How Premium Brands Create Demand Without Cutting Their Prices | Tom La Vecchia

exclusivity nowadays is emotional it's not just financial and then what happens is recognition actually increases that desire. Swatch it's a win, it elevates their brand, AP gets them out there inexpensively and people want it even more. A family member mine has a Royal Oak, I asked him right away joking around I said great I'm gonna get mine for four hundred bucks and he left and he goes hey absolutely it's gonna be a few beautiful watch but there's still only one you don't win by following the playbook you win by rewriting it seven hundred episodes deep with the people who actually built something real no theory no fluff no shortcuts this is right about now with Ryan Allford what's up guys welcome right about now on today's episode right about now we're using the rumored AP and swatch collaboration is a live case study into how modern brands strategize and use borrowed attention Tom Lavecki is the founder of X factor media and new theory magazine and he spent years working at the intersection of marketing media sales customer behavior and brand positioning in this conversation it's not just about watches it's about attention exclusivity cultural relevance Tom welcome right about now what's up Tom how you doing great Ryan pleasure to be here hey man good to have you hey the X factor you had me at X factor good name I like it got my attention and more importantly so's all the headlines had been happening lately I know you got a lot of opinions on them we'll get at it where's home today I live in Scotch plains of Jersey that's unique County New Jersey anybody from that area West field Elizabeth area not too far from Newark Airport yeah what is X factor what are we doing X factor media is a full service digital marketing company been around for 12 years we do media marketing etc we own some media properties New Jersey Digest social life lifestyle magazine and then take certain by invite only retainer clients plastic surgery space some other spaces so we do a lot of branding marketing etc but we also do stuff for ourselves as well a lot of guys at marketing companies and it's like well what have you done what we do for ourselves every day and then we try to do it for our clients as well yeah that's the key and that's the difference a lot of times the cobblers is it the cobbler's children having new shoes something like that yeah exactly and always on an interesting the social media agency that has three posts yeah we do social media marketing we our largest account on Instagram has about 162,000 followers engine I just hope everyone's checking out we do all tick-tock on YouTube separate podcast separate property at 104 thousand subs so yeah we we walk the walk because again I did it today if you can't do it how do you do it for the people yeah exactly one thing that may not have been directly what I will talking about with some of the things we're gonna talk about a specific story that thinks interesting with crossover brands and things like that you bring up the fact that you started publications your agency but you started your own distribution for attention I heard local and sort of national concepts that almost sounded like I love to talk about that a little bit because that's pretty fascinating to me and I've experienced that you do it podcasting which is you know the form of media talk to me about what you've done there I'd love to say it started out at some great MBA strategy driven type activity it's just we were doing local media buying for our clients and I was terribly under-impressed small email list not a lot of engagement board engagement etc so I said well wait a second why can we do this ourselves New Jersey Digest actually was an acquisition I acquired it in 2019 it's been around in New Jersey areas super hyper local and Hoboken not a good story but a funny story if you will now it's funny is what the publication late 19 three months later COVID hit all the advertisers dried up but the loan didn't it was literally a local small publication after kind of the readers digest you put your beliefs or your jacket we had a publication which ran an abandoned we said you know what we're digital guys and gals let's go digital let's go Jersey wide and we just struck the right courts and it was home we got a huge amount of readership and we just got to never look back we did maybe one or two prints since but we stuck it digitally since and now we reach about a million half people a month but the idea really was to have an agency own asset that we own don't get me wrong I love our agency clients and were there to increase the revenue and were there to trade time for money and we do it and maximize their return the best we can but it's about equity and ownership and when you own the bricks it makes it a little easier to function as an agency because you have more resources frankly as well yeah it's interesting playing both sides the fence selling the ads coming up with the ads and then owning the distribution point but if you've got the eyeball I mean it doesn't really matter attention's hard these days and it brings up even more things I've been in a marketing business for 25 years and did a lot of local newspaper ads when I started early 2000s that business has kind of gone the way side of digital media but local on hyper local is still it's an interesting and underserved media some markets do it better than others but you've had national media sort of eating all this stuff up but then suddenly the local market's not covered well correct the truth is we're not competing with the other rag down the street we're competing with meta-eds and Google ads for the most part that's what the big money's going at first it was hard to compete but now it's on your media kid as well own distribution is really important