Speaker 1:
From the library of the New York stock exchange, at the corner of Wall and Broad streets in New York city, you're Inside the ICE House, our podcast from Intercontinental exchange on markets, leadership and vision in global business. The dream drivers that have made the NYSE an indispensable institution for global growth for more than 225 years. Each week, we feature stories of those who hatch plans, create jobs, and harness the engine of capitalism right here, right now at the NYSE and at ICE's 12 exchanges and seven clearing houses around the world. Now here's your host, Josh King, head of communications at Intercontinental exchange.
Josh King:
Welcome inside the ICE House. The New York stock exchange is home to a community of listed companies representing some of the best known brands in the world, but what is a brand worth? Every year, Interbrand, a division of Omnicom group, NYSE ticker symbol OMC, carefully surveys the global marketplace to identify and calculate the value of the world's leading brands. Their findings that the top 100 brands create over $2 trillion of value for companies and their investors.
Josh King:
Coinciding with the release of the 2018 global brands report earlier this month, the New York stock exchange served as host to Interbrand's best global brand's summit. The event brought the people behind the brands together, inside the exchange boardroom, to discuss activating brave, how brand identity is leading the way for companies to engage customers in an ever changing, always on world.
Josh King:
Inside the ICE House was on the scene to capture the conversation so we can share their insights with you, our listeners. Select segments of the summit will be released right here over the next few weeks. The first installment is a fireside chat hosted by Interbrand's managing director Daniel Bins with Bob Pittman, the chairman and CEO of iHeartMedia and Clear Channel Outdoor. Globally recognized as a brand turnaround specialist, Pittman is the co-founder of MTV and served as the CEO of MTV networks, AOL networks, Six Flags Theme Parks, Quantum Media, Century 21 Real Estate, and Time Warner Enterprises. Bob talks about the big bold bets he's made during his career, right after this.
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Daniel Binns:
So I'm going to go right back to your early history. So MTV, you were one of the founders of MTV. At the time a brand that had such a clear idea and so that must have given you great permission to do all sorts of crazy brave things, but what was some of the stuff that stands out for you?
Bob Pittman:
You know, it's funny, I don't think we ever thought we were doing of brave, crazy things. I think we were thinking about what are we, and there were people who did video music before MTV. There were people who tried to do a network before MTV. None of it worked. What worked about MTV is that we spent a lot of time on the brand. And my view of brands still is, was back then, is to that a brand has to be human like. Otherwise, you're kidding yourself, you have a name, right? There's difference between a name and a brand. I think a brand is when you've got that human like behavior.
Bob Pittman:
Two books I've required for my operating committee to read, one is Incognito: The Secret lives of the Brain, and the second was Michael Lewis' recent book, The Undoing Project, which really points out that none of us are rational when we are reacting and forming opinions and forming relationships. I think brands go back to the absolute fundamental level of human beings, it's the tribe. We're looking for humans.
Bob Pittman:
Sometimes when you build the right brand, it feels human like. And I was friends with Steve jobs and I remember when he first went back to Apple, talking to him about what he was doing and how he was reinvigorating the brand, it was interesting, I was talking to Reed Hastings about some things at the very moment he was beginning to do streaming.
Bob Pittman:
All of these things you do with brands are not so much the utility, and yes, you have to have utility and it has to be of value, but if I think about my life, I have people in my life that if something goes wrong with my stereo or my sound system, I know one of my buddies knows about that. If I'm getting ready to buy a motorcycle, I know somebody who knows something about that. There are people in our lives who we sort of compartmentalized as that expert. Brands fill that role if you do it right.
Bob Pittman:
And MTV, in the early days, was music had never come together with TV. Even though this was the first generation, they'd grown up with a TV in the household and they'd grown up with rock music, and the mistake we thought most people made is they tried to make music fit TV. We made TV fit music, so fundamentally we had a different kind of product. And then we said that MTV brand is going to be human like. And everything from the logo design... We broke all the rules on logo design because we didn't have any money to do what everybody else was doing. And the guy who was doing the creative design said, "Bob, we've gone through this" everybody was doing those big Star Wars logos He said, "if we do a version of that, it will look cheap, because we don't have the money to do that, so why don't we just do something that look so different that it can't look cheap?" So, the idea was make it very human, very much a person like, and by the way we paid for the MTV logo, $750.
