Jump-Starting the Motor City

j

a rt i n g t t s p he um

Motor City DETRoIT IS A CITy of ConTRASTS.

A burgeoning downtown business scene is juxtaposed with financial insolvency and urban decay. Marketers are working to help the Motor City regain its mojo by being honest about its challenges and painting its setbacks as opportunities. by christiNe birKNer | Staff Writer

 cbirkner@ama.org Photos by Amy Sacka

30

Marketing news | JulY 2013

AMA_July2013_Final.indd 30

6/25/13 9:57 AM

July 2013 | marketing news

AMA_July2013_Final.indd 31

31

6/25/13 9:57 AM

Municipal economic revival campaigns

call on nearly every skill that a marketer can offer, including brand strategy, marcom and storytelling savvy, social media know-how, and grassroots outreach and customer relationship expertise. Many American cities and states have a tough row to hoe to rejuvenate their business sectors, and to restore confidence in the local, national and international business communities, but arguably none more so than Detroit. Once a thriving center of industry, Detroit has been reduced to a shadow of its former self, saddled with a shrinking population, persistent crime and billions of dollars in debt. Now teams of marketers are working to bring it back.

d Detroit either is on its way to obsolescence, or is in the nascent stages of an urban renaissance, depending on who you talk to.

In 1950, Detroit had nearly 2 million residents and now it has 700,000, with 25% of its population lost between 2000 and 2010.

As residents fled to the suburbs over the past decade, Detroit became the poster city for abandoned buildings, with an estimated 60,000 parcels of vacant land and 78,000 vacant buildings, according to a May 2013 report by Detroit’s state-appointed emergency manager, bankruptcy lawyer Kevyn Orr. Back in 2007, Detroit already was plagued by its declining population and 14.8% unemployment (versus 4.6% nationally), according to the U.S. Bureau of Labor Statistics. Then the Motor City lost more ground when the 2007-2009 recession bankrupted the U.S. auto industry. While the auto industry is recovering—Ford, General Motors and Chrysler all added jobs in early 2013, according to The New York Times—Detroit’s business sector and residents continue to struggle.

In March 2013, Orr began to assess Detroit’s dire financial situation, reporting in May that the city had $17 billion in long-term debt, unsustainable cash flow, a low credit rating, and staffing and equipment constraints in its police and fire departments. Since 2008, Detroit has spent $100 million more per year than it has collected in taxes and other revenue, according to The Wall Street Journal. The city is so financially hard up that when Orr asked for an appraisal of the billion-dollar collection at the Detroit Institute of Arts in May, he sparked rumors that the collection might be sold to cover the city’s debts if it files for bankruptcy. Orr told the Journal that he has no plans to sell the collection and Michigan’s state senate passed a bill on June 11 to protect it from sell-off.

In the midst of the turmoil, a cadre of organizations is working to spark an urban revival. People love a comeback, and that’s

32

what the city’s marketers are banking on. “The brand equity of Detroit has never been stronger,” says Jim Martinez, director of communications at the Detroit Regional Chamber, the city’s chamber of commerce. “People love an underdog, and people love building new things out of challenge and adversity. The Gulf Coast suffered from Hurricane Katrina, and this region suffered an economic tsunami in 2008 and 2009. The rebuilding of that is a challenge that appeals to the American spirit.”

EXECUTIVE TARGETS Brands of all stripes have found that focusing on transparency in their marketing communications helps them connect with customers and build trust, and Detroit is no different. Words like “opportunity” and “challenge” are used often. “It’s the difference between buying a fixer-upper and buying a home that is ready to go,” says Michael Finney, president and CEO of the Michigan Economic Development Corp. (MEDC), a Lansing, Mich.-based public-private partnership that serves as the state’s marketing arm for business, tourism and economic growth. “Our narrative is, ‘You can come to Detroit and make a difference.’ The [hiring of an] emergency manager, to a person who views the glass as halfempty, is a problem. To a person who views the glass as half-full, it’s a huge opportunity for Detroit to fix its true Achilles’ heel: the management of its financial situation. Organizations that understand the nuances of that are responding favorably.”

MEDC currently is working to attract top talent to Detroit’s businesses to help shore up the city’s marketplace, and like many marketers these days, MEDC has its sights set on millennials.

