In last month’s Unlimited Michael Brechtel graced us with a most excellent article on guerilla marketing. This month Unlimited discusses the best and worst examples of guerilla marketing with the advertising commentator and industry insider.

When Jay Conrad Levinson first wrote Guerilla Marketing, he was looking to help small businesses be smarter with their marketing spending. Affordability was key, and although guerilla can be synonymous with sexy and subversive, he talked a lot about profit margins and direct mail. Somewhere from there to here, creative advertisers stole his term. The “guerilla” isn’t about whether it’s on the street or on a billboard, the guerilla is about the intent of the advertiser, and whether the audience reads that intent as credible or false.

Although Levinson coined the term in the ‘70s, guerilla marketing finds its true roots in the stunts of publicity hogs like Thomas Edison. Seriously, watch the “electrocuting an elephant” video on YouTube. This was staged by Edison to show the danger of Nikola Tesla’s AC technology, a competitor to Edison’s DC technology. Warning: I found it kind of disturbing, as I expect you will.

More than a hundred years after Edison electrocuted Topsy, a bomb squad in Boston detonated a Lite-Brite as the result of another interesting marketing stunt. To promote a movie based on a late night cartoon, the people behind the movie hired a couple of performance artists to place Lite-Brites featuring characters from the show around the city (as well as in other major U.S. cities). Accompanying the displays were countdown timers – never a good idea in post-9/11 U.S.A. A public-transit employee called in the cavalry and a $5 Lite-Brite shut down Boston for a couple of hours.

The Boston performance artists were released on bail, charged with “placing a hoax device in a way that results in panic” (seriously) and “disorderly conduct,” and just to hammer home the fact that this was in fact guerilla, a network VP was let go. Although this campaign was relatively inexpensive for a major network, it was unique in every way and a crazy PR machine. Many people would question whether it was a success. I’d say yes – for a couple of reasons.

This was a risky, national campaign. And although it got some bad press in Boston, it got a lot of attention through the magic of buzz. And despite everything, the campaign was perfect for the late night, risqué cartoon it was promoting. In this case, the medium really represented the ethos of the product. A lot of people disagree with me on this – but I won’t judge them for being wrong.

Edmonton boy and media visionary Marshall McLuhan’s concept of “The medium is the message” is relevant here: guerilla marketing challenges norms, and possibly legal conventions. Making an ad is easy – taking risks in order to entertain your audience is not. Guerilla marketing’s ability to surprise, and when done well, entertain, shows that an advertiser is putting some effort into connecting with its audience, rather than blowing more money on another ugly magazine ad. As long as it doesn’t feel like bullshit to the audience, it can be marketing gold.

Speaking of bullshit – Sony’s 2005 graffiti campaign to promote its PSP was so clearly commercial that people saw right through it. There was no natural link between the image they had of Sony as a massive money machine and the idea of graffiti as a subversive street-level art form. Turns out stealing cachet is much different than creating it.

In the same way that Sony borrowed graffiti’s cachet, Mr. Levinson “borrowed” the cachet associated with guerilla warfare. And it worked. It helped him move 20 million copies that wouldn’t have sold if he called it something more appropriate, like “frugal and profit-focused marketing for small businesses.” He made a smart move, but I think that the real guerilla marketers have since laid claim to the term, and rightly so. The new guerilla marketer is cost-sensitive, likes to break as many rules as it can get away with, and relies on creativity and buzz. It’s choosing to entertain their audience, rather than simply sell to them. Just, no more electrocuting elephants, OK?

Next time – A multimedia exploration of some of the best and worst examples of guerilla marketing.

Canadian Olympian, Maelle Ricker.

Never in recent memory has the launch of a product been so prescient. Annie Leibovitz’s somber, muscled photo of Tiger Woods on the cover of Vanity Fair was eerily timed given the golf star’s recent troubles. Just as Woods became the first athlete to make US$1 billion, his “transgressions,” a bizarre car wreck and sudden sabbatical eclipsed the accomplishment. The scandal also hurt the lucrative Woods brand. Management consultancy Accenture quickly dropped Woods as its spokesperson and AT&T hung up on the star. Good publicity for Vanity Fair; not so good for the bottom line of America’s top athlete.

Olympic-sized Markets

It might be coincidental that the Woods scandal hit around the same time that other athletes were gearing up to compete in the 2010 Vancouver Winter Olympics. But the two events highlight the complex, layered business of sports marketing, a side that most of us never think about when we’re sitting up in the bleachers: the buying, selling and branding of athletes. For pro athletes, this is part of the game. “It happens the day you sign with the NBA. That’s what older people tell you, is that you’re a business now, whether you like it or not,” Chris Bosh, a forward with the Toronto Raptors who starred in the documentary First Ink, told CBC Radio’s Jian Ghomeshi. He could have been talking about any sport.  (An honours student and philanthropist, Bosh also just signed a deal with Warner Music.)