Daniel Binns:
Don't say that.
Bob Pittman:
I was 26 years old at the time we were developing it. We didn't have any respect for experience. We hated people in power. And we were looking to our friends who all were like, oh, I know some people who are doing design. It was right out of college, a group called Manhattan Design. We actually put it out to five or six people. The winner got $750.
Bob Pittman:
So to me, it was all about that, but we had a very cohesive idea of this personality. And I think with any time you have brand, you need a brand steward, who's the keeper of the vision. And the keeper of the vision's job is not to decide if things are good or bad, but to decide, is that our personality? Does that belong in this brand?
Bob Pittman:
When Brayden Carter edited, Vanity Fair, I thought he did a brilliant job of not deciding good and bad articles, but making sure it was cohesive. It felt like Vanity Fair. Because I say, what is Vanity Fair? You don't have a snappy answer. It's just, it's Vanity Fair.
Bob Pittman:
And by the way, when you say what's Apple, it's just Apple. And I think what you strive to build as a company is to be a one of a kind company. At iHeart, I don't want to be a radio company, I want to be iHeart. You can't describe us. And I think that's because the personality becomes that unique. You're a friend, I can't describe you as oh, he's like, so and so, you're you.
Daniel Binns:
Right.
Bob Pittman:
And I think that's the important part and I think that's what we got right at MTV. And we did some crazy, outrageous stuff, but they came because it was sort of MTV reflected this, joint personality of about four or five of us. And it would generally start with heavy drinking, at night, and making some jokes and then saying, "hey, we could do that." And the video music awards show sounds like a great idea.
Bob Pittman:
Well, there was a little strategy behind it. We said, "gosh, we don't want to be a part of somebody else's awards. We want to control the awards. We want to be the expert on it". And it was sort of an idea there, and I had a meeting with Nabisco and a guy named Donald Myers, their in-house agency, and Don said, "yeah, I'll give you some money if you... I like you, just an award show." And I go, "Don, you pay for the award show, we'll do an award show."
Bob Pittman:
So it wound up as really branded content for Nabisco. Turned out to have a life of its own. Or when we gave away a house, when John Melancamp came and painted it pink. It started out as drinking, I said, "give away a house" and then you go, "we could give away a house" and that would sound outrageous and it would get everybody's attention. A.
Bob Pittman:
Nd you also think about if I'm in a conversation with you and I tell you something, what will cause you go, "what?" That's, what we should do. We should be that person who's always got something going on that just is a little twisted and a little pushing the envelope. And that became our personality.
Daniel Binns:
And that was the MTV brand. I mean, that was, if you like the encapsulations of the brands.
Bob Pittman:
And it's interesting, Tom Preston and Judy McGrath, who ran it successively after me, we were all in the same gang. And the brand held up extraordinarily well until Judy left. And when Judy left, it was there's no keeper of the brand anymore. It became about making decisions about programming or decisions about economics. And there was no one to say, "look Paramount everything is the brand. You don't screw with the brand".
Daniel Binns:
Right?
Bob Pittman:
You don't take a risk with that brand.
Daniel Binns:
That's interesting, so you talk about a brand being a person and it's your tribe and you have relationship with it, so how do you go through a rebrand? Clear Channel was a company that you invested in and then became the CEO of, and yet you've gone through that rebrand to iHeartMedia.
Bob Pittman:
Yeah. You know, it's funny, I did one B2B rebrand before which I changed in name of Warner AMX Satellite Entertainment Corporation to MTV Networks. So it was important in the B2B. On iHeart we really had to throw away the old brand because I had to spend the first 10 minutes of every meeting telling people we're not who you think we are. That's a bad thing to do. And the truth is we had changed so much, when I got to the company, they were an owner of 850 radio stations in 158 markets and they were running a portfolio of all these disparate brands.
