The Signs From Trump’s First 75 — What Should Performance-Based Marketers Know11 Apr, 2017 By: Thomas Haire
For its contribution to this month’s DRMA Voice, the DRMA Education Committee decided to tackle the issues performance-based marketers are facing after President Donald Trump’s first 75 days in office – and what those issues could look like in the coming years.
Rather than having a single person write a column, however, three brave souls — Imagine Fulfillment Services’ Andy Arvidson, industry creative guru Rick Petry, and THOR Associates’ Lori Zeller — raised their hands to share their opinions on the questions I posed. Read on for more.
How are the Trump Administration’s proposed — or expected — changes to the regulatory landscape affecting the key government agencies involved in the performance-based marketing space, including the Federal Trade Commission (FTC), Federal Communications Commission (FCC), and Food and Drug Administration (FDA)?
Andy Arvidson: Many feel the Trump Administration has the most pro-business policies in decades. Trump wants to remove “barriers” from doing business and this thinking will be passed down through the FTC, FCC, and FDA. This will help marketers. It seems like Trump will be able to make these changes since the Republicans control both the executive and legislative branches of the government.
Rick Petry: Trump has spoken in broad terms about streamlining government oversight and deregulation, but it remains to be seen how that will affect business. When you examine his own advertising claims – take the controversial Trump University as one example – it would seem that there would be less scrutiny if his own reliance on sales puffery were to be any indication.
Lori Zeller: Changes to the governing bodies will provide disruption, as well as chaos. The concern with a “Republican” presidency and Republican leadership in the Senate and/or Congress is the non-governance and hands-off approach to issues. For example, privacy checks and balances that were implemented under President Obama have been negated with Trump. Interesting to note is the choice to head the FDA choice – Scott Gottleib – a candidate who has strong ties to pharma, biotech, and healthcare companies.
The bottom line is that the collusion and interest of the corporation – not the citizen – will affect emotional performance. Although the aftermath of all three agencies being advocates for multi-national corporations may lead regulation down one path, let us not forget that in performance-based marketing, the consumer looking to “feel good” amidst all this change often transacts with impulse buys. Historically, that’s been great for our business.
What do you believe staffing shakeups and directional changes at the FTC and FCC could mean for crucial marketer/consumer issues like net neutrality, data security, consumer privacy and more?
Arvidson: The Trump Administration wants the FTC, FCC, and FDA to be more innovative and pro-business and will systematically unravel complex regulations and policies enacted during eight years of the Obama Administration.
Petry: It’s a kind of reboot, where new players will be shaping or redirecting policy in alignment with a more business-friendly, less regulatory-heavy guise. However, issues such as data security and consumer privacy – which are controversial and occupy the news on a daily basis – would likely be more apt to be “bipartisan issues,” if that hasn’t become an utter oxymoronic term at this point.
Zeller: The FTC and FCC administrative shakeups will change the landscape of how the consumer is protected or – better said – not protected. The Trump changes are bound to create leverage for big business to dictate its terms, and the fallout will have grave consequences to net neutrality, data security, and consumer privacy. There are no words to describe the far-reaching issues that will arise and no silver lining for the consumer or performance-based marketers. As a result, strategic marketing plans will need to be aligned with huge budgets behind them if brands are to have revenue. Increased budgets are good for our business. However, it will take time for this correction to evolve. Performance-based marketers that can navigate with success will be the winners of advertising, media, and transactional campaigns.
How might the Trump border wall and immigration policy plans affect the performance-based marketing business most directly?
Arvidson: Performance-based marketing companies must employ legal citizens with proper documentation otherwise risk losing part of their labor force with deportation via the new policies. Now is the time for employers to be buttoned up and adhere to all city, state, and federal government hiring practices.
Importantly, illegal immigrants with criminal convictions need to be returned to Mexico. The opportunity for better jobs in the United States will offset the greater barriers to entry with a wall to getting into the United States. Illegals and smugglers of all types will go under, through, and over the wall.
Petry: Trump’s immigration policies could have a detrimental impact across the gamut of the labor force. On the digital side of the business, availability of engineers and programmers from the global talent pool could be hindered. At the other end of the spectrum, supply-chain companies – such as telemarketers or fulfillment that rely on low-skilled workers – could be similarly affected. Both ends of this equation are microcosms of how “immigrant worker” isn’t a single thing – nor does it fit a convenient stereotype.
