If you walked into your local liquor store or coffee shop and asked them about their SEO strategy and demand generation tactics, they would probably look at you as if you had horns.

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That means, argues Eric Schwartzman, that the major opportunity for digital transformation lies in small and medium-sized business, which he explains in his book The Digital Pivot: Secrets of Online Marketing.

Schwartzman joined the Marketing Smarts podcast for a discussion that touches on a variety of issues.

Online presence: "You look at the small and medium size businesses that figured out a way to transition over to digital and make money there. They all have their own platform; they all have a direct billing relationship with their customer; they’re not selling through someone else’s marketplace."

Digital tools of disruption: "You can’t be effective online without using the tools that the slumbering giants are not. That’s how they disintermediate these giants from their base."

Market positioning: "You can’t be all things to all people. You have to draw a line in the sand."

Owned, paid, and earned media: "We have owned, we have paid, we have shared, we have earned. I think there’s a logical sequence for applying them, which I lay out in my four-step sequence in the book. I think owned media is really the only way that we can prop up small business and have a competitive marketplace that’s not just controlled by a few major companies."

We also managed to squeeze in Star Wars, coffee obsessions, politics, media training, Lil Nas X, and ballet.

Listen to the entire show now from the link above, or download the mp3 and listen at your convenience. Of course, you can also subscribe to the Marketing Smarts podcast in iTunes or via RSS and never miss an episode.

This episode brought to you by MNTN and Sitefinity.

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Full Transcript: The Digital Pivot to Online Marketing

Matt Snodgrass: Welcome to another episode of the Marketing Smarts Podcast brought to you by MarketingProfs. My guest today is Eric Schwartzman. Eric, how are you?

Eric Schwartzman: I'm doing great, Matt.

Matt: It's great to have you here. I looked through your bio and you are a busy guy. You are a digital strategist, a former chief revenue officer, entrepreneur, and founder of a couple of SaaS companies, you're an author. You've done a ton of stuff.

Eric: I've been at it a while.

Matt: I have some questions that we like to kick the podcast off with that I want to get to, but I think first and foremost this has to be asked. I'm a huge Star Wars geek, and I see that you have worked with Lucasfilm in the past. I feel like that has to be our first stopping point before anything else.

Eric: Let's do it.

Matt: Tell me a little bit about that.

Eric: When Lucasfilm celebrated the 30th anniversary of Star Wars, they had an event called Star Wars Celebration in Los Angeles. It drew close to 100,000 people to the city. Many of them were dressed up as Stormtroopers and other characters from Star Wars. We brought in G4 and did a live broadcast from the tradeshow floor. We were mentioned on every national morning and evening show in the country, a huge amount of press. They screened all six films there. George Lucas gave a talk. It was amazing, it was really a fun event. I was responsible for all public relations at the event.

Matt: I am familiar with Star Wars Celebration, and this is a thing that they do, not just a one-time event, but it sounds like this was a pretty huge one. I've never been to one, so I'm already insanely jealous that you've actually not only got to work on one but have been to one and seen it firsthand. I follow these things and the pictures are phenomenal, the costumes that people come in with, the cosplayers are just tremendous the amount of effort that goes into these. That is really awesome. That had to be a once in a lifetime experience.

Eric: It was awesome. They had people that had jetpacks and they could actually fly. Some of them flew around from the tops of buildings down to areas around the convention center. It was amazing. We accommodated close to 1,000 journalists there, so we had a big press operation there, and millions of media impressions worldwide. It was really exciting.

It was sort of early internet days. I had just launched iPRessroom, which was the first content management system for PR people to manage the newsroom section of a corporate website. We were able to move a lot of our photos and a lot of our video to the world press online, which was a new thing. At the time, people were still handing out print photographs and physical media cassettes of B-roll to broadcast journalists to help them with their coverage. It was right at the time when we were transitioning media relations to the web.

Matt: That is a heck of an opportunity to work through that transition and that pivot. That's phenomenal.

