they unveil
a new product. It’s very impressive.
They launch a new product and just like that.
Everyone around the world covers the new product without Apple
having to pay a dime. This event
is just incredible. The event alone
is such a valuable commodity. Great tip. “Be like Apple.” Only slightly difficult to copy
and recreate. But there is an example of an event right here in Hamburg—not us
—who have adopted the principle. Our friends over at About You. A fashion company, based here, founder Tarek Müller
sat at the bar last year. Last year in Hamburg, they held
the Influencer Awards. I was able to attend.
There were 600-700 in attendance. The awards themselves, I must admit,
I don’t remember who won what or what they were for. I was invited, along with influencers
and social media stars. It was full of people
with an incredible amount of reach. So they had this awards show. And it cost approx. EUR 1 million
for the entire production. But because the audience
was really engaged and because they had
so much reach, they had 41 million impressions
on social media. Or to put it in other words, the event generated media value
in excess of EUR 20 million for free with their EUR 1 million event. That’s a very good margin. It was very cleverly done and it’s
a good example of modern PR. The target group now knows About You
just from this one event. Very clever. Path 5. For getting ahead
in today’s economy. You can make sure that you are agile
on those platforms that are most relevant
to our world. How so? When discussing Google,
everyone knows about SEO and SEA. Oft overlooked is Google Shopping. How can we stand out on Google Shopping? When you search for products
using the search term Adidas Samba white,
it’s incredible how similar the ads are. They are all using a free-standing
image of an Adidas shoe. Part of it might be the search term,
but the providers all use the same image. Except for one.
They did it differently. The people over at Asos
added red legs. That simple addition led to
a better click rate, better conversions. Such a small change
can have massive ramifications. It’s that easy to be agile.
Simple example. Next up: agile in
the mobile sector. What do I mean?
How can I be agile in the mobile sector? You can sell this blue shirt
on Amazon. There an order costs €8. If you wanna sell a shirt,
your costs amount to €8 per sale. We thought that maybe on Instagram,
the situation would be better. That we could show you
that you on Instagram it’s much cheaper
to sell the same shirt. So, we had a look and… it costs €8 too. Same costs for the same shirt
on Instagram. But what is remarkable
on Instagram, The price you can charge
on Amazon is €26. The price you can charge
for the exact same thing on Instagram with the
same customer acquisition costs is €50. that’s incredible. It won’t stay
that way for long. But right now, you can sell it
for that on Instagram. It’s crazy and it’s the platform
that creates that value. What about being agile
on Facebook? We’ve all heard that Facebook
is reducing the organic reach. But there are other ways.
For example, Facebook groups. I find it very surprising how few people
today make Facebook groups. Because in groups, all the reach
on Facebook is for free. You don’t have to
pay a dime. There are groups like these. This is a group
for German drugstore, DM. They don’t even run it themselves,
but some “fans” of the drugstore do. I didn’t realize that drugstores
could have fans. But there are over 100K DM fans
in the Facebook group. And they write things
in the group about all the crazy things they’ve bought at DM. How cool is that for DM?
All for free. I am certain that when you go
to the office on Monday, or on Saturday tomorrow, and make a Facebook group,
and it’ll have an impact. One day there maybe
restrictions on reach and less organic reach available.
Right now it’s a very strong channel. There are also ways in classic
brick and mortar shops there are also ways
of being agile on modern platforms. Here’s an example. This right here is
a champagne bar in San Francisco. It’s not the fact that it’s
in San Francisco that makes it special. I haven’t been there myself,
but I’ve heard it’s nothing special. Except for one thing.
This image here. The bottle painted
on the side of the wall. It kind of looks like a Banksy image. You wouldn’t think it,
but this bottle is a part of the recipe for
success for this bar. They aren’t in any travel guide.
All they’ve got is this bottle on the wall. What the hell is
the good in having it? People go there and take pics
with the bottle and upload them
to Instagram. All they did was paint
a cool looking bottle, creating an experience
and then comes the social media reach. And lots of it. There are plenty of options
for ways of standing out. In summary, they are going horizontal, retaining at all costs,
subscriptions, CRM standing out, sounds hard,
maybe try a champagne bottle, digital PR
and being agile on platforms. I want to say thanks to everyone
who helped out on the project, researching the charts,
our data partners, too, that patiently answered
my questions. It’s not like I just sat down last night
and did this all by myself. There was an entire team
that spent the past weeks and months putting together
a solid presentation. And hopefully, you’ll feel it justified
part of the cost of admission. Oh, oops.
I forgot one thing. Crap. There is a 6th path
for standing out, um, to make
good marketing. What else can you do? Play music.
What do I mean, “play music?” In Germany here,
we have experienced what it’s like to tear down walls. It’s nothing new.
The man has a talent for it. We can just watch how the Hoff
pulled it all off. We can find inspiration here
on how to tear down walls.

6 comments

  1. wer macht eigentlich diese videos? ich schaue mir doch keine keynote an um andauernd das Publikum zu sehen. Ja toll ihr habt einen Kamerakran, aber es geht um den speaker und die folien…. nicht um die Zuschauer.

  2. Huhu Kameramann, gibt es irgendeinen Grund warum du lieber die Leude anstatt die Grafiken zeigst? Machts ein wenig mühselig, weißt du.

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