What sunk one of the U.K’s oldest and most well-known brands?
The Blogfather defends marketing and goes after the Thomas Cook top brass who creamed off profits as they sailed the company into the rocks.
It’s often feast or famine with marketing’s reputation; either the c-suite see it as the colouring in department, or someone is preaching it is the answer to all of a company’s woes.
It always adds a melancholic flavour to the week when a long-established, well-loved British brand goes under. And as we’re left with 20,000 people out of work and over 150,000 needing repatriation, we’ve got the usual clueless suspects telling us what we can learn from Thomas Cook’s demise and how marketing (or a lack of it) played its part.
Let’s get something straight, right off the bat; it wasn’t marketing that ruined Thomas Cook. Yet on the flip side, nor was marketing prevalent at the company’s origins either way back in 1841. It’s often feast or famine with marketing’s reputation; either the c-suite see it as the colouring-in department, or someone is preaching it is the answer to all of a company’s woes.
Thomas Cook’s origins are interesting. There was no recognised customer research, market segmentation, targeting and what-not back then. The very first tour was organised by Thomas Cook, a man of religious conviction who began dabbling in away day plans for his fellow followers of the temperance (abstinence from alcohol) movement.
That first jaunt was a rail journey from Leicester to Loughborough before operations quickly expanded beyond trains. A tour to Liverpool, four years later, was booked by 1,200 people and proved so popular that Cook repeated the dose again, for another 800 customers, two weeks later.
And so a brand was born. Rory Sutherland famously talks of luck being important to success (on our podcast, amongst other places). Thomas Cook, as he sat on that first train ride to Loughborough, could not have foreseen the huge success that was to come as a result of a trip born out of altruism. Who could?
But luck was not so much in evidence as Thomas Cook dropped off its perch.
The demise of Thomas Cook was underpinned by awful strategic business decisions, above and beyond any marketing strategy. In 2018, (admittedly, partly caused by the UK’s hottest summer in 45 years), Thomas Cook posted a profit of just £12 million on sales of £9 billion. If we then hold that up alongside the fact that, across the last year, Thomas Cook executives have received £20m in bonuses...shocking. These same execs even had the gall to appeal to the government for taxpayers' money to help bail them out.
It was the huge pile of debt that sunk them - £1.7bn by the end– a debt they had been burdening for a decade. This disabled them from making the investments and changes needed to help the company deal with the issues they were facing.
One of our past podcast guests and friend of the show, JP Hanson, started a Twitter rant thread, tempered with reason and many of these great points, this week.
Take 5 minutes to read it and hit the follow button. It is, as always, an education.
In response to claims of Thomas Cook being not digital enough, JP makes this point:
“Well, sure, but Thomas Cook actually moved its business more and more online as 64% of its bookings were made there (and rising). [And] being the 'first travel agency to use virtual reality' and waxing lyrically about being a 'data driven' brand clearly didn't do wonders either, by the way.”
In wrapping up, he concludes:
“Sure, marketing plays a part, but to claim that a specific part of marketing, or lack thereof, is the sole cause of a large player's downfall, is simplistic at best and selling snake oil at worst. If marketing is to be taken seriously, such crap commentary must stop.”
Say “Thomas Cook” to me, and I immediately think; “Don’t just book it, Thomas Cook it.”
It is or was a great (hugely effective) slogan. It was recognised as an inaugural member of the Advertising Hall of Fame by AdSlogans back in 2000, but Thomas Cook’s treatment of its slogan probably reflects its directionless strategy.
It was created in 1984, put out to pasture in 1993, before being resurrected in 2008. It again got the heave-ho in 2013 as part of an attempt to recover from a 2011 crisis, in favour of something more modern that would attract younger consumers (oh dear).
And, to remember, the execs creamed off £20m across this period to line their pockets. That’s just horrific business sense at best.
It was then, finally, brought back at the end of 2017. At the time, Chris Chalmers, the Marketing Director at Thomas Cook UK, said:
"It's a line we haven't used since 2013, but we're bringing it back. When we tested some lines with customers, asking which ones spoke to our brand goals, they chose 'Don't book it, Thomas Cook it' as the one that really signposted us as one of the most loved and strongest travel plans."
I could have told you that in nineteen nighty fc*king four, boss.
What makes it so good? Rhyme, in a word. Our inaugural podcast guest, Richard Shotton, has written many words on the subject, but to summarise:
“Why is rhyme such a powerful rhetorical technique? There are two main reasons: perceived accuracy and memorability.”
Some marketers dismiss the old, simple ideas, and think a tie-up with Shazam on your ad campaign, or similar is the answer.
Thomas Cook’s marketing investment steadily dropped in its last years. According to Nielsen, its £12m ad spend in 2017 – already 3.5% lower than the year prior – was cut by the same again in 2018, to just £11m. By the end of the first quarter of 2019, a crucial time for travel brands to capture summer bookings, it had spent just £1.3m
And, to remember, the execs creamed off £20m across this period to line their pockets. That’s just horrific business sense at best.
Even here, marketing is not ‘to blame’. Bad strategy permeates from the top. We’re sending a whole lotta love JP Hanson’s way this week, but his ‘unagency’ Rouser’s manifesto talks of strategy hierarchies; Marketing comes under Brand, which comes under Business.
So, the reasons for the collapse, as expected, are numerous and inextricably linked; bad financial management, bad strategy, a weakening industry, competitor movements, economically uncertain times, even the weather (and yes, a bit of bad marketing).
I’ll leave the final words with a man who is in a position to know better than pretty much anyone else; Colin Lewis. Colin is also a future podcast guest of ours, and worked for Thomas Cook for 8 years, in sales and marketing:
“It was not a marketing problem. It was debt caused by bad strategy. Nothing to do with the brand or marketing. The fact that it was around 178 years and was the best known name in travel everywhere will give you a hint.”