It’s trying to attract young talent to Detroit by appealing to their sense of adventure and interest in humanitarianism.

Through MEDC’s Live Work Detroit program, Michigan’s young

marketing news | July 2013

AMA_July2013_Final.indd 32

6/25/13 9:57 AM

professionals and college students tour downtown Detroit, and are invited to presentations by local business leaders and networking events with Detroit employers who are hiring.

MEDC’s YouTube channel, MIAdvantage, includes interviews with young Detroit-based entrepreneurs. MEDC also provides funding to Challenge Detroit, a nonprofit organization that brings young people to Detroit from all over the country who are paid a modest salary to live, work and perform community service for Detroit-based charities for one or two years. The goal is to get participants to stay in the city, Finney says. “We don’t present a totally favorable picture. We try to show the challenges because part of our pitch is: ‘You can come to Detroit and make a difference. You can go to any other big city in the country and be lost in the crowd, but here you can have an impact in the community, on social issues. You can get involved with the redevelopment of Detroit.’ ” On the B-to-B side, MEDC’s Pure Michigan Business Connect program, launched in 2011, is designed to help Michigan companies grow and expand, connecting small businesses and startups to partner corporations, including Consumers Energy, DTE Energy, Ford, Chrysler and Google. The corporations provide small businesses with free legal, human resources, accounting and Web development services. Finney expects the program to reach $2 billion in B-to-B investment in 2013.

To appeal to business executives looking to open branches in the Detroit area, MEDC created an ad campaign featuring Detroit-based businesses and scientists, engineers and other

“[They] need to be aware that Detroit is open for business. We cite, wherever we can, the facts surrounding investment in the Detroit region: the attractive tax environment, the $9.3 billion of investment over the past five years in downtown Detroit and a workforce bolstered by nationally ranked institutions.”

Benjamin Erulkar, Detroit Regional Chamber business leaders who have moved their businesses to Michigan, all of whom give testimonials about the city and state’s great business environment. The campaign is running in business magazines including Site Selection, Area Development, Business Xpansion Journal, Bloomberg Businessweek, Forbes, Inc., Fast Company and Automotive News in key markets including Atlanta, Dallas, Austin, San Francisco, Washington, New York and Chicago.

The Detroit Regional Chamber also conducts marketing initiatives to raise awareness of the city’s favorable business attributes. The chamber follows a two-pronged strategy: communicating with southeast Michigan business leaders

Detroit has an estimated 60,000 parcels of vacant land and 78,000 vacant buildings, according to a May 2013 report by Detroit’s state-appointed emergency manager, bankruptcy lawyer Kevyn Orr.

July 2013 | marketing news

AMA_July2013_Final.indd 33

33

6/25/13 9:57 AM

through the Detroit Regional Prosperity Campaign, which launched in May 2012 and aims to create a $4 million budget for the 2015-2016 fiscal year to raise the region’s profile through marketing; and speaking to national and global audiences, including site selectors, foreign governments and trade counsels, about the momentum built by the regional campaign. “[They] need to be aware that Detroit is open for business,” says Benjamin Erulkar, senior vice president of economic development at the Detroit Regional Chamber. “We cite, wherever we can, the facts surrounding investment in the Detroit region: the attractive tax environment, the $9.3 billion of investment over the past five years in downtown Detroit and a workforce bolstered by nationally ranked institutions.”

The chamber markets these value propositions through a pamphlet and slideshow used at conferences and meetings with international, national and local leaders called “Detroit: A Region Where Things Get Done.” It includes facts and figures such as the percentage of loft and apartment space rented downtown (97%), and information on the engineering and research talent at Michigan-based universities. “Our message is, ‘If you haven’t been to Detroit in five years, you don’t know Detroit.’ They haven’t seen the dramatic transformation that we’ve seen on a daily basis,” Martinez says.

The chamber also instills local pride by telling Detroit businesses’ success stories on its website and social media pages, and in its eDetroiter e-newsletter and Detroiter magazine, which are distributed to chamber members. “People in Detroit are as hard on themselves as other people are nationally and we need to make sure we don’t get caught in that wave of negativity,” Martinez says. “With what Michigan and Detroit have gone through economically, the well-documented struggles through the recession, one of the key elements in the strategy is to get out there and tell the good story.”

