Mark Vandegrift
Welcome to another episode of the Brand Shorthand Podcast. I'm your host, Mark Vandegrift, and with me today is our campaign connoisseur, Lorraine Kessler. Lorraine, how you doing today?

Lorraine Kessler
There you go, you got a new one, you got a new one.

Mark Vandegrift
That is a new one. How you doing?

Lorraine Kessler
Yeah. I'm good. Good.

Mark Vandegrift
Good. We took a break from you for one week to have Alicia on our podcast, and so it's good to have you back. Have some interesting, like, We normally do brand news before we talk about our topic, but today is all brand news. And it's kind of like, how would I characterize it? Like bad moves corrected? Maybe that's the way to think about it. Good. So we're going to talk about Max, which was formerly HBO Max, which is now again, HBO Max. And you might remember about two years ago, HBO Max dropped HBO and just went with Max. And even at that time, people were like, what in the world are you doing? And we'll talk about one of our favorite, shall we call them a contrarian who predicted this would all happen. So anyhow, the move that Max made to go back to HBO Max the original reasoning for going to Max was because they merged with Discovery Plus and they said they wanted to offer a broader selection of content. So as we know, trying to offer it all doesn't ever go well with positioning and it doesn't make much of a differentiator. And then the name change just didn't resonate with people. So, you know, what do you introduce in that instance? Pure confusion.

Lorraine Kessler
Yep, absolutely.

Mark Vandegrift
So I know that along with many others, we continued to call it HBO Max because our brains couldn't think of it any other way. So two years later and Warner Brothers discovery finally says we're going back to HBO Max, big shocker. And the media release that announced Max to become HBO Max this summer stated, returning the HBO brand into HBO Max will further drive the service forward and amplify the uniqueness that subscribers can expect from the offering. So I think it goes back to your assumption, Lorraine, that people get paid like a million dollars for each word they put in these news releases. But amplify the uniqueness portion of this statement stands out to me because there was not much uniqueness when they decided to settle on one of the most generic names, Max. So Lorraine, I've done enough pontificating around here. Why don't you explain why the move to Max was a poor decision and then we'll talk about a couple other things in regard to this.

Lorraine Kessler
Well, first of all, HBO used to be HBO before HBO Max. I remember that. And it was the first pay for TV quality programming where they showed they actually made original movies. I remember one, Still the Night with Roy Scheider and Meryl Streep. That was really fantastic, even though Meryl Streep later said it was the worst movie she ever made. But we really enjoyed it. And my family, I always called my parents the original boomers, because we were the first to have pay TV, push button phone, air conditioning, take weeks long vacations. No one did any of this stuff. So I always think my parents were way ahead of it. But, you know, simply just look at the name, right? Max is, as you said, so generic. It means nothing. I mean, when you're doing branding, it's make meaning. You have to make meaning I didn't know what the max meant. I didn't know why they changed it. All I knew is I had to change the app on my TV screen from HBO Max to Max. And now I'll have to go back to HBO Max. So there were no specifics.

Mark Vandegrift
You poor thing. First world problem.

Lorraine Kessler
Yeah, it's like what? And, you know, the statement you read just proves to me, you know, these companies and their agencies think more about this stuff than their consumers. I doubt if you took a poll or did a survey rather, that many people knew why they went to Max. And just as few would know why they're going back to HBO Max. They might think they're two different entities. I'm sure there's lots of confusion. So it's a self-inflicted wound, which we see a lot. The good side of that is someone in the agency world is getting a lot of money with all this back and forth stuff. So yay for the industry. But the name just doesn't trickle down. And as you mentioned, I think our contrarian, that's Scott Galloway, right? And that's where I first saw the mention of this going back to HBO Max. And it was born out of a merger, as you said, with Discovery, which I don't even know what Discovery stands for. It's like an app. It's a program platform. I don't know what their mojo is or what they stand for and breadth, anytime you hear someone saying, we're going to broaden our line, or breadth, like, whoa, watch out. I mean, those are dangerous words. So, When you look at the original HBO, before even Max, Breadth didn't build their brand, as Galloway said. Breadth didn't build it. It was prestige. They really had first cut movies, quality, original programming. They were like the first to the gate on that. So as bad as this is, it's good they're going back, but they won't clear up the confusion if they don't start to do a better job, I think, in their marketing and in the content, getting back to the original quality content that they used to have.

