Monday, January 31, 2011

The Internet Ad Model Problem

A couple of months ago, Forbes was caught tiptoeing beyond editorial standards when it introduced AdVoice, a sponsored blog that is designed to better monetize Forbes' internet property. In that article, I touched the difficultly of monetizing the advertising model on the internet.
But the root of problem goes deeper. The challenge to monetize internet properties is constantly getting more difficult, resulting in entities like Forbes to experiment with giving advertisers more. Consequently, some entities will walk an ethical tightrope trying to survive online.
Faced with the exact same problem, Facebook is rolling out a new advertising platform that turns a friend "Like" of an advertiser into a paid advertisement on the page. Michael Lazerow, CEO of Buddy Media says "anything that lets brands amplify social action or word-of-mouth is a great thing."

However, as low CPM's and generally poor ad performance might reflect, users would argue that a lot of internet advertising diminishes the overall experience.

A Beefy Rebuttal

Taco Bell has begun firing back. In an effort to correct the critics weighing in on the "taco meat filling" controversy, the fast-food chain is fighting back with a new ad campaign intended to clear up any confusion. David Oven, Taco Bell's Chief Marketing Officer, said that reassuring customers and employees is a top priority for the brand and that "we are telling our customers the truth using only the facts about our food." That supposed truth is that the "seasoned beef" it advertises is really 88 percent beef and 12 percent "secret" concoction of extras. So don't you feel reassured now?

I'd caution Taco Bell that it is entering very dangerous territory. By taking its fight to the court of public opinion, it's taking a major risk. First of all, this move keeps the unflattering story relevant. The safer route is to shrug it off with a memo from the CEO and its lawyers and let the bad news fade away into a blur of trending topics long forgotten. Then the verdict will arrive some day in the future and be a tiny fraction of the initial story. Secondly, in our world without secrets, the branding puffery offers up a challenge to anyone willing to do a little digging to break a bigger and better story. After all, consider how long it took for someone to snap a picture of the ingredients on the package. This gives the muckraking types that much more motivation. Taco Bell should just address it and quickly move on; however, this is difficult to do, especially if the decision makers listen to their egos.

In my opinion, not doing so is already hurting Taco Bell. If the brand is confident enough to take its case to the news, couldn't they have expressed the "truth" in a better way than this? In order to really reassure the public, more factual details are necessary—don't just tell us, show us. But the current damage control campaign is really just more empty words that serve as the company's side of the story. More troubling is that I don't see the clarity in the message; in fact, the ads seem to intentionally obfuscate the contents of the beef. The retort begins by addressing the safety of meat filling, an issue that's not even in question. The ad claims that the beef "is 100 percent USDA inspected, just like the quality beef you would buy in a supermarket" and then addresses the actual issue in question: the meat formula. Eventually, a twisted message is pieced together from the corporate communicators: our beef is 100 percent inspected, all 88 percent of it.

Taco Bell should focus less on reassuring the public about what percentage is actually beef, because claiming that it's 88 percent beef is about as reassuring as watching the taco meat get injected with a caulk gun contraption. If we need reassurance of anything these days, it's that we'll keep getting a meal with the change in our pockets and avoid talking about what part of the taco used to go moo.

Monday, January 24, 2011

MTV's 'Skins' Cuts Too Deep

Advertisers didn't need long look at Skins, MTV's new controversial teen drama, before they decided they had seen enough. Taco Bell was the first brand to flee from the show's firestorm, citing a poor "fit for the brand."

The sponsor exodus continued all week; before the second episode aired last night, General Motors, H&R Block, Wrigley, Subway and Schick all joined Taco Bell in its ad embargo of the show. Even tougher to swallow for MTV, these brands wanted absolutely no part of Skins despite its incredible draw for a cable series debut. Skins opened to 3.26 million viewers and set a network record for volume of its core 12-34 demographic for a debut. Naturally, this caught the eye of the Parents Television Council and they're understandably worried.

Although, I believe the fear surrounding Skins is a bit misplaced. Rather than trying to convince the advertisers to that they're somehow taking a moral highroad by shunning Skins' unholy suggestive content in an effort to get the show pulled from television, perhaps they should be more concerned with fixing the real problems. Skins' drug and sexuality laced plot is popular with pre-teens, teens and young adults because it is actually relevant to them in some ways, even if not the sensationalized way depicted to create an interesting program. That's why people should be fearful. It's a reality that remains even if Skins does not; some teens will have to face similar issues and choices as the characters on the show.

I'd argue that we cannot protect them from this. It's parental instinct to protect your kids, no matter what age they are. However, the Skins demo has reached or is close to an age where they can no longer be protected from all the harsh realities of the world. Furthermore, protecting children from a television show may be a bit irrational. It's especially futile once network executives discover an audience of 3.26 million young consumers. They can get over looking like jerks to keep their jobs.