Start Me Up Some of those good stories are happening within Detroit’s burgeoning startup scene. Detroit Venture Partners, a venture capital firm started in 2010, backs early-stage tech startups with the hope of rebuilding Detroit for entrepreneurship and has founded 17 tech startups to date. Detroit Venture Partners markets two main value propositions to potential investors: the city’s lower costs and higher concentration of tech talent.

“You don’t need a Silicon Valley ZIP code to create a great tech company. If we can launch some successful companies here in Detroit, it will not only increase the tax base, but it will create jobs, urban density and hope,” says Josh Linkner, CEO and managing partner at Detroit Venture Partners. “Our cost base is, in some cases, half of what it would be on either coast. If you’re at a startup and you’re looking for a software engineer in Silicon Valley, good luck overpaying for a D-level person. In [Detroit], there are way fewer companies chasing that talent, so you can attract A-level talent at a fraction of the price.”

34

marketing news | July 2013

AMA_July2013_Final.indd 34

6/25/13 9:57 AM

“If we tried to be the ‘Silicon Valley of the Midwest,’ I think that would fall flat. If we’re busy apologizing for the things that we’re not, that would fall flat. In our case, we’re celebrating what we are. We’re celebrating the legacy of grit and determination that Detroit has, the soul that the city has, that it’s cool to be from Detroit again.” joSh lInknER, DETRoIT VEnTURE pARTnERS

JulY 2013 | Marketing news

AMA_July2013_Final.indd 35

35

6/25/13 9:57 AM

Stik, a tech startup and online referral site backed by Detroit Venture Partners that was featured in MEDC’s print ad campaign and on an NBC Nightly News segment on Detroit’s reviving business scene, moved its headquarters from Silicon Valley to Detroit because of the talent available. “In Silicon Valley, there are more companies competing for talent. We could come into this area and hire a lot of great people,” Co-founder Jay Gierak says.

Investment at the local level also has helped his company thrive and could help turn around the city’s economy, Gierak says. “A lot of the marketing started not just with pure marketing press, but with people putting their money where their mouth is and investing in these [companies], both on the public and private side. … The emergency manager [news] gets a lot of attention, but it doesn’t make an impact on day-to-day businesses in the city that are trying to grow.”

Detroit Venture Partners works with other venture firms and attends venture capital conferences around the country to spread that message. A TV commercial, “Opportunity Detroit,” which ran during Major League Baseball’s World Series and featured Detroit native Kid Rock, helps to tell the story, Linkner says.

The ad features construction workers, scientists, artists and tech entrepreneurs in Detroit, with Rock’s voiceover saying: “Opportunity is as much about grit as it is intellect. An explosive hightech corridor located at the intersection of muscle and brains?

You bet. What does opportunity look like? It looks like Detroit.”

Linkner and MEDC are doing a media tour in New York in July

36

to promote the city, and Detroit Venture Partners’ efforts have been covered on CNBC and in The Wall Street Journal.

Linkner’s marketing message attempts to paint a realistic picture of Detroit’s business-friendly attributes, he says. “Authenticity is a huge buzzword in marketing and Detroit’s messaging has that in spades. It’s a great call to action. If we tried to be the ‘Silicon Valley of the Midwest,’ I think that would fall flat. If we’re busy apologizing for the things that we’re not, that would fall flat.

In our case, we’re celebrating what we are. We’re celebrating the legacy of grit and determination that Detroit has, the soul that the city has, that it’s cool to be from Detroit again.

“We’ve got to turn around this story and stop feeding the negativity,” he says. “So much of this is self-inflicted wounds. In Detroit, we ‘catastrophize’ it. We’ve got to put the challenges in perspective with the opportunity and we’ve got to start celebrating the wins.”

Urban Planning Cowboys Marketing the city through success stories is all well and good, but one organization has created a tangible plan to redevelop the city and make it a better place to live and work. In May 2013, after three years of development, a group of business entities, economic developers, urban planning consultants and community activists backed by the city and operating under the name of the Detroit Works Project released a 349-page plan to redevelop Detroit by 2030 called Detroit Future City. The plan calls for

marketing news | July 2013

AMA_July2013_Final.indd 36

6/25/13 9:57 AM

transforming the city’s land use, turning vacant land into parks, reducing and retooling its infrastructure and reallocating investment throughout the city, with the notion that Detroit will not regain its peak population of 2 million but could have a stabilized population of between 600,000 and 800,000 residents by 2030.