we have a really robust email list almost about 500,000 people when you control kind of the channel it's less dependent on meta and Google but seven billion dollar valuation or five billion dollar whatever but maybe higher and then now sold twenty million dollars to it's 130 million but pennies out of dollar yeah by our now and because they relied on meta heavily where we're the opposite we create our own channel don't get me wrong we are a little bit of a hove into Google discovery I don't want to lie about that that probably will never change but we do our best our own destiny and the truth of the matter is if you do a great meta ad you do great Google it very expensive click for it is high and the truth of the matter is although it is local and you have their intent it doesn't mean you get their actual sale versus for us we curate the contents my curate the content you're almost curing the Arnie museum and more than likely you know what people like then you find the right advertiser for that you do that without paying big bucks to meta and Google and wasting a lot of money yeah it's a good point it's very smart that's in the playbook for sure all right twitching gears a little bit I had to ask you a little bit about that Tom just the marketing door came me luxury watches watch clicker myself this would call my attention with AP and swatch this is gonna ease me to Tom I grew up wearing swatch watch as a kid it was like cool and then it wasn't and then now it's cool again like everything else I'm waiting for members only I think I'm still the last member but that's got to come back that comes back I think I got some stuff in the closet somewhere well I had a little bit of a bump I think around the soprano's time yeah swatching AP what's AP thinking are they giving up a luxury position are they just smarter than all of us that's a great leading nowadays you mentioned this luxury today isn't about ownership it's about participation having single versus noise and getting to those younger consumers who want access to these brands before they can afford them is really critical it's a seeding activity as we call them marketing as you know the collaboration at this point allows millions of young people to get involved in AP culture without dropping 5060K and then we're all out right the idea is luxury brands they have to create the aspiration and create their ecosystem before they convert what they're doing is the AP buyer 10 15 years from now it's gonna look at the world oak in an nostalgic fashion when they kind of for the 5060K world oak so this is a tremendous marketing activity and I see it knowing any other way yeah I'm torn on this one I understand the tactic and I agree with fundamentally everything you just said but I sort of toil a little bit with Rolex didn't have to do this 20 years ago 30 years ago and I know the times changed that's probably what we're gonna talk about in social media exchange or is the avenues but sort of that aspiration was driven by how available or can you actually get a hold of it and so if everybody can get a hold of it does it have the same exclusivity does it carry that cash a forward the way that other brands and luxury brands have because just wasn't attainable to get those but you still had athletes and pop culture and musicians and artists and rappers and everyone else that created sort of that bling and doesn't demand desire that's one level for I'm from up more the youth and then now if you kind of make it we'll let it go you got swatz version are we diluting the luxury yeah so that's a great point and again in traditional kind of marketing if you will that would resonate and you and I would be correct if that's our assertion it could be more wrong in the current environment I'll tell you why in terms of segmentation and I'll give it a bit of a hot take and you watch collectors are there ready for you to shoot at me in my opinion at this point Rolex is a premium watch I don't think anybody would disagree however AP is a luxury watch the difference between a Maybach and an S class a Ferrari and a Maserati so in terms of positioning as you know this Rolex is a beautiful watch I have a yacht master I love it K.I. R.I. they kind of got it to the game a little bit of respect a little bit of the panoray a little bit of a bright lane but Rolex 25 years ago was I'm not saying AP's it exists then but that was more the proxy I agree with where you're going with where Rolex sits today I want to go once up for the real quick as in my opinion that why the hype proved the strategy worked so with today's market we just talked about this attention is the most valuable currency signal versus noise right off the bat 11 billion plus views on social media God knows what their earned media value is probably north of a billion no money on media buying swatch stock rose almost 5% confirming that the collaboration not only work was profitable no down only good for swathe and let's report that it may exceed a billion dollars in total sales right now because about sitting upwards between 150 to 300 million but it didn't cheap in the brand I'll tell you why for a sales merchandise porch sells SUVs Rolex has tutor you can segment what they did was and and the sound a little bit like a Gen Z or they democratize the vibe not the grail the kind of made it available they kind of gave you a little bit of a taste the truth of the matter is what prevents you what allows you to buy something why do you buy something that 1956 IBM bands budget authority need and timing the barrier can't be higher for Royal Kp it's the budget the guy or gal that can afford that can still afford that and if they can't they can't because the being the budget is probably the highest-barred entry-world oak aside for availability the people that are gonna own it may want to own it even more now because