The CMO Interview

Why Fender Is Spending 10% More on Marketing

Senior VP Rich McDonald Riffs on Shifts to Digital, CRM as Brand Boosts

By Published on .

NEW YORK (AdAge.com) -- One could say that in a "perfect" ad world, every marketing chief would take the path of Fender Musical Instruments Corp. Senior VP-Global Marketing Rich McDonald. Before Mr. McDonald ran the marketing operation for Fender he spent a lot of time -- 20-plus years -- with the company's main product as a Fender-endorsed guitarist.

"I was in a band called Morning Star, touring and recording," Mr. McDonald said. "There was also some session work in between, but the bulk was with Morning Star. We made records and toured 300 nights a year. It was like earning a Ph.D. in how to talk to our customers." He still plays in an Alice Cooper tribute band that performs with the man himself at his fundraisers.

Rich McDonald
Rich McDonald
But Mr. McDonald, 51, didn't jump directly from the stage to the C-suite. Much like he did all those years touring the country, he put in his time on the corporate side as well. In his 16 years at Fender, he has worked in a variety of departments including the "parts department," telesales, as a marketing associate, a brand manager for fender Pro Audio and amplifiers, and a brand manager for electric guitars.

Mr. McDonald, who reports to Andy Rossi, Fender's head of sales, customer service and research and development, oversees all advertising, product development, brand management, artist relations, co-branding, music education (K-university programs), communications and PR. Fender spent $28,000 in measured media in 2008, according to TNS Media Intelligence. Mr. McDonald, who recalls being moved at an early age by seeing Ike Turner play a sonic-blue Stratocaster on TV, said he tried to foster a culture that emphasizes the doctrine of, we all work for our customer, "no matter what role you play," he said. "Our vision is to champion the spirit of rock 'n roll throughout the world."

Of course, guitars aren't nearly the necessity that food and clothing are, and given recessionary constraints, the industry has been fighting an uphill battle during the past 12 to 18 months. That's prompted Mr. McDonald and his team to revamp their marketing and communications approach. Still, he believes that slogging through the economic downturn demands a continued marketing spending. "I liken it to the stock market," he said. "You need to spend when it's down, and it will pay dividends during the recovery."

In an interview with Ad Age, Mr. McDonald spoke about the recession's impact on the instrument business, the importance of customer prospecting and how and why the company has shifted its advertising dollars.

Ad Age: How has the recession affected your business, given that guitars and amplifiers are not necessarily an essential item for most Americans?

Mr. McDonald: Our products could be perceived as a luxury or add-on purchase. Overall we are pretty diversified, so we have taken our hits and had our wins. Acoustic guitars have seen nothing but growth, but some of the combo equipment like electric guitars and amplifiers haven't fared as well.

Ad Age: Why the growth in the acoustic-guitar sector?

Mr. McDonald: A lot of it has to do with entry-level price points, but acoustic is the least vulnerable of all the segments we're in. It's not an ensemble instrument, and it's a mainstay for music education and less susceptible to musical styles and trends. Most people don't actually picture themselves playing an electric guitar in a band but rather playing on the beach or at a picnic.

Ad Age: Has the downturn caused you to alter your marketing approach? And if so, how?

Mr. McDonald: Anybody that says these challenging times haven't brought things to a much clearer focus for them is bullshitting you. None of the changes we made were dramatic, but our sensitivities really seemed to have adjusted in this past year. The change hasn't been in our message so much as it's been about how and where we deliver it. We realized right away that we needed to shift our focus away from selling stuff into the distribution channel and start partnering a lot closer with our dealers and distributors worldwide to help them clear and correct their inventory position.

Ad Age: Are you actually spending more or less on marketing these days?

Mr. McDonald: We're spending around 10% more than last year and spending it in different ways. We have shifted away from creative to digital and CRM. We shifted a lot of money into our dealers and distributors to communicating with the end user to help stores generate buzz. And that's involved moving money, people and energy to that point of sale. Your brand can be affected more by the tone of a voice on the phone than a run of double-truck ads.

Ad Age: How hard has it been to get management buy-in on more marketing spending?

Mr. McDonald: It hasn't been that hard. Fender has been shifting toward brand-building, and the more aware the organization has become of the strength of its brand portfolio, the more support we have garnered.

Ad Age: Have you focused your efforts mainly on the avid guitar player or used this as a chance to branch out?

Mr. McDonald: The musical-instrument industry in North America doesn't grow that much, so it's always about the pursuit of new clients. Our partnership with Harmonix for the "Rock Band" game is one way we target customers who might be considering music but are afraid to take that step and learn a musical instrument, and that's part of what keeps the industry at a certain level. But we have increased our partnerships and are working with companies like MTV, Lego, Pepsi, Toyota and Oakley in trying to recruit new customers.

Ad Age: What role is brand advertising playing for Fender in the recession?

Mr. McDonald: It's huge because of the flight-to-brands mentality. But people flee from brands if promises aren't kept. Just because you have a brand doesn't mean you're bulletproof or indestructible, and the second you get arrogant and start to think the brand belongs to something other than itself and the people that are loyal to it is where the pitfalls start.

Ad Age: What type of customer data do you collect, and how does it influence your marketing efforts?

Mr. McDonald: The things most important to us are: What do customers want to know and where do they want to receive it? But we also want to know things like: What's happening out there on the music scene that turns you on? What kind of experience do you want on our sites? What do you want tweeted from us? It's about custom tailoring. If I don't give a shit about golf, don't talk to me about golf. It's about knowing these people and understanding them in an effort to have engaging and interesting dialogue with them. Marketers think they need to sit down and have grandiose schemes they are going to launch on to the consuming public, and it's not about that. It's about rummaging through their closets and finding out what they think is really cool and giving it back to them in the way that they expect it from your brand.

Ad Age: Have you guys introduced any new lower-priced products during the downturn?

Mr. McDonald: We made some price adjustments immediately in response to market dynamics. And we are launching several new products in 2010, but if I told you what they were, I would have to kill you. Or make you listen to elevator jazz.

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