Let's get into our standard three questions. At the beginning of each podcast, we like to ask each guest three questions, so I'm going to kick those off. My first question is what are you drinking? Either literally right now as we're talking or in your life, what's your drink du jour?

Eric: I'm a big coffee drinker. I love coffee. I'm a huge fan of the Nespresso machine, which I discovered at an event I used to attend in Paris every year that was sort of the digital startup event of Europe called LeWeb. It's where Uber was launched, it's where AirBNB was launched. These guys were on the stage pitching for investors and wound up becoming the winners that year.

One of the things I think that they understand better in Europe than we understand in America is they understand public spaces. We don't really have public spaces in the US, all public spaces are funded by commercial interests. If you translate that to a tradeshow, there's really nowhere at a tradeshow to just hang without being sold. You're either being sold, someone is selling to you, or you're selling. There's not any sort of Switzerland where you can rub elbows with people without feeling like it's a sales deal. The one show that kind of does that a little bit is SXSW, but the rest just don't have any of those unowned mixing spots, everything is sponsored.

At LeWeb what they would do is in the tradeshow area they had Nespresso sponsor a free coffee bar. In the center of the booths, they had this coffee bar, they had the booths all wrapping around that. It was awesome because you would walk up to get a coffee and you'd meet Bill Gross from Idealab, you'd meet Marissa Mayer from Google, it was amazing, it was like who's who. Also, because it was in Europe, unless you were more of a player, you weren't there, so it was sort of a smaller deal. I used to love going to that show because the people that I got to interact with and meet was just a cut above any of the other shows that I went to.

Of course, I became introduced to the Nespresso coffee capsules and those little machines that make those little espressos for you at home. During the pandemic, you can go out and get a coffee, there's no baristas you can hang with, so I had this little machine. I just went with it. I would get the capsules delivered. That's really my thing. My wife says, "You're having too many. Don't drink too many." I'm good for five or six a day, aren't I?

Matt: Wow. That is a lot.

Eric: Yes. Also, just one more thing. I'm working with a coffee company now because I recently keynoted the National Coffee Association's annual conference virtually. I got hired by a company called Walker Coffee there, which is out of Texas. They do all of this homegrown, single farm, single source beans. I'm doing some pour overs with their stuff now and really loving it.

Matt: Very cool. What are you reading right now? Are you a physical book reader or have you pivoted to digital?

Eric: I'm still preferring a physical book at this point. I still prefer to hold the book, and I like to write and highlight. I know you can do all of that on a Kindle. I just haven't made the switch there, just to be completely frank, I have not made that pivot yet. Although, I have made the pivot with The New York Times. My wife likes to get the print copy delivered, but even with the print copy on the table, I'm still reading it on my iPad.

This morning I read a really interesting article which I think says that content marketing or brand journalism, as I prefer to call it, may finally be taking a back seat to paid digital. I always thought the big opportunity was content marketing, but it didn't go that way. The money really goes to paid digital, it goes to pay-per-click, it goes to Facebook ads. It's a huge industry. I think this article in The New York Times said it's something like 350 billion dollars in online advertising now.

Here's a quote from this article by Brian X. Chen and Kate Conger this morning. They say, "Today small brands can spend a modest amount to target specific customers with ads across different websites and apps. But since this type of tracking can now be blocked on Apple devices, small companies may have to choose big brands like Facebook, Google, and Etsy, and advertise within each of those platforms to get seen."

I read that and I thought, is the efficiency of paid digital at stake? Does this mean that owned media finally gets its day in the sun? Could literacy replace clickbait? Does this mean that traffic from organic search moves from one-third to one-half of all ecommerce conversions on average? Don't get me wrong. Ads aren't going away. But will marketers spend less time rowing paid and more time trimming their sales organic? I think that may be the case.

Matt: That's interesting. You read that and my first thought was, is this is a case of the rich getting richer? That was my first thought. I wasn't thinking about the content aspect. I was thinking about those engines on the other side, the Facebook engine, the LinkedIn engine, those engines that are getting the pay-per-click dollars and is this just an opportunity for them to get even more of that.