they have the real deal just imagine for our role something out with Kia and they did a thousand vehicles for 35,000 those thousand vehicles are gonna sell they're gonna sell great for aftermarket but that attention is great you have that Kia Ferrari but I want the real one it's going against everything you and I taught as marketers in the books as experience as agency owners as our own marketers but having the signal versus noise on this and having that level of earned media behind it I think it was a huge win for both brands I had to play the contrary there Tom but I do agree it was brilliant I wanted people to hear both sides of that coin because I could just started this and gone Tom it was brilliant all that but it was because literally you know it takes a different way to see your brand to the youth then maybe it did when the availability of media was so sparse 40 years ago you didn't have to brands didn't have to do this and they also didn't have the opportunity to do it now to be able to do it to plant seed like you said I love the grail the grail didn't change they still want the fifty thousand dollar watch watch now doing this was brilliant for them too it was a no-brainer for them it was more of a risk for AP this got mastered in the sneaker culture and streetwear supreme Nike sneakers drops Travis Scott collab scarcity limited access we sell demand social flex all that stuff the watching industry just caught up and said hey you know what the sneaker culture mastered this a few years ago let's get on that tree exactly and I'm in the trading card shop that I own and trading cards are doing the same thing Travis Scott collaborations other clubs other things some people don't like this term but broad interest is powerful yeah and some people frown upon it because they're arrogant and think they can carry the show themselves but it's okay to share the sunshine that someone else has and bring it over to your side so I always love the right strategic broad interest and I think in this case the media value alone like you talked about is just outrageous yeah and the truth of the matter is doesn't this hurt exclusivity you kind of mentioned that exclusivity nowadays is emotional it's not just financial and then what happens is recognition actually increases that desire swatches a win it elevates their brand AP gets them out there inexpensively and people wanted even more a family member mine has a royale I asked him right away joking around I said great I'm gonna get mine for four hundred bucks and he left and he goes hey absolutely it's gonna be a few beautiful watch but there's still only one royale I have one but in my rush to head out today I was gonna wear it on the show it's had on my dresser I have a couple of them to talk about watches and you being a watch guy this is what bought watch back yeah right when Apple's watches were dead for a while I never wore watch a lot of people didn't wear watches were probably similar age watches kind of had its wrong it refract and then it ran again and then what Apple was Apple creating utility out of it by creating the utility everybody started wearing watches again what happens when we were watches again well I want to wear a better watch than him or her not to go ahead by a better watch but you I want a better watch than you and it recreated at the man and then the scarcity during the pandemic is what drove it to different level but again there's certain watches that participated in that driving ones that didn't for example Rolex one big time you're in COVID two brands that didn't make it at least in terms of the posterior were Panerai and Brightling both nice watches both good watches I would argue Panerai's more of a watch guy watch but neither those participated verse the other skyrocketed in your opinion why is that I think it is most missed about I think Brightling really missed it because I think they were closer to this culture anyway with auto bills and everything else they can lean heavy into this they were sleeping the wheel Panerai I don't know who's running it that was my first watch I'm going to watch that was my first good watch I still love their watches I wish they pushed them a little more they did it a little bit but they barely have touched the surface I think is a miss it's easy to say well why didn't they do something like this when the idea is out there ever good ideas obvious once it's done they've missed the boat I don't have a good rationale because if I was leading their marketing they should have leaned in to being a little more hip and a little more available all these brands can do this without throwing the baby out with the bathwater so to speak you could stay premium or luxury or super luxury just like we're seeing here without giving away some of your core values and things like that but just leaning into because I don't have it excuse for them and I love their watches Brightling completely fell it they're kind of like close to the sun and it's almost like they never turned around to look at it from a segment standpoint I felt that Brightling could have been your entry level premium watch right yeah well we'll house and I don't know if they just thought they were higher than they were I don't know yeah they pooped the bed and then for Panerai I think Panerai for a minute no watch is probably better than I do Panerai was going to be the watch guys watch everybody's gonna walk around the Rolex it's like the guy at the gym guy made work really hard and press the ladies but then it was a guy at the gym who wants to press the ladies and guys because he wants other guys like wow what are you doing what's going on most guys wear the watches for the other guys not the girls we actually I just tell you I do it because I just like to I'm half the married I don't need in person anybody but I know what that culture is