“Fundamental Shifts in the U.S. Media and Advertising Industries” – a report from the New Politics Institute.
• Extensive audience migration across and within media formats is driving major shifts in advertising spending, benefiting formats with targeting ability
• Advertisers are shifting ad dollars to digital media slower than they should given the cost and effectiveness of digital media
• The most innovative advertisers will utilize sophisticated direct marketing techniques (e.g., segmentation, targeting, etc.) and will adjust the digital marketing vehicle mix for each customer category
• Effectively creating “at scale” digital campaigns and integrating them into traditional marketing requires direct marketing skills that traditional marketers, particularly brand marketers, often lack
• Commercial advertisers are rapidly shifting dollars to internet advertising, in particular internet video, and are aggressively experimenting with new formats such as wireless and videogame advertising
Here’s the best executive interview I’ve read in a long time. It took place back in 2003, but it reminds us why Southwest Airlines has succeeded where so many others have failed.
A few excerpts:
“We’ve never tried to lecture other companies as to how they should behave, what kind of environment they should try to create, because there are a hundred roads to Rome and you can get to Rome by any one of those roads. But our focus has always been on the well-being and the joy that we want our people to experience.
“I just always have felt that people should be natural in their behavior, that they should be able to derive enjoyment from whatever they do. When they derive enjoyment they tend to work together better, they tend to be more productive. One time a ramp agent wrote me, he said, Herb, I’ve caught on to what you’re doing, you’re making work fun – and home is work. Now, I’ve never repeated that to anybody because I thought that wouldn’t make me very popular in certain quarters but he did get it. And you know I don’t think that in order for people to be effective they have to act like automatons.
“We don’t hire a great many people in management positions from other airlines, but we have hired some over the years where we felt that the expertise was required as we grew. And it’s interesting to see their response because they get into the Southwest environment and for awhile they are like a new dog in town, just kind of sniffing around, because they want to see if this is legitimate, whether it’s genuine, whether it’s heartfelt. And after about six months, I would say, you get either one of two reactions: they feel liberated for the first time in their business lives and they say, “Hey, this is for real. I can say what I want to. I can joke. I can be friendly with people.” Or in some cases they say, “This makes me feel very insecure, the fluidity of it is daunting to me. I need a more structured environment than Southwest Airlines has in order for me to be comfortable.”
“one of the things that I want to tell you with respect to a mission statement is that a lot of people hire outside people to prepare their mission statements. My suggestion is that if you need someone outside your company to prepare a mission statement for you, then you really don’t know what your mission is and you probably don’t have one.
“the thing about it is that a group got together and said, We want to define spirit. And I said, I don’t think you want to do that. Because Wordsworth said, “It’s murder to dissect.” And I think it’s murder to dissect to take a concept like that and make it too narrow and make it confining and a strait jacket instead of as expansive as anybody wants it to be. So we’re not going to define it. As long as it’s a positive attitude, that’s the Southwest Airlines spirit. Don’t chain it. Don’t put it in jail.
“we’ve said we’re in the customer service business and we happen to operate an airline. But then any business is about providing great customer service to the people you serve. We just happen to be in one branch of the customer service business. And if you have a great customer service organization it doesn’t matter whether you’re flying people or selling steel or cleaning houses or whatever it might be.
“when we built this building I said give me an interior office because fundamentally bureaucrats scrap over space, which in and of itself I think should be somewhat meaningless, physical space. It’s the space between your ears that should be the important thing. So I did say, I want an office without a window, away from a corner.
Read the complete interview here.
We should all be so lucky to work with a leader like this!
Sears, Roebuck and Co. this week launched what it is calling its first fully integrated campaign in years. The effort, “Wish Big,” includes television and print advertising, event marketing, in-store signage and cross-promotion activities, in-mall advertising, direct mail, online programs and public relations. [in Brandweek]
Maybe they need to just work on their strategy. Here’s what a recent article in the Chicago Sun Times had to say about that:
A Wall Street analyst gave voice Monday to rumors that Sears’ ballyhooed strategy of building new stand-alone stores is in trouble.
Sears is counting on its newest store, Sears Essentials, to compete with big-box rivals such as Target, Kohl’s and Wal-Mart, while also selling refrigerators, treadmills, lawn mowers and patio furniture.
Sears has denied reports that it is slowing or halting its plans to convert 400 Kmart stores into Sears Essentials stores within three years — at a cost of about $3.5 million per store. But Sears hasn’t yet announced how many Sears Essentials stores it will open in 2006.
Furthermore, two top Sears executives integral to the strategy have left or are leaving the Hoffman Estates-based retailer, Gregory Melich, an analyst at Morgan Stanley & Co., said in a note to investors Monday.
Catherine David, a former Target executive that Sears named to oversee Sears Essentials and two other stand-alone stores, left the retailer in September.
Sears hired David in July 2004 to turn around the struggling Great Indoors home-decor chain, which Sears had downsized a year earlier to 17 stores.
Sears also is losing Luis Padilla, another former Target executive and a merchandising whiz credited with putting the “chic” in Target’s “cheap chic” reputation. Padilla is leaving at month’s end, following Sears Chairman Edward S. Lampert’s decision to install his own top strategists.