Bob Pittman:
And by the way, we were bigger, cumulative, than Facebook and Google, number one in the US, but I couldn't make the brand operate as a whole with all these different brands. So I looked at the Pixar example, which is a master brand. Pixar is a brand and Finding Nemo is a brand and Pixar unites all these films, and if I say, it's a Pixar film, you're going to think, oh, that's going to be a better film.
Bob Pittman:
So we created iHeart as which originally started as our app to bring all of our brands onto a digital platform, we put the iHeart brand up to unify everything, so that everybody's an iHeartRadio station. It's a Pixar film. And now we have a master brand, iHeart like Pixar and we have the radio stations. Just like Pixar adds value to the movies, we find the value of a radio station goes up about 30%, if people know it's an iHeartRadio station.
Bob Pittman:
And now we can do the iHeart radio music festival, which by the way, we just did two weekends ago. And we had 13 billion social impressions coming off of it. In comparison, Coachella only had eight billion and Gov Ball about a billion. When we do the iHeartRadio Music Awards, it's not the biggest award show on TV, but Grammy's, Super Bowl, and the Academy Awards all do about 75 billion social impressions... 75, 80 billion. We did 230 billion and that's the power of not only a brand, but in essence what we are with all of our radio stations is we're personality.
Bob Pittman:
Our people in the air, Ryan Seacrest, or Steve Harvey or Elvis Duran, they're your best friend sitting in an empty seat next to you in the car every day. And if we do it right, you begin to think you really know them and they're really your personality. And by the way, our research shows, if we take that person off the air, they have all the symptoms of a breakup, the listener. And so what we're in the business of doing is building human like relationships with our personalities, with our station brands and with the iHeart master brand. So as we began to figure this out, we had to change the name of the company. We had to throw away the old company.
Bob Pittman:
Also the culture of the old company was toxic. It was a command and control company, not conducive to creativity. Great people, didn't want to work there. And we needed to recruit people from Google and Facebook and places like that, not people who had been in radio because radio was one platform we're on. Today we're on 250 platforms, 2000 devices, one of the biggest services on Alexa. You name it, we're there. Smart TVs, et cetera. And our strategy became, be where our customers are with the products and services they expect. We needed new people to do that.
Bob Pittman:
I think culture is the operating system of a company. And if the culture's not right, no program you have is going to run well. Part of the culture fix was to get rid of the brand. By the way, when you look at brand, we have about 90% awareness, we're about the same in Spotify and Pandora, in terms of audio brands, Sirius, Apple Music, everybody's much, much lower. And so when I pull out a credit card that says iHeart I hear OOO and that's the reaction. When your employees have that, their creativity goes up. And by the way, every time you meet somebody, we're meeting a customer and we're building a relationship.
Daniel Binns:
Right. Yeah, essentially you talk about culture and changing cultures. I want to go back to the AOL Time Warner merger, which was the most iconic of the dot com bubble world events. Interesting to know your view on... From a merger perspective.
Bob Pittman:
It's interesting, unlike most of the dot com, we actually believe... I'm an old fashion guy, I believe in earnings. We actually had earnings and big earnings and we're growing nicely and measure ourself on that. And if you go back to that time, we had 50% of the traffic of the internet in the US went over AOL. We were Facebook and Google combined. The last deal I did before I left was I gave Google our search traffic in exchange for 10% of Google and 100's of millions of dollars a year. Somebody at Time Warner sold it later for a couple of billion instead of the 100 billion.
Bob Pittman:
And we were on a mission to just go. We knew exactly what we were doing. We had a great brand. We were the it company of the moment. We had a market valuation of almost $300 billion dollars. Top 10 company and valuation. And time Warner, where I worked a couple of times. MTV was half owned by Warner Communications, but then it was wholly owned by Warner Communications and then they sold it to Viacom.
Bob Pittman:
I went back to Warner just as we were merging with Times. I was there in the Warner Time merger days and then left and did Century 21 and then AOL, and then went back, and it was a mishmash of culture.
Daniel Binns:
Right.
