Robert Reiss: We’re here today with Chris Kuenne. Chris is the founder and CEO of Rosetta. Rosetta is the largest independent interactive marketing company in America and probably among the fastest growing if not the fastest growing. Could you talk about what interactive marketing is and what Rosetta is?
Chris Kuenne: We define interactive more broadly than the market is today. We think of interactive as any channel in which there is an interaction with the consumer, so we define four: Digital, which is the traditional definition of interactive; mobile, which is now crawling under the tent of interactive; and then call centers and face-to-face selling and of course any other channel in which there’s an interaction.
Robert Reiss: And Rosetta’s model is?
Chris Kuenne: We like to describe Rosetta as where McKenzie meets McCann. McKenzie is probably best known in the world as a trusted advisor to the C-suite: brings intellect, brings analytics, and brings broad-ranging industry expertise to bear. McCann of course is known for its outstanding advertising. When we formed Rosetta, we believed that there was a big hole in the market. How do you bring the intellectual horsepower of McKenzie-like consulting to bear in an executional mode such as one that McCann would provide?
Robert Reiss: I guess that makes sense because of your background. You were a Harvard MBA. After working in products with J&J you then worked as a partner in a managing and consulting firm, so it made perfect sense. It was a blend of yourself.
Chris Kuenne: When I was at Johnson and Johnson I ran the Tylenol brand and then the Band-Aid brand. One of my great frustrations with agencies was that they didn’t “get” my business; they were good at executing a 30-second spot, they were good at executing a piece of print advertising, but they didn’t fundamentally understand the drivers of my brand. I saw that as a big opportunity to combine that kind of intellectual horsepower and analytic and strategic horsepower with marketing execution, which I believe is the most fun part of business.
Robert Reiss: The rub I have on marketing is that sometimes marketing is so focused on – “Oh, can we win a Clio?” – and on the creative and they forget about results. Let’s take that a step further: how do you deal with the fact of marketing companies not having skin in the game? You guys make your money regardless!
Chris Kuenne: It’s such a great point. I would say somewhere in the range of 10-15% of our revenue is revenue earned at risk. We are very confident in the impact we’re going to have on our clients and are prepared to discount our fees, put them in a pool, and when we achieve a certain level of business results – that we agree to beforehand – we actually double our return. As an example, let’s say our normal rate is somewhere between 150 & 200 thousand dollars per month to put a team on the ground. We would discount that by 25 percent; let’s say we’re putting 50 thousand dollars a month at risk. We then agree to a series of specific business-oriented benchmarks that actually can move the stock price. When we achieve those results, we get a doubling of our fees at risk. This has generated anywhere from 500 thousand to a million dollar bonus at the end of the year. We tried gain-sharing for every additional sale we participated in, and we found that not to be a very good model. After a certain point the client begins to resent the fact that you’re participating in their upside. We’ve found this idea of we discount our fees, put them at risk, achieve the business results and get paid a bonus, and then, frankly, renegotiate it in the subsequent year has been a much more effective way.
Robert Reiss: In the subsequent year, they see the results you get if you do that and they may say “Oh no, give us a straight fee.”
Chris Kuenne: Indeed. Sometimes that happens and then other times we reset the bar, and we’re comfortable moving the bar up because we really want to drive our clients’ stock price.
Robert Reiss: When you look at Rosetta Marketing, it’s grown dramatically. It’s now about 650 people nationally, and it was just a dozen years ago. Is that really because of you finding this niche? You’ve done more than that. What advice can you give to people about not just finding the niche but growing the company and operationalizing results?
Chris Kuenne: I’ve lectured at NYU and other universities where they’ve asked that same question, and I have a simple answer: Find one of the most important things that your addressable market is looking for and just do it better than anybody on the globe. We started Rosetta with one or two of us looking at one another and saying “We’d better go out there and get some clients,” just eleven and a half years ago. We started on the basis of the fact that market research and consumer insights were not driving marketing strategy. So we figured out a better way to develop those insights and make them actionable, and then did it 700 times over the last eleven years. We developed a proprietary way to understand the consumer that we call Personality-Based Segmentation…
Robert Reiss: Personality-Based Segmentation?
Chris Kuenne: We use the word personality – in fact we own the trademark ‘personality’ – because it’s conceptually similar to the Myers-Briggs Personality test.
Robert Reiss: In that, they have 16 different personalities. So instead of marketing the standard old way, as demographics – and to me, that no longer works anymore – you’re focusing on the personality traits of individuals, or of groups?
Chris Kuenne: It’s not built on the Myers-Briggs technology, but it is a similar conceptual model. There are not an infinite number of credit card consumer types, or breast cancer patients, or Botox patients. What you find when you take a very analytic and structured approach to the market is that there are typically between four and eight different kinds of personalities. We can develop the model very quickly – over a twelve to fourteen week period – convert that model in a manner that allows us to score every household in America for a credit card personality, for a Botox personality, or for a cell phone personality. Then, by knowing what your personality is, aim the marketing more precisely. We get results that can range from 20% better to 400% better because we’re actually tailoring and targeting the messaging.