Furthermore, Sears is investing less than its retail rivals in its stand-alone stores, and has cut its advertising by more than 40 percent, Melich wrote.
More than 50 percent of Sears Essentials stores are within five miles of a Target, a Lowe’s or a Home Depot, giving them tough conditions under which to compete, he said.
Other analysts have questioned the Sears Essentials format as unfocused and underwhelming.
“The store seems a hodgepodge of everything, and there’s no clear message to consumers about what to expect,” said Kim Picciola at Chicago-based Morningstar.
Maybe they need to outsource their management…
I must say I loved this ad from Sun. It’s actually fairly brilliant because it:
1) states Sun’s case in a humorous way,
2) highlights the different strategies the two companies are allegedly pursuing (innovation=Sun, low-cost=Dell),
3) beats Dell at its own game- price,
4) has an environmental angle,
5) tells us about the best server in the world!
6) trumpets open source messaging via Solaris…
I could go on and on.
Lucky for Sun that the NYT refused to print the ad, giving it even more buzz… All the news that’s fit to print, eh? They can print Judy Miller, but not an ad?
Well, the ad is on Jonathan Schwartz’s blog– which gives it that much more authenticity!
One more thing- will design and innovation rule the future of global competition? Sun thinks so.
I do too.
When we express a preference for French holidays, German cars or Italian opera, when we instinctively trust the policies of the Swedish government, comment on the ambition of the Japanese, the bluntness of the Americans or the courtesy of the British, when we avoid investing in Russia, favor Turkey’s entry into Europe or admire the heritage of China and India, we are responding to brand images in exactly the same way as when we’re shopping for clothing or food. But these are far bigger brands than Nike or Nestlé. They are the brands of nations.
Nation brand is an important concept in today’s world. Globalization means that countries compete with each other for the attention, respect and trust of investors, tourists, consumers, donors, immigrants, the media, and the governments of other nations: so a powerful and positive nation brand provides a crucial competitive advantage. It is essential for countries to understand how they are seen by publics around the world; how their achievements and failures, their assets and their liabilities, their people and their products are reflected in their brand image.
Simon Anholt has developed the Anholt-GMI Nation Brands Index – the first analytical ranking of the world’s nation brands. This report: Nation Brands Index – Q3 Report, 2005 tells us how nations view each other. Good stuff.
But even more critical, perhaps, is Anholt’s book: Brand America: The Mother of All Brands.
Here’s how the book is advertised on Anholt’s website:
Q: When is a country like a brand?
A: When it’s the United States of America.
America is more than just a country: it’s the biggest brand in history. Launched as a global brand, managed like a global brand and advertised like a global brand since the Declaration of Independence, America has deliberately marketed itself – as well as its products and culture – with skill, determination and sheer, hardnosed salesmanship.
But today, it’s a brand in trouble. Brand America shows, for the first time in print, how the world’s most successful brand grew to greatness, how close it now is to throwing it all away, and how it might win back those disillusioned ‘consumers’.
For anybody who has ever wondered what was the secret behind America’s greatness, and what happens next to the world’s sole superpower, Brand America is essential reading.
It’ll change your mind about brands, about countries and about America for ever.
Here’s what Phil Kotler had to say about the book:
“Anholt and Hildreth are to be congratulated for raising the issue of why Brand America is suffering a strong decline around the world. They trace American history, the values of Brand America and the growth of anti-Americanism, and offer stimulating suggestions for how to repair our broken image.”
Read it. That’s Brand America: The Mother of All Brands.
Most companies assume they’re giving customers what they want. Usually, they’re kidding themselves. When Bain & Company recently surveyed 362 firms, they found that 80% believe they deliver a “superior experience” to customers. But when they asked the firms’ customers, they found that only 8% are really delivering.
Talk about delusion. Why this huge discrepancy?
The folks at Bain found two reasons for the gap:
“The first is a basic paradox: Most growth initiatives damage the most important source of sustainable, profitable growth-a loyal customer franchise. To increase revenue and profits, businesses do things like raising transaction fees that end up alienating their core customers. Efforts to pursue new customers compound the problem, distracting management from serving the core.
“The second is that good relationships are hard to build. It’s extremely difficult to understand what people really want, keep your promises and maintain a dialogue to ensure you meet customers’ changing needs. Even initiatives to “better understand” customers can backfire, drowning firms in a sea of data.”
I’ll give you the third reason: management confuses actions and activity with outcomes. Just because you have a customer feedback program in place, doesn’t mean it’s effective. The appearance of virtue is not virtue.
More from the report: “Even initiatives to “better understand” customers typically backfire. A company can get so engrossed in collecting and sifting through data on patterns of use, retention, purchases and other transactions that buyers become numbers rather than people, segments rather than individuals. Companies become deaf to the real voices of real customers.” [emphasis added]
Download the report here.
For every automobile, and maybe every product, there’s a threshold beyond which your ad budget is wasted.