Eric: It could go that way. You look at the small and medium size businesses that have figured it out and figured out a way to transition over to digital and make money there. They all have their own platform, they all have a direct billing relationship with their customer, they're not selling through someone else's marketplace. You do that, you're a digital sharecropper.

That's kind of what I've been thinking about. I actually wrote a piece about that for TechCrunch that published this week. Is the network effect anti-competitive? Is this idea of a winner take all market essentially anti-competitive? Not for the people in the marketplace, but for the people who control the marketplaces. How do you keep things competitive if there's only a few games in town where you can connect buyers and sellers?

For those people that have their own owned media presence, which is their own website at a domain they own on the open web, hopefully powered by opensource because otherwise you're going to have someone's hand in your pocket when the founders sell the platform or the investment bankers come in and they're hungry for profits. The only real way you have a direct relationship with unfettered access is a direct relationship on a platform that is not charging a commission.

We're even seeing with Bitcoin and Distributed Leger this idea that maybe even the money won't be based on a commission moving forward. I'd like to see it go that way, but I'm not holding my breath. I do think we could see marketers start to allocate more towards organic than they previously spent on paid, as privacy concerns force the tech titans to clamp down on how much information they pass through to these ad networks.

Matt: What does your gut tell you about Apple's decision? Are you a fan of it from a privacy standpoint, are you a fan of it from a marketing standpoint, what do you think of it?

Eric: Honestly, I think it's self-serving. I think pretty much all of the tech titans are self-serving. That's what they're supposed to do. They're required to put their shareholders' interests first. That's capitalism, that's the way it works. I think we're naïve if we sit around and say they should do this or they should do that. Why should they? They're designed to make money for their shareholders and grow their coffers. That's what they do. Why would we be naïve and think it would be anything else?

Really, the only way we're going to have a world where we don't all work for Bezos and Musk is if we can figure out how to prop up small and medium size business. Let's face it, the enterprises are pretty much dialed in at this point. Can they get better? Yes. But it's not like they don't know what lead generation and conversion rate optimization are at this point. If we want a world where there is someone you can call that's not in India or the Philippines to get help with things, then you want small and medium size businesses. I don't want to order my pizza from the Philippines. I want to be able to call the guy and say, "By the way, I want extra anchovies."

If you want that, I think we have to get folks like us in marketing and digital marketing who have those skills into small business to help bring these guys up to speed. I'll tell you, I'm concerned about this new corporate tax increase which is being proposed in the Senate right now. What concerns me is not the increase. What concerns me is that they want to raise on businesses making $5,000,000 or more. On the coasts, $5,000,000 or more, you're barely surviving, so it really should be $50,000,000 or more.

Matt: In thinking about these larger enterprise companies, you have the 80/20 rule, I look at them as they're in that top 20% because they can make changes, but any changes they make are not going to have a huge substantial impact. Like you said, they're dialed in. It's that last 20% where they have to get to that perfection. Whereas these small and medium size businesses are still in that lower end of that 80%. Any change they make could have a potentially significant impact on what they do.

I like the way you're talking about it, because we're talking about the rising tide lifts all ships, we're talking about making the industry of marketing and marketers as a whole better across the board so that the whole thing raises up. I like thinking about it that way.

Eric: I still go to events and parties and talk to people where I say something like SEO or conversion rate optimization, and they don't know what it means. For us and for the folks in MarketingProfs, if you're listening to this, you're probably working for a company that pays you to do digital marketing.

Let me tell you. Most companies out there, and small business is the main driver of any economy, and most small businesses have no clue about any of this stuff. They're clueless. Imagine the impact you could make if once you've really cut your teeth and you know what you're doing that you decide to hang a shingle, go out on your own, and help small businesses stand up WordPress or stand up Shopify, integrate OptIn Monster and get them building lists and email marketing. This stuff that you do every day that you know how to do, it's a mystery to most people.

