Wizard of Ads Monday Morning Memo

The Creation & Extraction of Value

Apr 14, 2025
The discussion dives into the contrast between value creation and value extraction in marketing. It warns against the pitfalls of performance marketing that prioritizes quick profits over brand reputation. The host emphasizes the necessity of building a strong brand before attempting to extract its value. Sustainable marketing practices are highlighted as a superior alternative, advocating for the cultivation of relationships rather than exploiting existing ones. A memorable analogy from cinema rounds off the enlightening exploration.
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INSIGHT

Value Creation vs. Extraction

  • Performance marketing, or direct response advertising, excels at extracting value from established brands.
  • However, this approach is short-sighted, as value must be created before it can be extracted.
ANECDOTE

Milkshake Analogy

  • Roy H. Williams uses the milkshake scene from "There Will Be Blood" to illustrate performance marketing's exploitative nature.
  • It's about taking value without creating any.
ADVICE

Sales Activation

  • Instead of performance marketing, Roy H. Williams recommends sales activation within relational ad campaigns.
  • This approach, likened to shearing sheep's wool, allows for repeated value extraction without diminishing the brand.
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