That’s the premise of this startlingly clear analysis from Evan Hirsh and Mark Schweizer from Booz Allen Hamilton’s Cleveland office. They ask:
“…What if there was an optimal level of advertising spend for any given product — beyond which the money was completely wasted?”
“Economists often speak of “price elasticity”: When prices rise or fall, consumers respond by changing their purchase strategies. That is why price increases do not automatically lead to equivalent rises in revenues. The same kind of elasticity exists with advertising. For any given brand in any given market, there is a saturation point for advertising spend. Up to that point, increases in the ad budget will generate results; but once the market for a product or service is saturated, no matter how much a company spends on advertising, it will not produce enough added sales to justify the cost. The best possible budget places just enough ads to reach the saturation point, and not a dollar’s worth of advertising more. Companies that follow this principle will optimize their overall profitability because they will spend on advertising only what they can recoup in revenues.”
An important wake up call for marketing and advertising strategists everywhere. Download here >>
I keep getting emails asking me how “Double Loop Marketing” works. Here’s a quick explanation.
Let’s say a company like Texas Instruments wants establish itself as a thought-leader in the RFID marketspace.
In the traditional PR world, they could issue a few press releases, give a few speeches, write a few whitepapers, and then hope the media would cover them.
But what if TI decided on a “Double Loop Marketing™” approach?
What if Texas Instruments brought together its partners, industry thought-leaders, R&D professionals, VC shops, and senior executives in an online thought-leadership-based “double-loop” site to:
– Learn about the latest trends and technologies in RFID
– Define and understand the specific factors that contribute to improving strategy
– Develop recommendations for creating a RFID management discipline within your organization
– Present sample business justifications supporting strategic and learning investments in RFID
– Foster discussion of lessons learned from early adopters
– Disseminate news, events, and thought leadership articles on a monthly basis
– Create a framework for measuring performance and ROI
– Build a worldwide community of interested senior executives and target them w/ e-mail bulletins that include messages from TI and its partners
– Develop industry-specific campaigns promoting the community – including offline events, publications, and more.
– Build a members-only community of practice around the gurus and leading implementors
The site would include blogs as well, from industry experts and TI subject-matter experts.
Of course the cost of something like that is far higher than funding a blog or two, but its impact on the marketspace is far more potent.
By building a thought-leadership hub on RFID, TI establishes itself as “the one to learn from” and as I like to say: moves from “mind share” to “wallet share”
Blogs on the other hand are better suited to the voice of an individual. So if TI doesn’t have the resources to build the “big” site I mention, they can still play by allowing one or more of their subject matter experts to start blogging on the ins-and-outs of RFID.
Of course, great care must be taken to make sure that the expert actually does have something to say, and is not the mouthpiece for a veiled PR initiative. Scoble at Microsoft and Schwartz at Sun come to mind instantly, right?
Not enough? Here’s a slightly longer explanation of Double Loop Marketing.
“Brands have become increasingly fragile and difficult to sustain. Failure to invest in the right mix of activities at the right time risks eroding the brand. On the other hand, those companies that anticipate and avoid the common investment traps can reap superior growth in brand value over a long period of time.”
This from Andrew Pierce and Adrian Slywotzky in MMJ. Download here.
So what are the traps, you ask?
1. Failure to invest over time
2. Wrong investment mix
3. Wrong sequence
4. Myopic focus
5. Wrong touchpoints
6. Wrong positioning
7. Failure to adapt
8. Spending too little on too many brands
9. Overstretching the master brand
11. Wrong metrics
12. Trying to turn around a dead brand
13. Failure to follow through
I’ll add #14: Executive-Ego-driven branding!
I just dug this up from the archives:
Reminds me of paper television.
Kathy Sierra’s blog post should make you think twice.
Even someone as mainstream as Sergio Zyman says: “The problem in marketing today is that we spend 95% of our time and money on advertising and 5% on the rest of the stuff. What I propose to you today is to flip it around: Spend 5% of your time and money on advertising and 95% on everything else. If you do that, you’ll sell a lot more to your customers.”
I agree. That’s how I discovered Double Loop Marketing.
Apparently “employee discount pricing” isn’t exactly helping GM, Ford, and DaimlerChrysler.
Forbes reports that “the ultimate result of the promotion was the widening of an already-existing gap in perceived quality between Detroit’s Big Three and their Japanese counterparts.”
“After spiking during the summer, sales at the Big Three tumbled in September. Also falling were consumer scores for brand image, quality, credibility and perceived resale value, among other attributes, according to Brandimensions. GM and Ford, in particular, saw sales growth lag behind Toyota, Nissan and Honda by an even greater margin than they did in the spring, before employee pricing was implemented. Sales at both automakers dropped more than 20% from their September 2004 levels, while the three Japanese carmakers increased their sales at double-digit rates.”
Note: The promotion hurt GM the most as the leader in starting the program… ouch!
John Hagel talks about the auto industry on his blog: Delphi, Detroit and Dead-Ends.
Good news for Toyota and Honda. Hybrids, anyone?
Siemens has announced a new color display screen so thin and flexible it can be printed on to paper or foil, and so cheap it can be used on throw-away packaging.
Prediction: ads on toilet paper… aargh, what are we coming to?