That's why I wrote The Digital Pivot. I've spent most of my career consulting in enterprise, consulting in federal government at the high levels, making a lot of money, and thinking to myself, "What am I doing here? I'm contributing to the demise of diversity of small business." At this point in my career, I figured how can I get everything in my head into one book that you can buy for $15 and get all of this information without having to fly to a conference, without having to hire someone away from Uber for $250,000 a year?"

That's what The Digital Pivot: Secrets of Online Marketing is about. It's already been adopted as a textbook at a number of universities by professors who said there's nothing like this out there. We have all this tactical content out there, but we don't have high level strategic books that really explain to the general business reader without looking like a car manual or a software manual, with interesting stories and tidbits from Lucasfilm, and my career working for the Marine Corps and US Department of State, Boeing, Johnson & Johnson, lots of case studies about what really goes into it, how do you make it happen, how do you pivot from analog to digital and not get killed. I wrote the book to make that information accessible to small and midsize businesses.

Matt: I think about the government institutions as slow moving, as stodgy, as behind the times, generally speaking. You've worked with NORAD, you've worked with the Department of State and the Department of Defense. When you worked with those institutions, did you find that, was it that you have to bring that same sort of small business mentality into start them at the very beginning because there was not a lot of knowledge there?

Eric: It's all about politics. Everybody is trying to get more power and trying to up their career. It's not really about the issues. I came in as an outsider passionate about the issues, wanting to help, and I learned pretty quickly that no one really cares that much about the issues. They care about how they can use the issues to advance their career.

Again, it's self-interest at the end of the day. Within that self-interest, does some good get done? Yes. But at a big organization like that, I would have meetings where I would show up with ideas of things we could do, and somebody would bring their lawyer and threaten to sue me if we went in that direction because they felt that if I got support for that, it would take resources from them. That's big organizations. That's another reason I'm really enjoying working with small business now, because I'm out of the whole politics world which I didn't like.

Interesting note. A thought I've had about comms, media, marketing, and government. Politics 100% aside on this. Think about Trump for a minute. Think about the people that he chose as his spokespersons. They were all former Fox anchors. They didn't really know much about policy, but they knew a ton about media. That actually worked really well for him to get the support of his base.

Now think about Biden for a second. He has appointed people who are experienced policymakers to lead his departments, but they're not very good at media. He has a tougher time shoring up the support of his base for that reason. We see now how important media is and how important comms is in getting you to be able to achieve your result.

You also look at what is happening in entertainment. Charli D'Amelio, the TikTok sensation, the 16-year-old dancer who during the pandemic did these little 15-second dance videos and went viral, and now has a show on Hulu. I was watching the show on Hulu and I realized she's really good on TikTok, she has a very affable personality, she's kind of like Savannah Guthrie, a great smile and very personable, but when you see her on television she's not that. She doesn't have that same level of talent that a Savannah Guthrie does. You're sort of seeing behind the curtain. It's like the Wizard of Oz moment when you see the guy behind the curtain and he's not the wizard.

On the other hand, I think about someone like Lil Nas X, the rapper or pop star that does the song Take My Horse to Old Town Road. He actually was a Twitter influencer before he was a pop star. He became a Twitter influencer with these sort of cowboy-adjacent memes that he would put out. Then he creases this song where he gets Billy Ray Cyrus in as a cameo and transitions from country to pop. Which is totally backwards, it always goes from pop to country. Now, he's a major star. He also, I believe, is very talented. I like his songs. But it's interesting how his knowledge of media propelled him to where he is today.

I guess you look back at Kim Kardashian, who was a personal assistant of Paris Hilton, who created link to a sex tape that she made money on. Your knowledge of media, media literacy now, really sets you apart from a marketing standpoint, particularly if you understand how to leverage organic.

Matt: In your book, you talk about disruption a lot as part of this pivot. You talk about companies like AirBNB, like Dollar Shave Club, like Uber, who have come in and been founded on this idea of disruption, they're coming in to dethrone these incumbents. I love those ideas.

Most of our listeners are not those companies. As we talked about, most of our listeners do work for small and medium size businesses, but they're established companies, so they're not founded on this idea necessarily of disruption. How could they implement this concept of these disruptive technologies? How can they implement that and use part of that in their day to day marketing?