Mark Vandegrift
Yep. Well, let me read you a couple of things that were in his podcast episode from two years ago. I'm sure he's sitting there now saying, I told you so. We have our own example of I told you so here. We'll talk about it. Our second brand. But this one, when they first switched to Max, when that was announced and when it went to Max, here he named a couple of things. So his talking points during the video were this. HBO Max spent decades building a brand. You can't build a quality brand like HBO in just a few years. So it's the longevity, right? We always say that. HBO Max is known for their shows and their powerful emotional media moments. So that's part of what you were just saying. HBO spends less than Netflix. So the comparison is two to three billion for HBO slash Max. Netflix was spending around 18 billion and which shows are more talked about So there's the white lions that are the white lotus that everyone was just talking about Recently and now the last of us and there's popular shows like succession Game of Thrones the Sopranos, so they're just known for putting out quality shows versus Netflix I think he calls like the the Walmart of media

Lorraine Kessler
Yeah, that fits. That fits.

Mark Vandegrift
Yeah, and they just green light any idea for shows, movies. It feels like Hallmark. It's just like this formulaic boom, boom, boom, boom, boom. And all you do is you switch out the bodies and you twist the plot a little bit. Instead of falling down on an ice rink, you fall off a ladder. And that's when they have their, you fell into my arms moment. You know, Netflix is kind of the same thing. They're having these formulaic things whereas HBO is really seen what he says as the luxury brand of media. So that's why he said changing the name to Max backtracks all of that work. So let's comment on Scott Galloway's HBO Max podcast episode, spending decades to build their brand and how they're known for quality shows. So talk about that a little bit more.

Lorraine Kessler
Well, think that, you know, firstly, that's great info. I didn't know that Scott Galloway predicted this. You know, I only picked up the post-mortem on the name change back. I would say HBO was the first. I mean, you have the position of the first as a pay TV channel that has content that people are willing to pay. And remember, this was a time when all TV was free. I mean, that was a huge switch. So they really, to me,led the way for all these channels. The one disagreement, and it's hard to disagree with Scott, but I wouldn't do it in person, but I'm not sure about the luxury brand part of it in my mind, only because the last few years, I mean yeah, Game of Thrones was huge, right, and Sopranos was unbelievable, but the last few years they seem to have fallen off that scale. A lot of these channels to me have blurred this space, if you will. I'm finding some really great original content on Paramount+. I'm finding great content on Prime Video. Not so much created, but good uncut movies and things. So it's just a blurred space right now And I do think that they own that position at one time. But again, when you stretch your brand and you do these self-inflicted wounds to yourself, you diffuse, you degrade, you devolve the brand. You don't evolve it to something greater. So on that part, I totally agree.

Mark Vandegrift
Yeah, and it's interesting because you can look at this in a couple other areas. Starbucks comes to mind with the new CEO. They're really trying to get back to that coffee experience. And I don't think they can regain that because now you have tons of competitors that have emulated what they were doing. And even though you are noticing a difference when you go into an actual Starbucks location, they're offering free refills again. They're offering to deliver your drink to wherever your table is in a mug, they're writing your name and a little ditty on your cup. So they are trying to get back to it with the new CEO, but I don't think they can get back to where they were, which is, you know, back in the day, you would go sit this right in front of you, and it was your way of saying, this is part of my identity Now it's just, okay, I'm getting a drink I enjoy and if I sit at a Starbucks, it's a good experience again. They're not just trying to push me out the door, which is what they went to and do just the drive through Starbucks and make it transactional. I think with what you're saying with HBO Max is they're not gonna be able to get back to what they had before, because other people have moved into the market to fill that void.

Lorraine Kessler
Well, I can't not easily. I mean, you can't do it just with the ridiculous press releases and words like amplify whatever. have to,

Mark Vandegrift
Amplify your uniqueness.

Lorraine Kessler
yeah, you can't, the way to amplify your uniqueness is to create content that's as breakthrough and as watchable as Game of Thrones, as Sopranos, like get back to the core. And you can't just do one show, you have to have like a volume of this you have to be committed to that in such a way that you're not devolving. Because as you look at Prime and you look at Netflix, as you said, they have everything on the shelf. So they've cluttered their shelf. They may have some premium content, original content, but there's a bunch of other stuff too. So, you know, I think they do have an opportunity, but it's not going to be easy because it requires, you know, what does it cost to produce a Game of Thrones or a Sopranos or one of these great shows. It's not really.