More effective at this point is the parental instinct to educate. This means educating the 'Skins crowd' on separating the dramas from the scripted realities from the actual reality and that making the right choice in the latter is the only one that counts for anything.

Parents will certainly shoulder the brunt of this responsibility. But their is a great opportunity for a few responsible advertisers looking to promote brands that do "fit" with the themes of the show. A major brewer like Anheuser-Busch or MillerCoors or spirits company like Diageo could use it as a forum to promote designated driving or campaign against binge drinking on college campuses. Condom manufacturers could promote safe sex. The message of an organizations like Planned Parenthood or The Partnership for a Drug Free America also fit with the themes of the show. I'd like to see them go further than just buying spots too. The advertising could easily tie in with the programming, like BMW did with Mad Men, to not only serve as a commercial break but also a necessary reality check.

What do you think MTV should do? What other options do they have? Comment by clicking on the link below. I look forward to reading them.

H&R's Free Tax Prep A Bad Idea

This tax season, H&R Block has a bold new marketing strategy to reverse the downward trend in store traffic. Its strategy is to give its tax preparation services away for free. For 30 days ending on February 15, all the early-bird filers will get their taxes done for free.

Well, not exactly "all." The free tax preparation is only for customers filing the 1040EZ federal form, which only covers approximately 16 percent of H&R Block's customers. The basic tax form is not an option for customers with slightly more complicated finances, such as customers who claim dependents, who make over $100,000 per year, are 65 or older, have income adjustments from things like alimony or tuition, or customers who itemize their deductions. Also excluded from the promotion are state income tax filings, which are required in 43 of the 50 states.

The flaw in this strategy is obvious: they're making big promises to prospects in advertising that they know they won't keep. As H&R Block Retail Tax President Phil Mazzini said to analysts recently, "our ability to monetize this program means a minimal impact on our net average charge." The problem is that their customers will get to the store and feel they've been lied to. Yet, unlike the sneaky fees the company has made its living on in the past, such as the sky-high annualized interest rates that were paid on instant cash refund anticipation loans, this lie will be much more obvious. Amy McAnarney, H&R Block's senior vice-president for tax operations, is correct when she says that "'free' can be a very powerful word."

Every marketer knows that it certainly can be. "Free" jumps off the page and people remember it. Unfortunately, they will also remember when something was supposed to be free and wasn't. According to McAnarney, this promotion "was received very well" last year when it was tested in the Miami, New Orleans, and Atlanta markets.

Truly knowing that would require a second year of testing. However, I think the shoddy tactic of dangling the word "free" to get people in the door and then pulling a fast one on them has actually been tested enough. A marketing failure in the making, H&R Block is about to learn just how powerful "free" can be.

This post also appeared on Talent Zoo's Beneath the Brand blog.

Friday, January 21, 2011

A Better Buzz

A social media strategy should not be intended to get people to discuss the strategy. If the conversation becomes about how great of a marketing campaign it is, it's a sure fire failure.

A better use of social media tools is to lead a community of people dedicated to something real. Not just chatter.

Thursday, January 13, 2011

"More Car Than Electric"

Electric cars have become all the rage at the 2011 gathering of the Detroit Auto Show. After the Chevrolet Volt was bestowed the honor of 2011's North American Car of the Year award on the convention's opening day, the car's hype surged from zero to 60. The Volt beat out electric rival Nissan Leaf and the Hyundai Sonata. Feeling honored, GM Chief Executive Dan Akerson said that "since development began, we believed the Volt had the potential to transform the automotive industry."

While electric cars may not be the final answer to be saved from petroleum usage, the electric car category certainly looks like it has potential. It's easy to remember the harsh economic reality of paying more than $4 per gallon for gasoline less than three years ago and American motorists reacting by seeking out alternative options like hybrid vehicles or even (gasp!) bicycles.

Assuming the "gas goes up/people seek alternative options" formula still applies, the question becomes: which car brand(s) can build an eco-friendly reputation and realize the categories' full potential?

Winning the 2011 North American Car of the Year would indicate that Chevy has gained the upper hand in this race. Unfortunately, I worry that Chevy might be playing the wrong game. They may have built the better product, but they haven't built the perception of being a leader in this car category.

The Chevrolet brand name is a major problem. Chevrolet stands out in the mind as a classic American brand. In its heyday, they built big steel cars that looked great and endlessly chugged gasoline. In fact, not even two years ago Chevy was running an awesome billboard campaign to reinforce this perception for a powerful and classically American car. Yet now the consumer is supposed to associate Chevy with a small car that can sip gas ever so slightly and still be great.