Eric: I would say that just by selling online they're doing that already. You can't be effective online without using the tools that the slumbering giants are not. That's how they disintermediate these giants from their base.

Think about some of these kids now who do these makeup demos on YouTube, young women who do makeup demonstrations on how to apply makeup. They've disintermediated Revlon, Maybelline, Max Factor, all these major brands who used to be in control of the makeup industry are not in control anymore.

What's happened is the white label manufacturers who used to be providers of Maybelline and Revlon, who used to make the makeup for them, are now just going direct to these influencers and through ecommerce and these subscriptions are selling direct to the end user and totally circumventing the entire distribution channel that used to exist. Department stores, who buys makeup in a department store? If you think about it, the whole ground floor of a department store used to be dedicated to fragrance and makeup. What's happening to that? We are in a cataclysmic shift.

On the organic side, I guess the most important message, to answer your question, would be you can't play it safe. You can't be all things to all people. You have to draw a line in the sand. You have to take a position. I've often said people want brands to take a position. And I've often heard people say back to me, no, people don't want brands to take a position, they want brands to take their position.

Matt: Right.

Eric: So, I think it would be wise to take the position of your base. But you may have to let go of a share of the market based on the position you take. It doesn't necessarily have to be a political position, but it has to be a position. You have to have something to say. You can't be vanilla, you can't be milk toast if you want to shake things up. You have to be willing to rant.

Matt: That's very scary for some organizations because there's this focus of wanting to be everything to all people. As you said, we can't. Taking a stand, planting your flag somewhere, anywhere, wherever it is, is automatically going to alienate a portion of your user base. That's scary for brands because there is a loss that's going to come with that, and there's a measurable loss that's going to happen.

Will you make it up on the other side by staking this claim? Who knows? That's the hardest thing for brands or organizations to get their head around. Are we going to be able to make this up or is this a loss that is going to severely negatively impact us for a long time?

Eric: Google treats links like recommendations and assigns rank accordingly. Consumers vote with their dollars. I am legitimately concerned about climate change. I'm concerned that it may mean the end of the planet as we know it. But I don't blame the oil companies for it. I blame the consumers who buy the oil. The oil company is set up to sell oil, that's their business and they have a fiduciary responsibility to their shareholders to sell oil.

I don't understand why an oil company CEO doesn't just get up there and say, "Look, I know." Instead of telling everybody that we don't cause climate change and that it's inconclusive, why wouldn't Exxon Mobile's CEO just get up there and say, "I know this is a problem and it means the end of the Earth. Why are you still buying our oil? As long as you buy the oil, I am going to have this job. If I don't sell the oil, they're going to fire me and get someone else, because we act in the interest of our shareholders."

As long as people are sort of saying, "It's Apple's fault because they're doing this and giving our information." Why are you using their product? Why are you reliant on it? I think we have to start taking responsibility for our actions. I feel like until we start doing that, we're not going to see change.

Matt: That puts me in mind of an article I just read recently in the last month or two about Phillip Morris. One, Phillip Morris is buying an asthma inhaler company, which seems strange. That's brand new news. But a month or so ago, Phillip Morris came out and someone, I don't know if it was a spokesperson or the president, talked about the fact that there should be no more cigarettes, they should be banned, they should not be in this industry anymore. They acknowledged years ago that, yes, there is this link to cancer, but this was the first time that I can think of that a company did what you just said. They came out and said, "We know this is bad, but this is what we're going to keep doing until it's no longer tenable to do that anymore."

Thinking about companies like Exxon Mobile, like Phillip Morris, like Maybelline and Revlon, do you think we're sort of seeing the death throes of some of these big, huge established brands that have been around for decades, if not a century or more?

Eric: There's a lot of questions there. On the makeup side, I definitely think makeup brands are on the ropes right now. They're going to have to figure out a way to reinvigorate their channel partners and how to get product to market.