Mark Vandegrift
Well, let's take a side trip on this discussion because this is interesting. think it's changed the idea of advertising actual platforms. So I know my wife and I, we've subscribed to a couple streaming platforms because of the buzz about the show itself. So the product has become the advertisement. I'll give you an example. Only Murders in the Building with Steve Martin and Martin Short.

Lorraine Kessler
Yeah, Why I subscribed to Hulu.

Mark Vandegrift
I heard a ton of people talking about it that are my age, that are folks that I would normally agree with. So guess what? We got a Hulu subscription just so we could see that. And we binge watched the first four episodes and now we're excited about the fifth season coming out. It's supposed come out this summer. So that's an example where I really haven't seen a ton of advertising for Hulu because of where I was consuming media, but I ended up getting Hulu because of the content, right?

Lorraine Kessler
Well, it's no different than the movie industry mark. Nobody says, what's Warner Brother producing today? They look, the movie's the attraction. And then you go, and it's produced by more. I mean, these platforms are very much like that. They're the serving agent, but it's the attraction that drives you in. So it's really no different. And I've done the same. That's why the behavior follows the show. I subscribed, resubscribed to HBO Max when Game of Thrones came out, right? I wasn't subscribed for a long time. Same thing with you, only murders in the building. That's why I have Hulu. I actually have the Hulu Disney bundle. I don't watch anything on Disney because there's nothing there that attracts me. So that is the whole key to what HBO needs to get back to where it was.

Mark Vandegrift
Yeah. So the product really is the advertisement in this case. Yep. Good. So one last thing, because their PR release was like dud, right? Like we just discussed, but they've done a good job. They're using humor to kind of like make light of their failed attempt at using Max as the rebrand. And what are your thoughts on that type of approach? They're almost poking fun at themselves.

Lorraine Kessler
Hey, that is the best approach you can possibly have, right? I mean, to be self-defacing, I mean, that shows a humility. And people really respond to that. Once you make yourself kind of vulnerable and are able to get a laugh out of that, people go along with that. It creates a humanity for the brand too. so I think that's all good. What are you gonna do? Are you gonna be imperious? And blame the audience or what have you. I mean, I really don't know what other option you have other than to do that. So I think it was smart that they went this route.

Mark Vandegrift
Yep. Well, and it's it, what it speaks to me about a little bit is just the change in personnel. Every new marketing director or CMO or whatever walks in the door. They feel like they got a mess with the brand instead of just saying, where are we? What are we doing? How can I add or pour on the meaning that our brand has instead of let's rip it all out, insert something new and then you know, as Galloway says, you've ruined decades of good work on that brand.

Lorraine Kessler
Right. Well, part of this was hubris too. Well, it's inside, it's inside out thinking instead of outside in. Did I say that right? Yeah. Inside out. Yeah. What's important to you as a company? we did this merger. And so we want to make sure that we give kudos to Warner Brothers. And so we're now HBO Max. I don't know exactly how that connects all the way to Warner Brothers, but Warner Brothers has a lot of content. Anytime you're working and you're in this, what do you call it? This vacuum, right? Lost for words. But when you're operating and making decisions from inside the house in a vacuum, you're not considering what do customers think? What's in their head? What will they? You're going to make mistakes. So ego drove this bad decision.

Mark Vandegrift
Yeah. Oh, 100%. Yep. OK, so we're going to go to another brand. And this is actually one that we can point to ourselves and our creative director, Scott Edwards. Another Scott, a different Scott. Also a contrarian, I might point out.

Lorraine Kessler
Another Scott. Yeah. And both of them equally brilliant, probably on the 145 or higher IQ scale. Yeah.