I doubt that that will happen, especially with the Volt's current positioning strategy: "More Car Than Electric." That positioning hardly screams out "Chevy is a small, fuel-efficient car." Instead, Chevy is attempting the impossible task of fighting deep-rooted perceptions, specifically that small (and electric) cars are not powerful. For consumers, small and powerful are conflicting qualities in a car. Any consumer making judgments on vehicle horsepower or toughness will make a strong determination without even hearing so much as the sound of an engine. A simple eyeball test will tell them that a Chevy Volt is not "more car" than the significantly larger vehicle it's parked next to. Trying to convince the American consumers otherwise is an exercise in futility.

Instead, the Volt's positioning strategy should convey the principle reason for owning the car: the substantial cost savings that accrue with long-term ownership. That's what the Volt does best, and the reason someone would buy one—not a smooth, quiet ride, a luxurious interior, a spacious cabin and trunk, turbo speeds, or superb handling.

The best part is this position strategy can be proven with fact. Picture an ad that compares the yearly fuel costs between a Chevy Volt owner with a high MPG and the owner of another car. They both drive 15,000 miles and fill up at $3.50 per gallon. Then $3.75. Then $4.00. Then $5.00. I think that would convince some folks.

Still, there are a lot of people who are already convinced; they consider the cost efficiency of their car a priority. And I think it's a safe assumption that this population will steadily grow along with the price of oil. The Chevy Volt was made for these people; it's just too bad it's not marketed to them.

This post also appeared on Talent Zoo Media's Beneath the Brand blog.

Special Extra Credit Reading: Branding Strategist Jonathan Salem Baskin discusses the flimsy social media tactics electric car marketers are using to get the new category off the ground. Very insightful and I highly recommend reading all of Mr. Baskin's branding insights.

Monday, January 10, 2011

Misconceptions of Social Media

There are a lot of misconceptions surrounding the tools of social media and how they are best utilized in marketing.

It's about creating content- The adoption of social media tools has caused a lot of marketers to abandon what once worked very well, when they thought all they were doing was advertising. Curiously, popular opinion has decided that if it's going to be social, then it must be for entertainment purposes. I can see how one could easily believe this when videos of crazy cats accumulate 46 million views. Entertaining content is just that. It does little for brands to differentiate themselves and it's neither useful, relevant or persuasive. And trying to be entertaining when when you're not an entertainer can ugly. Even with "free" social tools, the goal of marketing should still be communicating the real differences between your product or service and the competition.

Done right, results come fast- When a homeless man in Ohio can captivate the world in a matter of hours, it's safe to say that word travels the through the internet fast. Unfortunately, this buzz dries up as fast as its created. Achieving sustained results from a social media effort is a slower yet more reliable process. Where word of mouth is "tell-a-friend to tell-a-friend," social media is "tell all your friends at once," so it's easy to assume that social media results are accelerated and amplified. The pitfall of this logic is that our social networks are homogeneous, all comprised of similarly like minded friends who we share a strong bond with. Consider your knowledge of those in your own social networks. Do you consider them all to be credible sources of information for all your purchase decisions? Not me.

The recommendation of a trusted Facebook friend can certainly open the door to the mind; but the brand must be credible on its own. Gaining this credibility is not something that happens in the time it takes to click a computer mouse. It's an ongoing process.

It helps brand transparency- Transparency is definitely a part of the social media equation- for the consumer. Marketers now have the keys to a brand new treasure chest of personal information about consumers. A little transparency on their end is a happy trade off.

Even still, I question that this happening. For the brands who began using social media out of fear, I question whether their purpose is to progress a conversation or to filter it. Surely, brands that simply chime in and add an amendment conversations taking place about them are hardly improving transparency, even if it's in the spirit of correcting misinformation.

There must be constant contact- It's important to remember that just because consumers give a brand permission to their newsfeeds, it doesn't mean they should camp there. This is particularly important if your brand has nothing meaningful to say. It's important that your brand understand the difference between helping fans and followers be being better informed as opposed to making them more informed.

Measurements of Social Media- Too many assume that measuring social media is like everything else; the ultimate judgment will be a number or combination of numbers. Just remember that cat video. Simply looking at the total views, number of clicks, the times your message was forwarded or retweeted doesn't determine the real impact of the message. Remember the cat video. The real measurement will be conversations taking place. After all, a brand is nothing more than what a consumer thinks it is. Marketing is about shaping that perception.

What do you think? What to you agree with or disagree with? Perspective you want to add is always welcome in the comments section below.

Thursday, January 6, 2011

Starbucks Losing Its Way (Again)

For those who get their morning cup at Starbucks, you will discover a few changes this spring.

In anticipation of those changes, Starbucks did some adjusting to its well established siren logo. The new version dropped the company name from the outer ring of the logo so all that remains is the circular siren in a new shade of light green.

As is customary with logo changes today, the feedback poured in instantly online. And as is expected with consumers dealing with change, it was greeted with an overall tone of displeasure. A Starbucks loyalist called out the logo and its creators in the "boneheaded marketing department." On Twitter, the change was attributed more to the company's arrogance, not ignorance. Other critics called the video attacked the video for being creepy. Meanwhile, the opinions of marketing professionals seem a bit more reserved.