Bob Pittman:
Because at the end of the day, what's interesting is if you look at performance, 2001, the first year we emerged, we actually grew the earnings 10%. In that year, every other media company had a decline in earnings. So the statistical analysis were great. The press was horrible because everybody at either AOL or Time Warner couldn't do anything except badmouth each other. Time Warner was a company in which you managed a bunch of Dukes who ran divisions. At AOL, we were one company, we were like Coca-Cola. Everybody manages that brand. And it was just too much. I think it just came apart and I think the lesson is you've got to have a compatible culture, on a merger, or you have to just take over another culture.
Bob Pittman:
The mistake we made was we tried to take this culture and this culture and build a new culture where when we bought Netscape or CompuServe or any of the other companies that we had absorbed, they became a part of AOL. We didn't change the culture. They adopted our culture. With Time Warner, we tried to say, we're equal merger, we'll deal a little of this and a little of that, and pretty soon you had every mistake you make by committee decision.
Bob Pittman:
People often say, oh boy, Time Warner got hurt. I think AOL probably got hurt the most because AOL was about 40% of the free cashflow of the combined company, but instead of us using that to build new products constantly, as we had been doing... AOL instant messenger, ICQ, MapQuest, blah, blah, blah, blah, blah, we gave it to the cable company to build that cable and suddenly AOL's growth stopped.
Daniel Binns:
Right.
Bob Pittman:
And I think that's the danger you have.
Daniel Binns:
Yeah. Talking to culture, we at Interbrand talk about brands have the power to change the world. You were named one of the top 10 marketers to influence culture in America, but do you think that great brands shape culture or do great brands reflect culture?
Bob Pittman:
Well, you do a little of both. I spent my life, I think, although I have a CEO title, I'm really the Chief Marketing Officer and it's really awful being the CMO under me because it's the one area in which I actually think I have some professional skill, but I think you spend a lot of time looking at the consumer and then you have to do something with it. And I've always thought of this as a mix of the math and the magic. And believe me, I love research and my first job, management job, was as a Research Director. Ironically, I was also on the air as a radio disk jockey, but they let me be the research director to figure out how to listen to consumers better. But when you map it out, research doesn't tell you what to do. It tells you answers to questions. And I think you have to take the idea and then do some magic with it. I've got to create. Now that I know where it is, I got to do some magic.
Bob Pittman:
Steve Jobs was math and magic guy. He knew his landscape well. When you talk about the stores and I remember when Steve started talking about him, he said the reason I'm doing stores is because they don't know how to display my product and I'm on a line of 50 computers and there's an Apple and there's a Dell and there's an HP. And he said, I need a store to show people the magic of it. But he started with a very rational business reason to do the store. Now the stores, I think, took off greater than his wildest expectation. I think Reed started the streaming initially, not to say, wow, I'm getting rid of DVDs, he thought originally it's an add-on. It suddenly became it.
Bob Pittman:
So you never know where it goes, but I think it constantly needs this, this combination of math and magic. If you have magic, I got great ideas, but they're not based on what's really going on with the consumer. You lose. And if you find out everything the consumer is interested in, but you can't do anything exciting with it.... I mean, you need a showman. You need showmanship in this. And it's like, give me a great idea... And remember we're humans, if you say something dorky to me, I go, Ugh, okay, got to go. If you're compelling and everything you do is like, God, that guy's fascinating. Can we have dinner with him again? Hey, come on over this weekend. That's what you want out of a product.
Bob Pittman:
To me, I look at a product constantly. When I look at liners, we use on the radio, I say, are they dynamic? We had one the other night, and I don't know baseball well enough to know, but with the Yankees and the thing, and Z-100 here in New York was our hit station, more hits than one of the Yankee names. And I called our head program, I said, it sounded creepy dorky, like so corny and on the nose. And he goes, you're right, we did the wrong voice. He said the voice was supposed to be ironic. It was supposed to sort of be like, more hits than... We were making fun of ourselves being corny, but they got the voice wrong. And so you sounded dorky. And I think the one thing you can't sound is you can't sound dorky and dull. You've got to be incredibly charismatic. And that means, I think it's a precision of every word you use.