Marrying sport and business and entertainment is natural for Bosh. He’s less of a basketball player and more of a personality. This is something Olympic athletes experience in a shorter, more intense period as marketing campaigns gear up for 15 days of competition, rather than a whole season. And despite a recession, companies are coming on board. In late 2009, for instance, Proctor & Gamble signed up six athletes for its Olympics campaigns, saying that “The athletes will be fully integrated across numerous marketing channels including advertising, public relations, in-store merchandising, mobile, digital and direct mail.”

John Furlong, CEO of organizing body VANOC,  says, “There has been no better time in the last 50 years to be a Canadian winter athlete. Sponsors are hiring athletes in jobs tailored to them, and corporations are sponsoring them.” The benefit, especially for those who don’t have lucrative contracts to fritter away, is that “Many can finally do what top athletes around the world have been allowed to do – train full time without having to worry about losing a job.”

By Craille Maguire Gillies | Photography by Pete Aspros, Grip Limited

There is nothing like a big orange slide plonked right in the middle of an office to obliterate hierarchy between upper management and everyone else. But then Toronto creative agency Grip Limited, home to that big orange slide, has never been a place for hierarchy. Grip, whose clients include Acura, Lululemon Athletica and Labatt, has an unusually linear team, with an astounding 11 partners. David Crichton, one of eight founding partners calls it a “flat structure” in which partners work directly with clients, and therefore with their own designers, writers, interactive and technical staff who put together campaigns. “There’s no corner office mentality. There isn’t actually a corner office,” Crichton says, adding that newly hired president Harvey Carroll has the worst digs in the space – a small, drafty office that no one else wants.

Grip’s office – designed by the folks at Johnson Chou and featuring the agency’s signature orange logo – is  spread over two and a half floors, and reflects the open attitude of the agency. (And the fireman’s pole in the atrium is great when you’re running late for meetings.) Crichton spoke with Unlimited about breaking down barriers – and walls.

+ Every Thursday, many of the company’s 100-plus staff gather in the atrium for a 4:30 beer-fuelled news briefing. (It counts Labatt as one of its longtime clients.) “On Thursdays we open up the draft taps and play foosball,” says Crichton. “The atrium is basically stadium seating for announcements.”

+ The company has events called “What’s your story?” when anybody in the company – from someone in the production studio to a creative director –  can present new ideas.

+ They notice the little things. White Astroturf lines one of the boardrooms. “It deadens sound,” Crichton says, “but it’s also not expensive. We like to do things creatively that don’t involve spending a lot of money. It sends a message to clients that you can be creative without being excessive.”

+ That working-class ethos turns up in Grip’s logo, a bright 1960s-style orange circle meant to show the company’s working-class roots. “I would say the culture here is pretty peer-oriented. Our partners work on a client’s file directly, so that means we worked directly with everyone here,” Crichton says. (Click to see a TV reel of some of Grip’s work.)

+ The non-linear structure of the company lets employees move between departments for rare wholesale career changes within the same company. For instance, a longtime studio manager became a designer and later an art director. One former IT staffer went on to become a multimedia editor/producer at Grip’s in-house production facility. The strategy is to “let people make a career change and then keep them in the company. At the end of the day, [the happiness of] a bigger paycheque only lasts two pay periods. If you provide a place where people like to work and are respected, they’ll be happier and more enthusiastic.” U

Johanna Hoffmann, managing principle, Oomph Group Inc., Toronto
On the Idea: They’re running lean and mean, and that’s key for cash flow. Their overhead expenses are not high at this point, and they also have a financial cushion that will carry them through 2010.
Red Flags: The whole thing swings on this machine. Innovequity’s managers acknowledge that the prototype may require adaption for each site. If it requires a significant redesign, they’re going to be eating their cushion of cash.
Next Steps: They need to continue to be conservative until the machine realizes the savings projected and clients see it operating in the field. Until then, they should really not spend any money beyond the core, which is getting it built, transported and installed on the site. Until the first client is thrilled and one builder after another is coming in the door, mouths dropping open and asking, “How can we buy one?” they should minimize every expense.

Bill Erichson, owner and educator, Pacific Training Innovations, Vancouver
On the Idea: The business model relies on a royalty-based system rather than a sale-of-product system. This means that Innovequity’s profits and cash receipts are deferred. They are effectively both the manufacturer and financier of the first two units.
Red Flags: There are two critical issues in any cash flow forecast for a business start-up: the starting cash position (capitalization) and the time it takes to become cash self-sufficient (burn time). Innovequity has serious problems on both accounts. The business model has stretched the burn time for this company to an extent that there is a greater need to finance this business.
Next Steps: Develop a monthly cash flow and carefully manage it. As royalties accrue, the company could sell this annuity for a lump sum to reduce debt and further develop the business. Remember, there are two ways to go broke in business. No profit is the slow, painful way; no cash flow is the fast, painful way.