To their credit, Starbucks appeared ready for all of it, perhaps learning from the missteps taken by Pepsi Cola, Tropicana and The Gap in their logo redesigns. The new designs were announced via a webcast and included reasons for the change from Chief Executive Howard Schultz. Its their reasoning for the logo change that the real marketing story exists.

In the webcast, Schultz explains that dropping the word coffee from logo was to represent the brands' ability to "think beyond coffee" in the future. In a blog post, Schultz explains that "Starbucks will continue to offer the highest-quality coffee, but we will offer other products as well." Starbucks is no longer satisfied with being the undisputed leader in the premium coffee category.

None of this is really all that surprising however. Starbucks has been testing their "other products as well" strategy in a Seattle location for the past couple months. This test location more resembles a small neighborhood coffee shop in its look at feel as well as its products. In addition to serving coffee, this Starbucks serves more items typically served in the evening, such as sandwiches, micro brews and wine. Obviously, Starbucks is hoping to draw a larger crowd at night when its stores are quieter. The problem is Starbucks is not perceived as a nighttime spot [dropping the word coffee from the logo won't it one either]. It's perceived as an A.M. destination and their sales figures reflect this fact; 70 percent of its sales are generated before mid afternoon. However, judging from their actions recently, this is a sacrifice that they're no longer going to make.

The problem is that sacrifice is fundamental to successful branding; brands simply cannot exist in the mind as jacks of all trades. Oddly enough, Schultz and Starbucks understood this not too long ago. Upon returning to the company in January of 2008, Schultz devised and led a plan to bring the struggling company back. His plan, outlined in a March 2008 USA Today article titled "Starbucks Going Back To The Bean," was to refocus on the brands' core product: a cup of coffee. In the article, Schultz vowed that consumers "won't be able to find a fresher cup on the planet." And to make good on his promise, Starbucks ditched the presealed coffee grounds and returned to grinding the beans fresh in the store.

Additionally, they closed stores and eliminated products that didn't quite fit with their core of coffee. One product that was eliminated was the breakfast sandwiches. On the surface, a breakfast sandwich makes perfect sense for a coffee shop. Yet in reality, it proved a terrible match. Instead of fattening their margins, they slowed down the line and kill the fresh coffee aroma.

This "relentless focus" is what brought the company back. Unfortunately, Starbucks is once again veering off into a directionless path.

Individually the pieces may seem to fit but try to put the puzzle together and it doesn't fit. More food items, beer and wine, along with coffee, espresso and lattes. The illogical "high end instant" brand Via and Seattle's Best to cannibalize its core coffee brand. Expert at retail yet declaring an all out war to become a distributor of its product. Put the pieces together and it's suddenly very easy to see that Starbucks has lost its way.

Tuesday, January 4, 2011

Brands Battle For Second Place

In the brand wars there is only one winner and it's typically very easy to predict who that will be. With very few exceptions, the brand that claims the title of "category king" is the one who invented it. Despite this fact, many marketers never give up on their overthrow attempts of the king.

So, when I open Brandweek and read this, "surprise" was hardly my reaction. The headline says it all: "Sears Intros Netflix-Like Service." The retail dinosaur will be partnering with Sonic Solutions to deliver movie downloads to Sears and Kmart customers on a "growing network of devices;" however, the popular iPod is not yet one of them. The new offering from Sears will be called "Alphaline Entertainment." Thankfully, the extension wasn't called Searsflix. Still, the new brand is obviously a copycat of Netfilx and won't do much to fix the struggling retailer. Copycats simply don't become king. And this is especially true when they are not even the first to copy the leader; Walmart and Best Buy introduced movie downloading services before Sears.

However, a lack of focus is not just reserved for struggling brands. Thanks to Apple's iPad, others are rushing (back) into the tablet computer category. Samsung is currently touting its iPad clone, the Galaxy Tab, even though the company leads the flat-panel television category. An obvious copycat, perhaps the tagline should be "it's exactly the same but without the Apple name." Further, they're doing this at a time when their flat panel leadership position is less than secure, as number two Vizio is not far behind. Meanwhile, despite all its successes, even Apple cannot keep itself from trying to establish itself in the flat-panel market.

Will marketers ever stop creating copycat brands. Of course not. But I hope they remember Coca-Cola's iconic "It's the Real Thing" campaign and understand why it was so effective: a copycat inherently implies "second best."

Growing up, I hated owning copycat brands. I had Matchbox cars instead of Hot Wheels, Mega Bloks instead of Lego's and a Pro Player jacket, not a Starter. What copycats and generics do you remember having as a child or possibly still enjoy today? Portions of this post appeared on Talent Zoo Media's Beneath the Brand blog.