Mark Vandegrift
Yeah. So this one is about Krispy Kreme and McDonald's. And we only have to go back a year on this one, March of 2024. And they announced their partnership that they will be expanding nationwide. So they did this test in Kentucky and they soon turned to your favorite donuts being delivered and sold fresh daily at McDonald's. And this was, you know, nationwide. So being who we are, we took our positionst view lens and applied it to this cross promotional strategy. And Scott Edwards accurately predicted this would not take off well nor end well. And we're only a year later, literally one year later. And it was announced a couple of weeks ago that Krispy Kreme has paused its partnership with McDonald's. So we're kind of banging our chests and saying, told you so, or at least Scott can say that. Because he wrote in our blog, it's in writing, May of 2024, that this was not gonna work out well. So he just wrote another one and said exactly why it didn't go well and what happened. So do you wanna explain to our listeners how this partnership was a bad brand move and how it affects the Krispy Kreme brand identity, which I might add we worked for in part in a little bit. And we knew clear back then that they were having problems with that horrible word, ubiquity.

Lorraine Kessler
Well, agreed. I read Scott's blog. I got this totally wrong. I thought this was a good partnership. And I would contend that, you know, I read Scott's blog. So, two Scotts, right? I thought it was a good idea, and I'll tell you why. I thought, in my mind, and maybe in the public's mind, I don't know, I'd have to take a poll. Krispy Kreme lost its mojo a long time ago. Scott's article focused on the fact that McDonald's is known for hot breakfast and this is not a hot breakfast and so there's incompatibility. But I would raise up that Dunkin' Donuts, known for cold breakfast, now does hot breakfast and it's doing quite well. So I'm not sure it's just that. And I'm not sure it's just a positioning problem, although positioning plays a role. It's one of the factors and here's what I mean Krispy Kreme when it started. What were that? What was the big thing? What was the mojo? Hot doughnuts they had donut theater. They actually showed them being baked and coming down the conveyor and you got them hot What did they do within months of this big or within the first year all of a sudden I find cold stale Krispy Kreme doughnuts in every grocery store I shop so that

Mark Vandegrift
C-Stores, gas stations, everywhere.

Lorraine Kessler
Yeah. So what happened to the fresh hot donuts? I don't even think of them in that vein anymore. I think of them as a mainstream fast food brand like McDonald's and it seemed to me it would work. So what do I say? It was deeper than position. I think Krispy Kreme has had financial problems. They've been losing revenue. They've been having problems with profitability for a long time. I think this was a hail Mary kind of play looking at all the McDonald's challenges. And I also feel they didn't do enough advertising. didn't, there's actually an article that the shareholders of Krispy Kreme have filed a lawsuit against Krispy Kreme because they failed to disclose the early challenges of the McDonald's partnership. Now this isn't about positioning, this is about operational stuff and this is about financial stuff. They said that the donut chain overhyped the potential for sale of donuts inside the fast food giant. Well, this is what they've done. This has been the modus operandi since they started. They've gone too fast, too quickly from a really cool position that they didn't nurture over time or were patients with. And I would say lack of patience is their absolute problem. And then when they did launch in McDonald's, the advertising was short-lived. I mean, and if you look at it, when they advertised, sales were up and then they pulled the advertising because it wasn't being profitable because there were back end problems. So I don't think it's just a positioning mismatch with deference to Scott Edwards because he's brilliant and he predicted rightly and I did wrongly. I just think there's more at play here. I do know this, that the decline in the first quarter, their revenue declined something almost just under 3 % and their EBITDA went down nearly 63%. I mean, I just think that what neither of them counted on was a bad partnership, that there was something going on in the way they constructed this, and they weren't patient with the position, and they weren't patient with the McDonald's rollout. So those two things created an unholy pun intended.doughnut situation.

Mark Vandegrift
Well, wanna, acknowledging the operations, I wanna set that aside because I got two emails back from the email blast that we sent when we published the second article. Both of them said, Scott was right on because I am unable to think of McDonald's as a place that offers donuts. Like I want my McMuffin and I don't give me anything else. So let's look at this from maybe a category standpoint. We talk about when you extend beyond a category or you try to make something broader, like HBO Max, we said they were trying to be all things to all people. This idea that from the standpoint of I think of McDonald's for my McMuffins and my hot breakfast sandwich, now trying to loop doughnut into there. And both of these responses were from people that they don't consider themselves like marketers they were just responding to the article and said, I could never get past that. I just want my McMuffin. So was there a line extension here that might be the problem as well? Or what do you think when we go to the mind and we think about ideas and we pull out breakfast and specifically breakfast at McDonald's, was there more a more basic challenge to this that it just would have never worked? Or if it could have worked,beyond advertising, what should the advertising have done to expand the meaning of breakfast at McDonald's?