because the girls don't even know there's something to be said here about this in my agency life one of our big clients is actually the leading classic surgeon for men he has three centers and he just does men follow the blue ocean strategy 12 years ago why everybody's kind of doing boobs and butts he didn't men which people looked at us we like we had ten heads as it evolved at every dinner party every meeting every everything that they knew what I did would pull me aside and say hey can you get me an appointment I want this this and this thing care and now the guy is killing it you learn just account I could go on and on about it but something to be said here though is men's interests have changed over the years and you know this probably better than I do it's hard to get to men like it's over example we would have run a campaign selling anything to women or selling anything to men men are inherently more expensive to get to so this kind of buttresses the point back to most of the men were going crazy over this for the world pop and they got all that earned media for men which I would probably put a multiply of two X on there is getting to men is even harder than it is a women because it takes change over the years yeah totally agree I think well stated other than kind of like this segment we're talking about men just don't care as much they do some things and so you know the things they do care about but then there's some things that they can drive a Ferrari and have an AP but they could care less what that brand of sweatpants are that's why we name our company X factor because everybody has that X factor as to why they make a decision I make no sense I will wear the same t-shirt from high school but I'll throw $250 on a hand of blackjack it makes sense to me and on the guy spending the money if you're trying to get to guys segmentation is a little harder it is a little more expensive to get the guys but also guys are very simple in terms of decision making it's kind of binary even though it's a little harder it's doable the value believes in systems but if you get fit in with that system or belief they're going to sell to more men the one is observation that I have and I tell people this all the time I still believe there's a purchase funnel even if it's a cycle or whatever this is where playing braining still matters and playing the brand game we still have this short-termism that goes on and I understand it everybody needs to make money and everybody needs to literally make sales today with the marketing they're doing I understand it I own multiple businesses I get it you do it play the brain game and I think for AP especially and I know they made a lot of sales but they still were willing to play the long-term game because not everyone is buying today correct and everybody wants to scoop up the low-hanging fruit but AP played the young guys and girls young people that will buy us 30 years from now and because we're planting the seed we're keeping our brand relevant and they played the long game and it actually ended up winning the short game just the butch is your point right now the 54-year-old guy had a good year maybe an exit has a few bucks discretionary books more than a few bucks if they want a world-look they have the money and this if anything raises cash a short game but then the young guy is 27 years old who can't nearly afford it but once in on the game now has that purchase now or able to get it maybe for 12 hundred bucks on stock X now but now gets that affiliation with the brand so when he's ready to buy when he's 54 not only does he have the money but he now has the nostalgic connection and the funny part is about is not he really have the connection from an nostalgic perspective he's gonna be brand loyalist even before and then one of the things that really made AP pop believe it or not similar to many French brands etc is the rap community rap songs and the younger rap guys although they flex just as much they don't flex about watches anymore they're smart they don't have that Jay-Z out of it to see anymore they don't have maybe an M&M M&M still kind of cool more from nostalgia but in 20 years he's really not going to be so they don't have that seeding maybe from rap that they used to the champagne kind of community if you will asa spades crystal they're in trouble nowadays because less guys drink but watches will not go to style so again makes it another great move yeah I love it Tom this has been fun man talk to me about where people can learn more about everything you guys are doing at X-Factor Media and to get any more of your insights yeah absolutely fun to check us out X-Factor Media Group dot com is a website I have a podcast new theory podcast hopefully I can post you and give your insights to our audience and valuable I think you got a great podcast got a lot of great stuff going but anyway if anybody want to reach out I love the chat is it on a privilege to be here really appreciate it Tom hey guys if you're listening there's a lot of things to take away from some of the strategies Tom talked about what you see from AP whether you're AP a billion dollar brand a thousand dollar brand or whatever lean into ways that aren't always obvious it's not always about the short term you got to play the long term and don't be scared to partner with people and brands and share in that borrowed interest even sometimes when you go left it is right we'll see you next time right about now here's the truth information doesn't change your life execution does so don't just listen to this episode and move on take the idea make the call launch the thing fix the problem build what you keep talking about building for more follow Ryan Ulford on Instagram at Ryan Ulford and watch or listen to every episode at Ryan is right dot com this is right about now now quit waiting go win