Detroit Future City takes a grassroots approach to its marketing, meeting with regional stakeholders, community development corporations, religious leaders, philanthropic institutions and potential donors to communicate the plan’s goals. “We tend not to use the language of ‘marketing,’ but we’ve done numerous large-scale presentations to different groups to talk about what Detroit Future City is broadly recommending and how they can contribute,” says Dan Kinkead, the organization’s director. “We’re looking for everybody with whom we connect to be an ambassador for the project.

“Anytime you deal with a city like Detroit that has suffered from significant decline, there’s a little bit of folklore that’s out there about the circumstances and the reality on the ground. In some ways, we don’t try to counteract negativity at all. We’re not looking to spin anything. It’s true that we have an emergency manager in place and the city is fiscally insolvent. This year, we’re electing a new mayor and we’re not sure what kind of control he or she might have. It’s about not refuting the realities, but recognizing that there’s opportunity for change,” Kinkead says.

However, even some urban planners who worked on Detroit Future City are skeptical about Detroit’s chances for a 2030

comeback. “Even best-case, Detroit Future City is going to take years to see significant results,” says Alan Mallach, nonresident senior fellow and urban planning expert at the Washington-based Brookings Institution, and a team leader on the Detroit Future City project. “The idea is a wonderful one and pursuing it in the long run is absolutely critical. Drifting along is not a strategy.

Detroit’s a mixed bag. It’s also very geographically fragmented.

There are certain parts of the city that have a lot going for them and can be marketed successfully and credibly, but there are a lot that are really tough. There’s demand in downtown and midtown for good, quality housing … so that’s the plus. The big minus is a question mark: It’s what’s going to happen financially and governmentally to the city. There’s not enough money coming in to cover the cost of providing a decent quality of public services and maintaining infrastructure.”

Adds Joseph Schilling, research assistant professor of urban planning at Virginia Polytechnic Institute and State University in Blacksburg, Va., and founding member of the Center for Community Progress, an organization dedicated to converting vacant lots and buildings in U.S. cities: “Not everyone has completely bought into the Detroit Future City vision, but it lays a solid foundation for moving forward. What they’re doing in Detroit is still uncharted waters for most post-industrial cities in the U.S. No one has had a systematic or secret formula to say what happens when a city loses so much population and spirals into urban decline.”

Margaret Dewar, professor of urban and regional planning at the University of Michigan, whose projects address remaking cities following abandonment and strengthening deteriorated neighborhoods, says that for Detroit to fully make a comeback, it needs to focus more on strengthening the blighted neighborhoods that exist between downtown and the suburbs. “One-fourth of the residential structures in Detroit have gone through foreclosure.

It has been a tidal wave that has hit intact neighborhoods, middle-class and working-class neighborhoods that didn’t have a problem with disinvestment before the mid-2000s. People are losing confidence in neighborhoods that were once desirable and unless that stops, Detroit Future City will not be achieved. You can market downtown and midtown as much as you want, but it doesn’t have as much effect on the rest of the neighborhoods. It has to include neighborhoods.”

Can They Call it a Comeback?

Detroit’s comeback attempts over the past 30 years offer an understanding of the city’s assets and challenges, including the competition that it faces with its suburban neighbors, says Brent Ryan, associate professor of urban design and public policy at the Massachusetts Institute of Technology in Cambridge, Mass., and author of Design After Decline: How America Rebuilds Shrinking Cities. “Detroit has a lot of land, they have low prices, they have a good infrastructure and they have a big metro area with a big suburban workforce. [But] Detroit has a lot of competition

July 2013 | marketing news

AMA_July2013_Final.indd 37

37

6/25/13 9:57 AM

“Not everyone has completely bought into the Detroit Future City vision, but it lays a solid foundation for moving forward. What they’re doing in Detroit is still uncharted waters for most post-industrial cities in the U.S. No one has had a systematic or secret formula to say what happens when a city loses so much population and spirals into urban decline.�

Joseph Schilling, Center for Community Progress

38

marketing news | July 2013

AMA_July2013_Final.indd 38

6/25/13 9:57 AM

Chrysler Makes Detroit Cool Again For better or worse, Detroit will forever be linked with the industry that built it. As the city tries to regain its footing, that connection seems to be coming in handy.