Lorraine Kessler
Well, I think first of all, you're pointing out the most basic principle of position, right? A brand can only stand for one thing in the mind. So it's not what I think, it's not what you think, it's what's in the mind of the customer. And if you had two people already say, I can't bring these two into the orbit together, then we got to honor that. And that's something that could be tested with research pre-launch and, but there's another side. So that's pure position, right? I mean, Heinz is ketchup. Heinz is also mustard and it's done really well in the mustard category. More why? Not because it doesn't really fit right what you're saying. I mean, if Heinz is ketchup, how can it be mustard? But people somehow have expanded their thinking to think, well, that's a condiment. They go together. Um, but then Heinz mayonnaise? Whoa. No, that doesn't work. Heinz Relish works, or Pickles. Why? Because they seem to be in a family. It's something where you're dealing with the mind. It's a tricky terrain. That should have put a question mark for McDonald's. Will people think of us for donuts? Will that hurt our brand? Again, I think they could have used research to find that out. I don't think any amount of advertising is going to save it. On the other side of it, you and I have told this many, many times that many times a company that we've dealt with, really their focus is one thing, maybe custom, maybe custom specialty, whatever. But they have a lot of off the shelf products and they can still sell those, right? And maybe they need to sell to fill holes because the client who wants custom also wants maybe some of these stock things and they only want to buy from one buyer, make their life simple. So how do you deal with that? Well, you just don't emphasize the office. You don't make that part of your brand identity. It's on your website, you can buy it. It's there to be sold, but it's not there to define who you are as a brand. So after the initial introduction, let's say it was successful and people were like, this is great because my kids love donuts. I want an Egg McMuffin. You know, that's the other, I think McDonald's was thinking we deal with families and families come in and people want different things out of breakfast. And so, so having after the initial launch, if they just had it on the menu and didn't promote it and everything was really about the McDonald's breakfast there. Maybe it would have worked. You know, we're all looking back and we don't have a clear crystal ball, but apparently Scott Edwards' ball was tuned a little better than mine.

Mark Vandegrift
Hey, we get it wrong sometimes. I remember saying we didn't think Dove for Men was gonna have much of a chance. Well, that's still around what, 10 years later now? So, yeah.

Lorraine Kessler
Yeah, I'm looking at it. It's super and they you know what they were able to and this is where people have to take the principles of positioning as pure as they are but it's one factor and it it exists within the orchestration of many things one of which is if you have like Dove did a strong brand already you command shelf space. have distribution on your side. This is where I think A.G. Lafley's book, Playing the Wind, and Roger Martin was the co-author, these five strategies that he talks about, one of which is differentiation, but they all have to interrelate. So if I have a really strong position on the shelf in a retailer space, I can leverage that to my advantage. So I think one of the things that really helps Dove for men, if you ever go to a store, it's just this broad line of Dove skincare for men. And if it works for women, it's gonna work for men. And the packaging, the branding was done well with black package, not white. And they were patient in their rollout. And so it works. It does work. If you're just stuck with the pure principle of positioning, it's a no. But again, it's not what we say, it's in the mind of the class.

Mark Vandegrift
Yep. Good. Well, that was a good discussion on some current brand news. It's interesting when things are predicted and then you get to revisit them in such a short time. I mean, two years and one year is a nice way to remind our listeners of topics that we've covered several times that whether we made a prediction that was accurate or inaccurate, it's always good to go back and see the situation.

Lorraine Kessler
I for one am very unhappy that I can't buy Krispy Kreme at my McDonald's. But I also don't buy McDonald's since my heart attack. so I'm just saying that that was my go-to junk place. so I have to have a little fear.

Mark Vandegrift
Yep. Well, you know, in the end, it's healthier for you, Lorraine.

Lorraine Kessler
Yeah, I know. Yeah, it's not my funeral. It's McDonald's and Krispy Kreme's. Yeah.

Mark Vandegrift
That's right. Good. Well, let's wrap up today's episode of the Brand Shorthand podcast. Thank you to you, Lorraine, for joining us as usual and for our listeners for joining us. Don't forget to like, share with a friend, shop from a mountaintop and subscribe, subscribe, subscribe. And until next time. Have an amazing day.