Want key insights into the present state of our digital world and where we’re headed?
Invest 15 minutes and 52 seconds to watch and listen to Scott Galloway (@profgalloway), a professor at New York University’s Stern School of Business, speaking at the DLD (Digital-Life-Design) Conference earlier this year.
He quickly admits some past predictions were wrong. But the research and discoveries he shares are convincing. One of the most intriguing: In an economy with 2 percent annual growth, a business that’s growing faster than 2 percent will reveal a business that’s significantly impacted on the losing end. He believes it’s just as important to talk about losers as the winners.
He talks about the “Four Horsemen,” or the four most dominant companies in digital: Apple, Amazon, Google and Facebook. The four have a combined market capitalization of more than $1.3 trillion, greater than the gross domestic product of South Korea.
Galloway believes Amazon and other e-commerce entities will either open brick-and-mortar stores or go out of business. The most amazing statistic: As Amazon pushed the concept of free shipping, its transportation costs soared 40 percent to $7 billion last year. Two thirds of all Christmas packages were delivered to consumers free of charge.
He believes stores are and will continue to be flexible warehouses for products and there will be growth in click-and-collect—order online and pick it up at the store. However, retail salespeople, who once made $40,000 to $80,000 annually, will be replaced by factory and fulfillment workers making $20,000 to $40,000. It’s a metaphor for the economy losing middle-class jobs and a predictor of low-wage, on-demand services, he said.
Galloway clearly articulates the evolution of the relationship between businesses and Facebook.
“Facebook has pulled off the greatest bait-and-switch in marketing history,” he said. “They convinced many of the brands in this room to spend hundreds of millions to build their communities, telling them that it would be their community and they would have access to it. They then put a walled garden around it and said, ‘Just kidding. You have to pay for access to that community.’ ”
Instagram is growing faster than any other social media channel and its engagement rate is 10 to 15 times better than Facebook. However, two thirds of all time spent on social media is on Facebook.
“There are 1.1 billion self-identified Catholics in the world,” Galloway said. “Google has relationships with 2.2 billion people and Facebook has 2.4 billion.” Galloway says sales pitches for those two companies should go something like this, “We have more relationships than God on this planet and we’re on mobile phones.”
The mobile economy is not favorable to Google’s search and its revenues in several categories is declining.
“Google Glass is not a wearable,” Galloway said. “It’s a prophylactic ensuring that you will not conceive a child because no one will get near you.”
Galloway believes Apple will become the first $1 trillion brand and the most powerful luxury brand in the world. It possesses outstanding craftsmanship, an iconic founder, an exceptional price point, it’s vertical and global. It also possesses a self-expressive benefit.
“The ultimate self-expressive benefit brand is the iPhone,” Galloway said. “For those of you carrying an iPhone, it means your wealthier, better educated and more likely to have more options in terms of who you mate with.”