Why AI Might Do More For Challenger Brands
How Orange Theory is able to punch above its weight
As AI infiltrates the advertising world, so much of the focus has on on how big brands will be able to flatten organizations, and streamline endless processes that get in the way of speed and innovation.
But then you read about how many large organizations struggle with AI - and how many giant marketers are stuck figuring out where to get started.
Maybe the bigger impact of AI, at least in the near term, is going to be on the other end of the market? Might this technology be less about making giants leaner and quicker, but more about helping level the playing field for ‘challenger brands’ and even smaller players?
That’s been the experience of Empire Portfolio Group, which includes the high-end fitness chain Orangetheory - at least a few years into the AI revolution.
Shiv Gupta, of U of Digital put it this way:
Part of the problem many brand giants are facing, explained Alan Magee, Chief Marketing Officer, Empire Portfolio Group, is that their larger organizations are inking giant enterprise deals with AI tech companies, and the associated products are being foisted upon the marketing departments, whether they are a good fit or not.
“A lot of enterprise tools that were not built for marketing,” said Magee. “Everyone’s business model is so different.”
In Orange Theory’s case, the gym operates 55 studios in 10 states. And while there is some national spending, Magee and his team’s resources have historically gone towards running 55 different regional campaigns, including 55 distinct campaigns on Meta platforms, and so on.
“We were aggregating data from eight different sources, and spending hours a week crunching all this data manually,” he said. In the past, we would have hired tons of agencies and build all that we needed from the ground up.”
To help, the company tapped Passionfruit, a self-described “Marketing-native AI” startup. Now, Orangetheory is able to look at leads driven by various ad vehicles on a hourly basis.
“Originally I tried to do this with ChatGPT, but I couldn’t get to the truth in the data,” said Magee. “With Passionfruit, it took a little while to build, but we were eventually able to say, ‘here’s all the data, here are the questions we need to answer.’ In aprior era, we would have had a data analyst. Now we can look at our media mix and take it to the next level.”
Raffi Salama CEO & Co-Founder at Passionfruit said that he thinks the idea that massive marketing organizations will benefit from AI streamlining operations and (getting rid of tons of people) is an oversold narrative. “I don’t think that’s how it is going to play out,” he said. It’s the smaller brands that will be able compete head to head with the titans in ways they never could before, due to inherent gaps in budgets and resources, he contends.
“CMOs are having to take their destiny into their own hands,” he said.
It’s only one brand of course, but with Orange Theory, the improved efficiencies and effectiveness have been considerable - and not necessarily where the company expected.
“What’s amazing to me is that in marketing, AI is replacing that project management need, instead of an agency with a retainer,” said Magee. “Right now, phase one has been about productivity. My hope is that in phase two, we’ll be able to optimize our CRM, our ad performance, our media mix.”
In his view, the brands that win over time won’t be those that are able to maintain technological advantages - but those with the best creative and products.
“The playing field is starting to level,” he said.