Bob Pittman:
And I'm the CEO of the company. We're talking about customers. I spend 20% of my time with our clients because I'm a marketing guy and in fact, I happen to enjoy when somebody says, I got a problem. I go, good, let me come talk to you. And sometimes it's a big role for us and we make advertising on it. Sometimes I'll just have an interesting conversation. I spend a lot of time with our consumers and I pour through the consumer research constantly. I read the reviews in the app store. What problems are we having that our team isn't telling me about? But when you get down to these words, I write copy.
Bob Pittman:
When we start saying, I got a new promo, I say, I want to see it. Well, there are some words that are just too important. When we write a press release, Wendy Goldberg's in the room here so our Chief Communications Officer, I'm sure I drive her nuts says, I got a pen. By the way, I can't add it on a computer, print it out for me and let's start editing because it's all about the language you choose because you're a human being. Say the wrong thing and you'll lose a friend. Say the right thing and you'll gain a friend.
Daniel Binns:
Right. Right. So you've been referring to as a sort of turnaround king. You've had turnarounds at Six Flags, at Century 21 and you're in the midst of one at iHeart. Do you do things differently in a turnaround? Do you need to operate in different ways of basically doing the same thing as you've been doing in a successful company?
Bob Pittman:
You start one, like MTV, I was a kid, I don't know how I knew to do this, I interviewed every single employee of the company, not to see if they were good because I assumed whoever wanted to hire them knew that, I wanted to just make sure they were on the mission with us.
Bob Pittman:
That they were on the road with us. So we had a very consistent and very tight culture going in. When you turn around a brand, you have to undo, and boy is that hard. At Six Flags theme parks, I did the deal to buy it for Time Warner, found it and actually had a deal with MCA, they didn't want to buy it, so I got bought myself out of the deal, went back to Time Warner. Steve Ross said, you can buy it if you come back here, so he let me buy the company. And what I saw in that company was it was number two to Disney, but no one knew that because it was a regional theme park. They had destroyed their branding, so every city had a slightly different brand. I unified it under the Six flags brand, again.
Bob Pittman:
I figured out the number one thing consumers are always interested in is convenience. You show me any product people like if I can make it demonstrably easier, I'll buy your product instead of that one. Convenience wins. I would argue brands are convenience.
Daniel Binns:
Sure.
Bob Pittman:
Once I've decided on a brand, I stop shopping. Makes life easier. I just know I drink Coca-Cola, I don't even look at anything else. So with something like Six Flags, the idea was... I remember the old Avis thing, we're number two, we try harder... and when I was at MTV, the biggest advertiser I had was Pepsi. Coca-Cola wouldn't advertise for five years because they couldn't measure it. And Roger Enrico in the five years you couldn't measure it, moved the market share against Coke, the most it's ever been moved before or after.
Bob Pittman:
So having learned a few lessons, some of them the hard way, what I saw with Six Flags was an opportunity to get in the Disney category. I mean, when Pepsi did the Pepsi challenge, they didn't want compete with Coke. They wanted to get away from RC Cola. They wanted to get out of the pack. And we wanted to build a brand where we could be competitive against the other brands, not Disney. And what we wanted people to say is, you're not as good as Disney instead of you're better than Dorney Park.
Bob Pittman:
If they would say, you're not as good as Disney, great, I win. I'm in the category. I'm in their brain... as in the Disney category. And we took attendance from 17 million to 25 million in about four years. And a lot of it was built on, we had an idea and then, when you have a new idea, we have to turn over some people, because some people are just poison and toxic in your organization. Some people are looking for something new and other people want you to show them. So you got to get a couple of early win. And let them win. And when they win with a new way, they go, oh, I like this better, because everybody likes to win.
Bob Pittman:
And with Century 21, the same thing, it's an old tarnished brand, but it had awareness. And I find in building brands, there are two things you do, you have to build an identity value of the brand, but you have to build awareness.
Daniel Binns:
Yeah.
Bob Pittman:
I think it takes a billion dollars of earned or unearned media and about five to seven years to build a brand. Find anybody that's broken that role. Facebook, Google, AOL, MTV, et cetera. It's all... I haven't found that.
Daniel Binns:
...Malcolm Gladwell had a new book on it.
Bob Pittman:
I haven't found an exception yet, but you can turn around the image of what a brand is in about six months. People have very short memories. Remember no one wanted to run against the first George Bush because they just had the war in Iraq and he was flying high. Within six months, they had forgotten and Bill Clinton was the president.