Cindy Priebe, CMA, vice-president, corporate services, CMA Alberta, Calgary and Edmonton
On the Idea: The company appears to have conservative sales projections. Furthermore, they have considered the manufacturing warranty as well as the risk of downtime for their customer should the machine break down.
Red Flags: Although pro forma balance sheet and income statements are necessary, I’d recommend a cash flow statement, because entrepreneurs often underestimate the timing of cash flows. Innovequity may run short of cash, leading to an inability to fund future purchases, such as inventory to manage repairs. They should perform a sensitivity analysis to cash flows to project best and worst case scenarios, in case the cash they expect through sales or royalties for instance is not collected. The company acknowledges the potential for debate with the customer on cost savings. If a customer feels they do not realize the cost savings that translate into royalty payments, they may hold payments to negotiate a better rate.
Next Steps: The company should prepare a pro forma statement of cash flow along with a sensitivity analysis to determine the impact on cash flows if their estimates on collections or sales do not come to fruition.

Voice mail is the salesperson’s worst-case scenario. Not for Mark Holtom. When he began contacting 20 customers in Western Canada who he figured would want Innovequity’s Geometric Construction Unit in their assembly lines, he had a sure-fire line to get a call back. “Sometimes I would leave a message and say, ‘Can you give Greg Spicer a call?’” Then he’d give them his own number.

Greg Spicer, a director at the business financing company Sumex, is Innovequity’s CEO and he has a hefty Rolodex. He’s on a first-name basis with most of Innovequity’s potential customers. Those who didn’t know him knew of him. Spicer gives these two young entrepreneurs the opening they need to get the ear of company buyers. Once the prototype is operational and Holtom and Ben Bertrand approach each potential customer again – this time for a one-on-one meeting to deliver a sales pitch – they’ll have both credibility and a history with buyers.

The Expert Panel
Our panel of experts weigh in on Innovequity’s approach to sales and marketing, point out red flags and offer suggested next steps

Behind the Scenes
Don’t get into bed with wishy-washy investors! This and other hard lessons the Innovequity duo learned

From the Editors: Outsourcing Advice for Small Businesses

Links
Our round-up of useful links for start-ups from around the web

Who:

The topography of the digital landscape shifts constantly as the tectonic plates of technology form and reform, seemingly overnight. Five or six years ago, for instance, venture capitalists weren’t sinking hundreds of millions into the development of iPhone apps. Digital advertising, meanwhile, has gone from the peripheral vision of most web users to a key part of the online experience.

Stephen Beck of Engine Digital in Vancouver. Photo by Amy Pelletier

Stephen Beck has watched this shift, first as an interactive art director at a Vancouver-based ad agency – though nobody really calls them ad agencies anymore, they’ve become one-stop-media shops – and then as the co-founder of Engine Digital. Over the past seven years, Engine has shifted its focus from web development to online advertising that’s like nothing you’d find at Sterling Cooper. “We decided early on that, for the most part, we would need to look outside our sandbox for the kinds of clients who think big, and expect big things from their creative partners,” Beck says. Those partners include Blue Man Group, Nintendo and Telus (along with creating Telus’ digital campaigns they worked on its corporate social responsibility report).

Beck’s own career represents a kind of morphology not unlike what’s happening in technology. When he was laid off as an interactive art director at a local agency, he gathered a colleague, Richard Gallagher, and they launched their own studio. They soon brought in Kele Nakamura as a partner and technical director. “Our start-up was very grassroots,” Beck says. “We used our network to generate our first client projects.” Eventually those networks expanded; even the economic downturn didn’t have as great an impact on them as it did for other digital agencies.

Engine Digital and Beck’s place in the slipstream of online commerce has become a paragon for a new kind of work, one where the person and the professional drive each other. (“There is no such thing as a part-time innovator,” he says.) Beck’s online presence – on Twitter and LinkedIn – supports the brand of his company. His Twitter feed reflects this intermingling with reverent (and irreverent) commentary on his industry, sometimes linking to innovative projects or ideas. Mixed in is that loosely curated, quirky stream of thought inherent in the medium. Sample tweet: a link to someone who’s re-tweeting the entire script for Breakfast at Tiffany’s.

He’s looking for this same fluidity when he’s recruiting staff. “When we interview,” he says, “we’re looking at the relationship that this person has with the Internet, and whether they know the rules and have a desire to break them.” AsThomas Edison put it, “Hell, there are no rules here – we are trying to accomplish something.”

Podcast: Batman Was an Entrepreneur

Sean Wise, venture capitalist, comic book aficionado and author of the book How to be a Business Superhero, talks with contributing editor Greg Hudson about what entrepreneurs can learn from Batman and the Green Lantern.