Zeller: Immigration policy plans and the border wall have a huge impact on performance-based marketing businesses for many reasons. The wall represents a discord with our neighbors to the south, which puts a damper on call centers, media, and the import of products that contribute to fair trade. Regardless if an actual wall is built, the idea of being able to change the policies will have far-reaching impact for business and private citizens. The idea of “search” can be used as an example – if citizens have no privacy and search records on phones and computers will be widely available, the $64,000 question is: will businesses see the same crackdown and suffer, or will consumers bear the brunt of change and while businesses have an easier, more open opportunity for growth?
On the other hand, the proposed changes in immigration policy will take the opportunity of creative contribution and intelligent acumen away from performance-based marketing and branding. No longer will any business be able to access the brain trust of our foreign strategic partners. Immigration policy change will create a sordid emotional rift as families are separated, words are examined, and the free flow of freedom is curtailed. As a result, American strength outside of the United States will weaken, harming all business.
How might the Trump Administration’s signals of a newly protectionist import/export policy — including a possible border adjustment tax (BAT) — affect performance-based marketers?
Arvidson: The BAT is a 20-percent sales tax that will pressure performance-based marketers to increase pricing to consumers. Products sold online and at retail stores – such as apparel, footwear, and wearables – will become much more expensive and the American consumer will take a direct hit. This could cause a few more major retailers to close operations. A price hike is the last thing retailers need right now.
According to the keepamericaaffordable.com, “the 20-percent sales tax on essential goods will result in the average family paying $1,700 more per year on items bought every week.”
For many marketers, the import tax will affect the entire supply chain. Some manufacturers will be forced to change certain supplier relationships to keep costs down.
Petry: A protectionist trade policy could be a dire threat to the As Seen On TV category of performance-based marketing. The reason is that the required margins of a four or five times mark-up of cost to manufacture relative to retail price is already challenging. So, for example, if an item is $19.95, the cost to manufacture it has to be $4 or $5. Domestic labor costs would cause those numbers to inflate significantly, which will result in higher retail prices that will likely be untenable to many consumers.
Zeller: Is the glass half empty or half full? While many business owners find this a disruption, there are the same number of opinions that businesses are overpaying, and that new policies and adjustment taxes will help all businesses, including ours. Modeling to adjust to these policies will be the key to growth, but make no mistake that the operational support of high-level decisions will take a toll if efficiencies are not planned properly.
The end result will be the tradeoff of tax deductions for corporations and how that will affect the ultimate pricing for the consumer. Exporters’ profits would be exempt, and the change would remove existing tax deductions for what importers purchase from foreign countries. For our industry, this may create overnight effects because of international contributions to the manufacturing of products sold direct-to-consumer, as well as industry marketers having sales overseas. Competition can’t be ignored, however, and American products may benefit if the policies are implemented.
This is the first time a president has had an existing and operating marketing brand. That opens up the Trump Administration to allegations of conflicts of interest. How do you see it: is it the Trump Organization’s greatest opportunity for product placement ever, or is it a possible mess that could lead to troubling entanglements?
Arvidson: This could lead to many troubling issues. Trump has interests in more than 500 companies. It is impossible for Trump to separate decisions from the buildings, golf courses, hotels, and restaurants he owns, even if managed by a blind trust. The Democrats and even some Republicans will repeatedly scrutinize the assets of a multi-billionaire who refuses to follow the path of a traditional politician.
Petry: Politicians cashing in on their name is hardly new, but Trump does make for a very bizarre and unprecedented situation given you have a sitting President who has made a fortune from licensing his name. For example, the documentary filmmakers at Vice have shown how the Trump name is being licensed to a project in Dubai where Pakistani workers are allegedly being lured into slave-like labor arrangements by being paid far less wages than they were promised and having their passports confiscated so they cannot leave the country. The average American hasn’t a clue, and a good many might care less. Trump might shrug and say something akin to, “It’s not me. I only lent them my name.” This type of strange brew is a recipe for scandal that threatens to cloud any ability for our leader to be effective.
Zeller: Conflict of interest? Please. This is a brand-building sh*t show. There will be no troubling entanglements because this President will make sure that his interests and financial gains are realized – with the greatest opportunities available to the Trump Organization for not only product placement, but also brand-building engagement.