Arrow Electronics & Marketing As A Business Model

The following is an excerpt from my upcoming book with Joe Pulizzi, Killing Marketing – which will be published by McGraw Hill in September of this year.

What if we looked at marketing as a business model, rather than as a functional cost center?

In Experiences the 7th Era of Marketing, Carla and I told the story of Kathy Button Bell and her role as chief marketing officer for Emerson. She kicked off her position with a massive rebranding effort.  Certainly that’s not that different. But then as we note in the book she spent the next ten years instilling the editorial “story” of Emerson as the launching point for every other marketing and sales touchpoint. She instilled a culture of storytelling in the organization as the foundation through which every other effort would emerge. In short, instead of trying to position marketing as the department that described the value of Emerson products and services, she created an entire strategy of one that creates value for customer audiences wherever they may be.

As we note in the book:

“Button Bell and her team have cultivated a brand story that resonates with businesses around the world and infiltrates every niche of the brand – from research and development to human resources and new business models. Emerson’s “Consider It Solved” story centers on reducing complexity and how the company solves people’s problems. Every story the company tells and every activity they take part in stems from the “Consider it Solved” story.”[i]

But what if we took it one step further?

What if we not only killed the marketing we know today as the department that maximizes reach and frequency of our message and simply describes the value of our product and service, but transformed some part of our marketing into a revenue center? What if we could create a marketing function that creates so much value for audiences and consumers that it actually begins to pay for itself? What if it actually paid for itself so much, that it started to actually make more money than it spent?

What if marketers did marketing at a profit?

One of the stories that you’ll hear more about in our upcoming book is Victor Gao. The company he works for, Arrow Electronics, is number 119 on the Fortune 500, has more than $24 billion in annual revenue and has been a leader in the industry for more than 80 years.

Over the last two years, Arrow Electronics has watched as electronics publications that they heavily advertise in struggle. And for their customers, electrical engineers, these publications were not only how they kept up with what was going on in the industry – it’s how kids became enamored and inspired to actually become electrical engineers.  These publications are, quite literally, the lifeline for increasing the knowledge and population size of the Arrow Electronics customer base.

Arrow seized this opportunity. They saw the tremendous need to serve engineers. Where the big media conglomerates couldn’t afford to digitize small circulation print magazines, Arrow could.  Where the success of niche oriented publications weren’t in the interest of the media parent companies, it was directly linked to Arrow’s success.

Over the last two years, Arrow Electronics has established itself as the largest media company in Electronics. In February of 2015, Arrow purchased 16 engineering web sites, e-newsletters, inventory access tools and databases from Hearst’s United Technical Publications. One year later, the company acquired the entire electronics media portfolio of UBM, including the brands EE Times, EDN, SEM, Embedded, EBN, TechOnline and for $23.5 million.

The new content and marketing portfolio for Arrow Electronics sells advertising to competitors, and partners, holds events – and develops educational content for electronics professionals. And the effort is 100% on developing value for the consumer.

Arrow is playing the long game here. By transforming a part of their marketing into an editorially led strategy, they are doing more than just focusing on describing the value of Arrow’s products. Gao said it best in our interview:

“We think about the brightest, most talented kids. When we think about who we’re competing with there – it’s not our competitors. We compete with management consulting, or fashion, or other career choices these kids may have. So, the more of those bright young kids that we can attract to the electronics industry, at some point they will become customers to our industry. And we are supremely confident in our ability to grab our fair share of the market – as long as it keeps growing. So, our job, with this part of our marketing – is to make sure that the underlying market keeps growing. And we can make money doing exactly that.”

Arrow Electronics and Victor Gao is one in an early group of innovators who are completely re-defining how marketing markets.  As I’ve said before – this isn’t about changing what Peter Drucker said was the businesses main goal: “ to create and keep a customer.” It is, ironically, staying more true to exactly what Drucker meant.

Killing the marketing we know, and replacing it with something entirely new may, quite frankly, be the only way to save the practice that we so love.


Author: Robert Rose
As the Chief Strategy Officer of The Content Advisory, the exclusive education and consulting group of The Content Marketing Institute, Robert develops content and customer experience strategies for large enterprises such as The Bill and Melinda Gates Foundation, Oracle, McCormick Spices, Capital One, and UPS. Robert’s book, Experiences: The 7th Era of Marketing was called “a call to arms and a self-help guide for creating the experiences that consumers will fall in love with.” For the last three years, he’s co-hosted the podcast This Old Marketing, with Joe Pulizzi. It’s frequently a top 20 marketing podcast on iTunes and is downloaded more than a million times every year, in 100 countries around the world.