Robert Reiss: It sounds like you’re hitting people’s systemic characteristics. Give me an example of a client you’ve worked with; how this works out in real life.
Chris Kuenne: We’ve worked with three of the top five credit card companies. Credit card companies are probably some of the most advanced direct marketers. They are modeling data out of the credit bureaus and other behavioral characteristics of every household in America. What’s missing from that is the mindset, as you said a moment ago. What’s missing is that deep insight about how I think about spending, do I spend more than I earn, how do I think about how I’m going to pay for something? Am I prestige-driven, so when I’m at a dinner or a lunch I’m going to pull out my American Express card and say something about me, or do I not really care what kind of plastic I’m carrying? What we’re able to do is build a very precise model that explains brand choice. So I have a Capital One card, a Chase card, and an American Express card in my wallet. I’m out to dinner; which one do I pull out and why? When I get back home late at night and I see solicitations for another credit card do I respond and, if so, why?
Robert Reiss: So you’re capturin g the “why.”
Chris Kuenne: Exactly, and we talk about this in exactly those terms. What-based marketing has existed for some time. What are you like from a credit risk standpoint? What are you like from a channel preference standpoint? These are behavior al elements that direct marketers understand well, but you and I may look exactly the same from a behavioral standpoint and be motivated for completely different reasons. It’s really the “why” that compels someone to make a brand choice decision and a category-usage decision. We’ve built these personality-based models 700 times and applied them in the interactive channels. Drive them into call centers; drive them into kiosks at retail for a cell phone manufacturer. You go in, you’re typed into one of the cell phone personalities and then we help you choose the right cell phone and service that fits your needs best.
Robert Reiss: You’re talking about the mobile phone, and I’ve seen that for a while as the huge area of growth in transactions. What are your thoughts on how that’s growing and what the potential is in terms of marketing?
Chris Kuenne: Mobile is just unbelievably exciting. In fact, we just developed a mobile application for Nationwide Insurance whereby if you have an accident, at the accident site you can fill in the accident report, you can take a picture of the accident. Immediately, in real time it tells you where you should have your car towed in a Nationwide-authorized repair shop. That would be an example of an acute need tailored to the moment and the person such that Nationwide can drive its brand linkage, its relevancy, to that market better than its competitors. The opportunity exists in retail, in financial services. It’s unbelievably exciting to think about what mobile’s going to do.
Robert Reiss: I want to ask you about the word “engagement.” It seems everyone is trying to engage their customers, their potential customers, their employees. You’ve done a lot of work in this area. What are your thoughts on the core issues with creating engagement?
Chris Kuenne: The driver of engagement is relevance. I need to be relevant to you, and I’m relevant to you based on what personality you are. The ability to understand your fill-in-the-blank – credit card, cell phone, whatever it might be – personality. I can engage you in a more relevant fashion by giving you the right product message offer through the channel when you expect it. That’s really what our personality marketing system does.
Dennis Troyanos: In the last segment you mentioned that Rosetta was founded 10 years ago in response to a growing need on the part of clients to better understand their customers. Can you expand on this a bit and tell us about the evolution of your product offerings and your service offerings?
Chris Kuenne: Over the last ten years there’s been an explosion in customer data. There’s database data, there’s click stream data, there’s social networking data. The marketing game has become enormously complex. At that same time we’ve been building our business on the basis of being able to sort that data out and use it to drive better marketing.
Dennis Troyanos: As the largest privately-held interactive marketing services firm in the US, I understand that Rosetta was grown both organically and through acquisition, and that you’ve made some critical acquisitions over the last few years. Can you describe those acquisitions and tell us what gap it filled in the Rosetta model?
Chris Kuenne: We’ve made two acquisitions. Our growth is about half organic and half acquisition-based. The first acquisition we made was in 2005 of a company that you know well: Simstar. Simstar was a leading interactive agency in the early days in pharmaceuticals. We had almost a 100% overlap in clients; we were doing the strategy and analytics and Simstar was building out the website. It was just a perfect acquisition; we were able to combine forces, take the McKenzie part of our business and combine it with the McCann part of Simstar. We took two 10 million dollar businesses and turned it into a $45 million just eighteen months later.
Dennis Troyanos: You mentioned that Simstar had that pharmaceutical piece that was important. Can you give us a sense of – with the volatility of the pharmaceutical world right now – how Rosetta is helping clients respond to those issues that are in a state of flux?
Chris Kuenne: Pharmaceutical companies, as the pipeline has dried up, have had to look harder and harder at sales and marketing efficiency. We have been able to come in and fill that gap by making their marketing directly to patients and their selling directly to physicians much more efficient by understanding brand choice and then targeting and tailoring marketing to be more effective. As the business has become more difficult for our pharmaceutical clients we’ve been able to help them meat that challenge by driving efficiency.