Daniel Binns:
Yeah.
Bob Pittman:
So I think, for me, probably about the time I got to be 40, I was too old to start, why? Because that's a long process. And by the way, you don't even know if you have anything for three or four years.
Bob Pittman:
The board of directors tried to shut down MTV two or three times in the first three years. It's a deadly fight. But with Six Flags in six months, we sort of flipped the image up. Not where you want it to be, but we got it back on track. Same with Century 21, we took cashflow, as a franchise business, so relatively small business on the bottom line, but we did 10 million of earnings to 100 million in a year. And we flipped it and it was all because we were flipping the brand.
Bob Pittman:
And at AOL, when I went in there, we had about six million subs when I went in. I first joined the company on the board of directors and then I went in to help Steve Case run the company, in management, and we had six million subs. We were losing about half a billion a year. We had about 90 million in the bank. We were under an SCC investigation. Couldn't raise equity. We're going to bankrupt if we didn't fix something. So my great innovation was I took a billion dollar direct marketing budget and cut it to half a billion. But what I added to it was I added 60 million dollars to brand advertising. And our head of marketing was one of the most brilliant marketers I've ever met, great direct marketer, said, Bob, we're not getting any subs for that 60 million, don't waste your money" and I go, "why is that?" See, well I try radio and TV, but I don't get any subs. And you go, well, I don't think it's the channel. I think it's the brand enhances your response rate.
Bob Pittman:
So we did the 60 million and we got more subs for the 500 million than we thought we were going to get for the billion. The response rate more than doubled, because instead of people saying, what's this? They went, oh, I've heard of this. And that difference in reaction is brand. And a brand, I think, activates people.
Bob Pittman:
It's crazy to me, I hear people say, we're not worried about brand, we're worried about this. They're not disconnected. To me, you have a brand and then you activate it. I'm going to spend money here and they talk about their funnel and I go, really you think it's that simple add it's that defined? It's that brand is that human being... your impression of that human being in the back of your head.
Bob Pittman:
If somebody invites you over for dinner and they're the creepiest person you know... If they invite you 100 times, are you going to dinner with them? If they're the coolest people in the world, they invite one time, you're going over and you got some wine for and everything else, because you want to be invited back, right? That's the brand. And people who think I'm going to activate, devoid of the brand, I think good need to go back to marketing 101.
Bob Pittman:
It's also people go targeting. We all go, man, I can super target and I can go right to my target audience. You've measured this. There's not been one brand or service ever measured where the majority, simple majority, of the buyers or users, are in their target audience. Target audience means you have a high density of users within this group of people. It doesn't mean it is most of your buyers. And if you say, why did people who shifted out of traditional media went to social and everything else, why didn't their business go up? Why it didn't go up is because they went to targeting just the brand and most of their buyers never heard the message again. So, I think you really have to think about this brand as everything and activation funnel targeting, blah, blah, blah, is under that umbrella.
Daniel Binns:
Absolutely.
Bob Pittman:
If you destroy the umbrella-
Daniel Binns:
It all falls apart.
Bob Pittman:
... your business is dying.
Daniel Binns:
Listen, Bob, thank you for your time. I know you've got to fly to LA now. I say thank you.
Bob Pittman:
I do. I do. Thank you. Thanks for the time.
Daniel Binns:
Fantastic. Thank you.
Josh King:
That's our conversation for this week. Our guest was Bob Pitman, CEO of iHeartMedia interviewed by Interbrand managing director, Daniel Binns at Interbrand's best global brand summit held in the New York Stock Exchanges boardroom.
Josh King:
If you like, what you heard, please rate us, on iTunes, so other folks to know where to find us, and if you've got a comment or a question you'd like one of our experts to tackle at a future show, email us at [email protected] or tweet at us, at NYSE.
Josh King:
Our show is produced by Pete Ash and Ian Wolf, with production assistance from Ken Able and Steven Porter. I'm Josh king, your host, signing off from the library of the New York stock exchange. Thanks for listening, talk to you next week.
Speaker 1:
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