The Retreat From Experimental, New Media Marketing
December 31st, 2008 | Posted by innovIn recent years the advertising world has enjoyed something of a renaissance. Companies pushed Madison Avenue to come up with edgy marketing—online and off—that would grab people’s attention amid the 24/7 noise and clutter. Some clever ideas emerged (Nike (NKE) built a hot social network for running geeks), as did some dumb ones (Sears (SHLD), Coke (KO), and others hung shingles in the online virtual world Second Life but attracted few visitors). Still, the main point was to get feedback and learn what worked and what didn’t.
Now, the lousy economy is prompting chief marketing officers to reexamine their priorities. “We’re not making huge bets on things that are unproven,” says Dave Burwick, head of marketing for PepsiCo’s (PEP) North American beverages division. For a campaign launching this month, Burwick says, “we’re not going to put millions of dollars behind social networking, for instance, but we’re going to be there.” Translation: The experimentation will continue because companies need to figure out how to reach consumers in this Digital Age. But CMOs like Burwick are hedging their bets—and Mad Ave. is feeling the pinch.
Few agencies have worked harder to build a reputation for outré stunts than Crispin Porter + Bogusky. To help Burger King (BKC) promote its chicken sandwiches, for example, the Miami-based agency built a much trafficked Web site where visitors can boss around a man in a rooster suit. But Crispin, says CEO Jeff Hicks, is now having a harder time selling clients on innovative tactics. So Crispin is running more focus groups and other tests to help judge the efficacy of a new ad concept before asking clients to commit money to it.
In these hard times, advertisers wield more power than ever. Packaged goods behemoth Unilever (UN) is forcing media companies to throw in experimental marketing for free. The Anglo-Dutch company made a proposition to the broadcast and cable networks, as well as Yahoo! (YHOO), Google (GOOG), AOL (TWX), and Microsoft (MSFT): Develop creative ways to reach customers, Unilever told them, and it will buy a block of traditional ads. The Food Network was happy to oblige. For Unilever’s Hellman’s brand, it created a “Leftovers” recipe menu for mobile-phone users and filmed several online cooking videos, all starring mayonnaise. “We’re shifting risk onto the media companies,” says Rob Master, Unilever’s North American media director.
Media agencies, which buy ad time and space for companies, are falling over themselves to make sure clients keep experimenting with ads placed next to online videos. “This is the kind of thing that could get back-burnered in today’s climate,” says Curt Hecht, who helps companies buy digital ads at media agency Starcom MediaVest. He is coaxing clients to pool their resources and share the risks and rewards. Allstate (ALL), Capital One (COF), Applebee’s, and Nestlé Purina have put their money together to experiment on such sites as Hulu, MSN, and Yahoo. Each company gets its own video ads, but they are collaborating to standardize them because retooled 30-second television commercials work poorly on the Web.
Not all companies are so easily persuaded. In 2007, Travelocity, the online travel agency, set up a page on MySpace for its “Roaming Gnome” mascot. But unable to verify a return on its investment, Travelocity has since stopped supporting the page. The company’s CMO, Jeff Glueck, says he will continue experimenting. But he’s putting his money into technology that can deduce where Web surfers want to travel, provide matching information on the best hotel and airfare deals available, and put it all in an online ad, either on Travelocity’s home site or elsewhere. “We love our MySpace page,” says Glueck. “But we’re not going to spend money just to acquire more friends for the gnome.”
Consumer Electronics: Innovate or Die
December 31st, 2008 | Posted by innovIn May 2008, The Wall Street Journal reported that 11%-20% of all electronics goods are returned. Sony’s (SNE) senior vice-president, Mike Abary, explained that defects “aren’t even the top three reasons for returns.” The top reason? The products “didn’t meet expectations.” According to the article, an Accenture report shows that it costs the U.S. electronics industry $13.8 billion to rebox, restock, and resell the returned items, eroding the industry’s ability to attract and then create loyal customers. Quite a high price to pay for a problem that has a solution.
