Dynamic Marketing Communiqué

Building the Human Network: How Cisco helped connect the world [Monday Marketing Marvels]

April 20, 2020

Computer technology is arguably the most impactful innovation of the 20th century.

Over the decades, it has provided people and businesses a new degree of automation and interactivity never experienced before.

To keep up with the rapid pace of technology, new technology companies have been established to develop new systems and innovations.

Among the major developers and innovators of computer technology is Cisco.

Founded in 1981 by Sandy Lerner and Leonard Bosack, Cisco Systems started out as a project at Stanford University, developing a program that connects computers to a single network.

The 1980s and 1990s were an important time in technological development as the internet looked to become a network that can connect people and companies across the world.

Cisco saw its potential, marketing their products and services to people and companies looking to utilize this new technology. At the time, their products and services were innovative and new, giving them an edge over the competition allowing them to lead their market.

By the year 2000, Cisco Systems became one of the most valuable companies in the world, with a market capitalization of USD 500 billion.

Their marketing approach initially focused on promoting their products, highlighting their uses and benefits. By the 2000s, this changed as they marketed to more non-technical consumers. Instead of talking about the product and technology itself, Cisco focused on the benefits that customers could get.

They also made their campaigns more light-hearted and relatable, creating case studies that featured the likes of Santa Claus and the Easter Bunny, and making them more interactive by introducing games and virtual events.

In 2006, the company was renamed into Cisco, and created a marketing campaign that would help them become a household name.

This marketing campaign was called “The Human Network”, and presented ads that show a world connected through mobile and wireless technology. The commercials feature people contacting each other across different parts of the world, browsing through the internet wireless, and the ability to stream media on the go.

While wireless internet was still in its infancy during the first half of the new millennium, Cisco was able to show how it can transform businesses and how people can connect and communicate.

In 2008, the second phase of the campaign, “The Human Network Effect”, was launched. This follow-up campaign emphasized the key points of the previous campaign while focusing on the seven Network Effects, which are:

  • New Collaboration Effect
  • Break Down Barriers Effect
  • Save More, Travel Less Effect
  • Power When You Need It Effect
  • Launch Products Faster Effect
  • Save the Planet Effect
  • Knowledge Is Power Effect

These campaigns were essential to Cisco’s plan to expand its presence globally, as they invested in new technologies in the next few years. This included the Internet of Things, cloud computing, and artificial intelligence.

It was also an early example of digital marketing, something that they would heavily focus on in their subsequent campaigns through the power of social media.

Today, Cisco is now one of the largest network companies in the world, with company campuses located in Asia and Europe. They also continue to acquire a number of technology companies in order to expand and diversify their products and services.

The campaigns also helped the company generate strong net income, reaching USD 5.6 billion in 2007, USD 7.3 billion in 2007, and USD 8.1 billion in 2008.

For a company that helped expand the use of the internet worldwide, Cisco continues to innovate and develop new systems that make connectivity more accessible and effective.

Cisco’s Earning Power: Valens Research vs. As-reported numbers

Cisco makes for a great case study that we come back to regularly. One great reason?

The company has proven itself to be a phenomenal earning power generator.

So, how well has Cisco been growing its business in the past years?

The research doesn’t lie—nor do the results. Earning power (the blue bars) continues to show results much higher than what traditional databases show.

The blue bars in the chart above represent Cisco’s earning power (Uniform Return On Assets). These numbers have been positive, going over 20% 14 times for the past 16 years.

The global ROA average is just 6%

The orange bars are the company’s as-reported financial information. If you relied on these numbers, you won’t see the 26% Uniform ROA (return on assets, a measure of earning power) for 2019. You’d just see the company report less than half of that, at 9% as-reported ROA.

That’s what you’ll see in Yahoo Finance, Google Finance, and most other databases.

The company’s stock price also performed better than the rest of the stock market over the decade, which we can see in the blue line in the chart below. Their returns have been well above the market.

The numbers show that they are doing well and making a profit.

The internet has come a long way from its humble beginnings, becoming a valuable necessity that enables people and businesses to connect to each other across the world.

Cisco’s innovation and growth were essential to this, as they made the internet more accessible and reliable while investing in new technologies that would shape the digital world in the near future.

About The Dynamic Marketing Communiqué’s
“Monday Marketing Marvels”

Too often, industry experts and the marketing press sing the praises of some company’s marketing strategy.

…Only for the audience to later find out that their product was a flop, or worse, that the company went bankrupt.

The true ROI in marketing can’t be separated from the business as a whole.

What good is a marketing case study if one can’t prove that the company’s efforts actually paid off?

At the end of the day, either the entire business is successful or it isn’t. And the role of marketing is always paramount to that success.

Every Monday, we publish a case study that highlights the world’s greatest marketing strategies.

However, the difference between our case studies and the numerous ones out there, is that we will always make certain that the firm really did generate and demonstrate earning power worthy of study in the first place (compliments of Valens Research’s finance group).

By looking at the true earnings of a company, we can now rely on those successful businesses to get tips and insights on what they did right.

We’ll also study the greatest marketing fails and analyze what they did wrong, or what they needed to improve on. We all make our mistakes, but better we learn from others’ mistakes—and earlier, rather than later.

Hope you found this week’s marketing marvel interesting and helpful.

Stay tuned for next week’s Monday Marketing Marvels!

Cheers,

Kyle Yu
Head of Marketing
Valens Dynamic Marketing Capabilities
Powered by Valens Research
www.valens-research.com