On the companies like Purdue Pharma, the Sackler Family, or big tobacco, or oil and gas, those guys have been basically doing this backroom PR business where they assassinate people's character and they spread lies. I think that whole business, I do feel like that is going to become less effective, because I think people have become a lot more sophisticated about media. I think they're a lot more suspicious, for the most part, about who is giving them the information. I almost feel like the messenger has become more important than the message. If you're not a messenger from my tribe, forget it, I'm not even going to consider your message. I do feel like there probably is some change there.

Big picture, I guess what's most important is I think we haven't really been focused enough on owned media. We have owned, we have paid, we have shared, we have earned. I think there's a logical sequence for applying them, which I lay out in my four-step sequence in the book. I think owned media is really the only way that we can prop up small business and have a competitive marketplace that's not just controlled by a few major companies that are pulling this skullduggery in the background.

Because this is a podcast, I should also say that the book is available on Audible, I read it myself, so if you prefer to listen, you can get that as well.

Matt: I love hearing words like skullduggery come out. It's a word that's not used very much anymore and I love it.

In your book, you talk about the things that companies who are succeeding in digital transformation, what they're doing. I'm curious on the flip side of that, companies that aren't doing this well, that aren't succeeding in this pivot and digital transformation, what are the things that they're doing? And what are they not doing? What can we tell our listeners to make sure you're not doing?

Eric: What they're doing is they're applying the media channels out of sequence. If you pour your foundation before you dig your drains when you're building a house, you're screwed. You have to break up the foundation. That's what happens.

If you think about something like the digital pivot, which I liken to a ballerina's pirouette turn. Have you ever seen ballet? There's that beautiful turn that a ballerina does balanced on the tippy-toe of her foot where she turns around without moving a muscle, almost like a music box fairy. Your jaw drops, "Wow, that's amazing." What you don't see are the decades of sacrifice, work, and training that went into getting them into the position, one, to be a prima ballerina in the first place, but two, just to have the strength and dexterity to perform that move.

I think of that pirouette on one toe in an arabesque position, that to me is earned media. That is everyone is adoring you, they're writing about you, and they're celebrating you on social media. People see that and they think, "Wow, I want to be that," so they just go straight there, they go straight to social media. What they don't realize is before you build your social media presence, you need an owned media presence. After you build an owned media presence, you need a social media presence. Then you're ready to go after earned media.

I started in PR. I used to pitch people on the phone before there was an internet. They would look at a two-pocket presentation folder press kit and I would be pitching them. Well, they don't do that anymore. Now, as you pitch, they're Googling you. If your website sucks, you don't get the story. The next thing they do is look at your social presence. You don't have to have a gazillion followers, but you can't be a ghost, you have to have something going on. If you don't have those two things going on, you can't do PR nowadays. You have to do those two things first.

Frankly, when you do all those three things together, that's when you can see what your conversion rate is and start to see what's working and what's not. Why would you spend money on paid media to drive traffic if you're not ready to convert that traffic into an opportunity or a customer? What most companies get wrong is they go straight to social media. Let's face it, most people when you say digital marketing, they say Facebook. No. Not really. Facebook is just one channel.

If you Google average conversion rate by traffic source, you're going to find on average most ecommerce brands are doing 5-8% off of social. So why are all of these grimmies allocating 50% of their time and revenue on social? It's ridiculous. One-third comes from organic, maybe one-third from paid, and then the rest is going to be referral, direct, social, and email. You have to start to allocate resources based on where the opportunity is. I think that's what most companies are getting wrong right now. They're applying the steps out of sequence.

Matt: Eric, thank you so much for your time today. It was great talking with you.

Eric: Thanks so much for having me.

Matt: The book is called The Digital Pivot: Secrets of Online Marketing if you want to check that out.

Friends, if you enjoyed this episode, if you found value in this episode, I have a favor to ask. Tell one person about it. Share it with one of your marketing colleagues, send them a text or an email, let them know that the Marketing Smarts Podcast is out there and it provides some good ear fodder. Until next time, friends, thanks for listening.

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