Chrysler Group’s “Imported from Detroit” campaign, first introduced in a TV commercial called “Born of Fire” that aired during the 2011 Super Bowl and featured Detroit native Eminem touting the city’s grit, guts and spirit, has been credited with helping to spark the city’s renaissance and raising its “coolness” factor.

“We have a great relationship with the city of Detroit and we will continue to build upon that relationship. Almost three years later, we continue to receive positive e-mails and letters from consumers across the country who grew up in Detroit or are connected to the city in some way,” says Olivier Francois, CMO of Chrysler. Chrysler followed the success of the Eminem spot with “It’s Halftime in America,” an ad for the 2012 Super Bowl narrated

by Clint Eastwood that also heralded Detroit’s resilience in difficult economic times.

“Those were really profound commercials with a profound statement. I’m not the only one who had chills when I saw them,” says Josh Linkner, CEO and managing partner at Detroit Venture Partners, a venture capital firm that backs tech startups in the city. “As a tech entrepreneur, I’d travel the coasts for years and tell people I was from Detroit, and they’d give me this weird sideways look of confusion. When the TV commercials came out, the story

within its own region. It’s a heavily suburbanized city. The great majority of the population lives outside of the city and many of those cities have just as much office or industrial space as Detroit, [with] fewer of the negative externalities” such as crime, he says. “The city needs to market what’s special about Detroit in order to be more competitive.”

While marketing and redevelopment efforts led by the private sector certainly help, leadership from the public sector is a must, Ryan adds. “You have to have a city that says: ‘We are ready to do business. We are ready to cut down on the red tape and make it easy for people to open a business, rehabilitate a building, change a zoning designation’—relatively simple bureaucratic measures that cause a lot of headaches for small businesses.”

Detroit Works Project’s Kinkead is realistic about the challenges. “To accomplish what we need to, it’s going to take more than just one group, more than just Detroit Future City, more than the city government or an individual business leader.

It’s going to take everybody,” he says. “The issues we’re facing are far too significant to get around in any other way.”

really changed. People would say, ‘Wow, you’re from Detroit.’ It immediately became cool to be from Detroit.”

The “Born of Fire” spot received more than 16 million views on YouTube and accounted for 46% of all Chrysler channel views, and the “It’s Halftime in America” spot generated more than 11.5 million views, accounting for 33% of all of Chrysler’s YouTube channel views, according to Francois.

The U.S. auto industry’s comeback post-recession has had a real impact on Michigan jobs, says Michael Finney, president and CEO of the Lansing-based Michigan Economic Development Corp., the state’s marketing arm. “Jobs in the auto sector have a huge multiplying effect, in the range of five or six to one, and the positive multiplier effect is having an impact here to the supplier base for auto-related companies and other industries that rely on the auto industry.”

Jay Gierak, co-founder of Detroit-based tech startup Stik, says that the auto industry’s success is a powerful marketing peg for new businesses in the city. “The automakers supporting the view of Detroit as a cultural icon is valuable because the rest of us can piggyback onto that and tie it into a lot of the success this city has. It’s not an accident that the New York Times and Wall Street Journal are constantly returning to Detroit to write cover stories about what’s bad and what’s good in the city. From a marketing perspective, being in a place that Americans can identify with so quickly and is top of mind no matter what the state of the economy is a really powerful thing.”

Meanwhile, Detroit Venture Partner’s Linkner is hopeful.

“Our city didn’t decay overnight, and it’s not going to be perfect overnight, but we’re in the early innings of an incredible transformation,” he says.

Marketing plans that balance such reality and hope could spark an eventual urban renaissance in Detroit, Ryan says.

“People need to be excited about the good news, but also be pragmatic about what it actually takes to succeed. Getting some small successes on the ground first and building up to something bigger is the way all entrepreneurship starts. Detroit’s really at the beginning of an entrepreneurship cycle. If it gets small successes, maybe it’ll have better news in a few years.” m

•com For more on municipal marketing, check out “The City That Works” at MarketingPower.com/marketingnews. And stay tuned to Marketing News for more on the role that marketing plays in municipal economic revival campaigns.

July 2013 | marketing news

AMA_July2013_Final.indd 39

39

6/25/13 9:57 AM