No great equalizer here: The marketing prof fears that pre-corona business issues will be even more protracted post-corona
We are living in a time of a myriad of “should haves,” “could haves,” and “would haves.” If not for the corona pandemic, Scott Galloway, professor for marketing at NYU’s Stern School of Business, podcaster and, most recently, founder of an online education startup, would have been standing on stage at OMR20 in May. Instead, he is stuck—just like millions of others—working remotely from home. In his case, that means being stuck in sunny Florida. Considering the circumstances, we are all the more thrilled that Prof. Galloway found the time to chat with Philipp Westermeyer. In the latest edition of the OMR Podcast, the pair discuss the impact of corona on both sides of the Atlantic, and Galloway offers up his prognosis on how the pandemic will reshuffle the economy and why his own business figures to be one of the winners of the crisis.
Like many of you, OMR founder and CEO Philipp Westermeyer looks forward to reading Galloway’s pointed analysis every Friday in his “No Mercy/No Malice” newsletter and is also a loyal listener of the “Pivot” podcast, which Galloway co-produces together with Recode’s Kara Swisher.
The Big Four: “What crisis?”
The latest episode the OMR Podcast is not just a must for fans of Professor Galloway. At a time in which we are inundated with new information every other second and assumptions and half-truths are the rule, rather than the exception, it’s refreshing to hear someone synonymous with self-willed and surprising views.
That applies to the stock markets, whose freefall last week threatened to push Joe Q. public over the edge. Galloway pleads to take a closer look—especially when it comes to the big tech companies. And that’s because, while “Amazon has plunged to where it was in November of 2019, Facebook has given up about a year’s where the gains Apple is back to where it was in September of 2019.”
Amazon wins the reputation game
Citing Apple and Amazon as examples, Galloway makes the case for how corona could positively impact companies. “Apple was hardest hit early because their supply chain is so dependent upon China but China looks as if it’s recovered. Galloway goes on to say that while there may be some delays with iPhone 12, Apple will be spared the brunt of it. That, according to Galloway can be attributed to the fact that Apple’s base consists of the wealthiest people on the planet, who may “have lost more capital on a gross basis than any other cohort because they had the most to lose, but if they come out of this crisis worth $500,000 or $600,000 they’re not going to give up their iPhone,” says Galloway.
Amazon stands to profit even further from the crisis, according to Galloway, “not only financially, but reputationally. Amazon is now shipping COVID 19 diagnostic tests in the U K. The operations around Amazon, their leadership, their decisions or their decisiveness, they’ve stopped taking delivery of any nonessential items such that they can ensure their supply chain could deliver essential items. A lot of people who have been following stay at home or shelter in place, orders are using Amazon.
More bad news for print publishers
Nevertheless or perhaps as a direct result, Galloway is concerned about the economic landscape post-corona. His biggest worry is a further expansion of the oligopolies who until recently were not involved in the marketing industry. “Facebook and Google in the US they have about two-third share of all digital marketing. And you can imagine them coming out of this crisis with 70 or 75%,” says Galloway.
He backs up his prognosis by drawing parallels to the impact that the financial crisis 2008 had, in the wake of which the tourism industry withdrew their advertising budgets from traditional channels such as print, TV and radio and placed them in digital formats. What marketing decision makers “learned about these platforms is, not only are they effective, but they can be calibrated,” says Galloway. Even after the economic recovery, Galloways says that people are unlikely to return to print and we’ll likely see something similar happen to other mediums.
However, Galloway also stresses that past scenarios are not entirely applicable, due to the fact that compared with previous crises or times of war, there has never been a broad swath of public life that has, more or less, come to a grinding halt overnight. While many companies are in a position to compensate 20, 30 or even 40% drops in revenue, losing 100% of revenues threatens the existence of nearly every company.
Buy stock in cruise ships
Regarding stimulus packages, Galloway is more ambivalent. On the one hand, as a self-described democrat, who supported the campaigns of Elisabeth Warren and Michael Bloomberg and is now backing Joe Biden to win at the polls in November, he welcomes measures aimed at reducing the loss of jobs. The current predicament is unprecedented: At the height of the recession, I believe it was somewhere around six or 700,000 jobless claims were submitted in one week. This week we had 3,500,000, says Galloway.
On the other hand, however, he sees the dilemma of state-sponsored intervention into the market economy: “If you’re a real capitalist, you believe that a company that has prepared for this type of disaster and been more conservative and has aggregated cash, probably deserves to not only stay in business, but they deserve to have some of their competitors go out of business.”
To find out which suggestions Galloway has for making taxpayers the main profiteers of the aid packages, or why now is a good time to load up on stocks in cruise ships and why Scott Galloway is jealous of Germany in the current situation, check out the entire episode of the OMR Podcast with Philipp Westermeyer.
The OMR Podcast with Philipp Westermeyer featuring Scott Galloway at a glance:
- On the impact of corona in Florida and his home of New York City
- Why people in the US are closely watching how things develop in Germany
- Which companies have been hit particularly hard by corona and why Uber figures to emerge releatively unscathed
- Why the current sitaution is poised to exacerabte an already significant problem
- What his thoughts are on state-sponsored measures to support struggling companies
- What we can learn from the 2008 fnancial crisis and apply to today
- What the biggest difference is between known scenarios like recessions or depressions
- Why marketing budgest figure to be permanently reallocated to Google and Facebook
- Why we should all take a closer look at the Big Four’s stock prices
- Why is Amazon’s reputation a big winner of the pandemic, and why Facebook’s is not
- Why now could be a good time to invest in cruise providers
- Why he is a defender of NATO and is a fan of Angela Merkel
- Why Donald Trump could still profit yet from the crisis despite his mismanagement of it
- How the corona pandemic could help solve a fundamental issue of the US education system
- What the objective is with his brand new education startup Section 4
- What the similarities between social media and traditional media outlets are and where are the differences most pronounced in the current crisis