Dennis Troyanos: As you know, we’re executive recruiters in the marketing industry. The word on the street about Rosetta is that Rosetta is considered the CMO’s agency. If you can give our audience a sense of what that really means, we’d appreciate it.
Chris Kuenne: I did not make it to CMO when I was at Johnson & Johnson but was one layer below that, and we really built Rosetta to be the agency we wanted. By that, we mean that many agencies are accused by CMOs of not getting it. Not getting it means not understanding the drivers of my business, not really understanding the economics of my business. We actually start every engagement, every client relationship by really understanding – if we don’t already know – what are the drivers of profitability, the drivers of brand choice and category usage. We move from converting the business problem to a marketing problem and the marketing problem to a marketing solution. That is very different from the traditional agency that shows up at the CMO’s door and says: “Can I build you a website? Can I shoot you a 30-second spot?” We’re really focused on solving his or her problem rather than just executing some task.
Dennis Troyanos: You talked about the challenges that CMOs and their organizations face today. Let’s look into the Rosetta crystal ball, if you will. Where do you see the interactive marketing place going, and what are the trends in the digital marketing world?
Chris Kuenne: I believe that in ten, fifteen years, every piece of marketing will be interactive. If you define interactive as a piece of communication that permits an interaction between the brand – or that message – and the consumer. Here are some examples. Set-top boxes are well on their way to being interactive so I can deliver a very specific piece of advertising to your household. Even outdoor advertising is becoming interactive, where there is a little chip or a little item that you can aim your cell phone on and have an interaction with the billboard or even the print ad that allows the print ad to capture you and give you more information targeted and tailored to who you are. I think everything will become interactive in some mode over the next ten years and, frankly, it’s really really exciting because it allows the marketer to fuse a much deeper and more relevant relationship between brand and consumer.
Dennis Troyanos: This morning I was listening to another radio broadcast, and the author was a fellow who was talking about Google, and how Google has changed the landscape of marketing forever. We’d love your view on how the digital world is going to affect media, and which media will thrive and which media will suffer in this market.
Chris Kuenne: I think media that does not make the transition to developing some form of interaction is highly likely to wither. The good news for some of those older media is that there is a way to make them interactive; even billboards, as I said a moment ago, can be interactive. If I were a CEO of a media company, I would be obsessed over two things: How do I make my medium interactive and how do I make sure that I capture the exchange between the consumer or the viewer and the media such that I can become more and more relevant over time. As it pertains to Google, there’s just no question that they have changed the game. They continue to change the game. It’s very exciting to work in a Google world where search plays such an important role, where search relevancy is the next level, and where geosourcing so that relevant ads are given to you on your cell phone based on where you are. Google has catalyzed an incredible revolution.
Dennis Troyanos: Talking about the brand identity of Google or an Amazon, Rosetta is a brand. What we’d love to do is get a sense of what the important elements of that brand are, especially as it relates to the human element, the unique human capital.
Chris Kuenne: I chose the Rosetta metaphor when I started Rosetta because it seemed to be a great description of the marketer’s dilemma: how do I translate insights into action? We have been able to pull together some of the best and brightest in each of our key functions to focus on translating insights or technology solutions to impact in the marketplace. Our ethos is: hire the best and the brightest, reward them with what we like to call ‘red meat problems:’ problems that are very difficult to solve and, when you solve them, they are dramatically important to – ultimately – the share price of our clients. We attract people who really want to change the game, work on hard problems, and work in a collaborative environment such that their skills can be brought to bear in concert with others’ to create a world-class solution.
Dennis Troyanos: If I’m a client and Rosetta is my marketing partner, what’s the Rosetta experience like? What am I feeling, as a client?
Chris Kuenne: Many of our clients describe us – excuse the immodesty, I’m just answering a question here – as the smartest marketing folks they’ve ever worked with. They also describe us as tenaciously focused on driving business results. These are – sadly, because frankly I think every agency should do that – really quite different from the traditional agency experience where the agency is executing a task, doesn’t necessarily understand the business, and is not as focused on business results. I would say the three characteristics are deeply understanding the consumer and using that, translating those insights into action; doing whatever it takes – within moral and legal bounds, of course – to drive impact; and then to be easy to work with. The agency-client relationship is an intimate one, one that goes on for years, and you have to be a fun and easy organization to work with to be effective with your clients.
Dennis Troyanos: Fifty years from now, when Harvard is talking about a Rosetta case study, what are they going to be saying about Rosetta and why it was successful?
Chris Kuenne: There’s a revolution going on in marketing. We’ll look back on this period from 2000-2020 and say marketing completely changed. It’s my aspiration and hope that Rosetta is named as one of the companies that helped catalyze that change.