This becomes especially poignant given the current decrease in spending on consumer electronics (CE). Data from MasterCard Advisor’s retail service showed holiday sales for this sector plummeted 26% from 2007. To survive the market shifts long-term, CE companies need to view this extraordinarily challenging period as an opportunity to innovate, to fix what was already broken, and revamp their business strategies. It’ll take a lot more than blanketing the media with clever ads. Here are four recommendations to consider:
The problem at the heart of the industry today is that CE companies still design for their original, early adopter geek audience. Tech geeks drove the development of the CE industry when it was new and there was a steep adoption curve. But, now that grade schoolers and hockey moms carry iPhones, consult their GPS for driving directions, bank online, and share family photos on Flickr, CE companies need to do more than rely on consumer curiosity to stay alive. The digital lifestyle is no longer one-size-fits-all, and today’s impatient and fickle mass consumer expects more than the complicated, unsatisfying out-of-the box experiences that have become an industry norm.
CE brands need to match the right product to the right consumers and then connect with them meaningfully at every point of contact. The “360-degree experience” includes everything from packaging, design, and marketing to after-market support such as programs to help customers discover product benefits, end-of life recycling programs, and user support executed with the care of a concierge service, rather than with the complication and delay of an overwrought bureaucracy.
It’s true, we need an example other than Apple (AAPL) to demonstrate a successful 360-degree experience, but Apple nails it every time. They do not try to be everything to everybody. Packaging is elegant. The product is beautifully designed. Set-up is simple. Support is available (though there is room for improvement here). Messaging is consistent and clear at every touch point.
Make meaning: Right now, CE companies start losing before they’ve even said “hello.” Research for our own CE clients, such as Logitech (LOGI), has revealed that consumers are overwhelmed and confused at retail stores like Circuit City (CCTY.Q) (no doubt a contributing factor in its recent bankruptcy filing).
People we tracked on “shop-along” research trips found it impossible to discern the meaningful difference between, say, a $40 mouse and a $70 one, let alone penetrate the chaos that is the flat-screen TV section. Navigating the many dozens of options marketed with buzzwords like “plasma,” “digital,” or “720p LCD” was daunting, and many potential customers we tracked left the store without making a purchase. So the industry can add “loss of sale” to their return losses as well.
Few of our shoppers visited manufacturer Web sites for information. Rather, they used third party sources such as CNET, customer reviews on Amazon (AMZN) or the advice of their peers. It’s no surprise, then, that there is little-to-no brand loyalty. Except, of course, for Apple who has succeeded in translating geekspeak, like “120GB,” to terms anyone can understand, like “30,000 songs.” The CE industry needs to stop talking techspeak and speak in terms that mean something to the rest of us.
If products do make it home, many don’t make it past the out-of-box experience. Not everyone is an early adopter with an appetite (or tolerance) for splashing around a sea of techspeak to deal with hours-long product set-up guided by confounding directions, little-to-no customer support, and lots and lots of wires.
The Magellan GPS navigation system, for example, begins with a jumble of parts. Setup requires about half a day. Mac users learn late in the process that setup requires a PC. Meanwhile, the Roomba robot cleaner packaging promises it will “clean routinely so you don’t have to.” The Roomba itself, however, requires cleaning and maintenance after each use, making it more suitable for the gadget freaks who love to endlessly tweak their technology than the suburban housewife to whom it is marketed, who’s looking for hassle-free cleaning convenience. CE companies need to clearly communicate what their products are about and who they are for.
As CE firms gear up for the annual CES show in Las Vegas, which kicks off on Jan. 8, the industry stands on the precipice of a great opportunity: to not only survive the short-term economic crisis, but also to create lifelong brand loyalists from a mass of disenfranchised, frustrated consumers—and recoup the current $13.8 billion in losses. One thing is clear: Huge rewards are possible for companies and consumers alike.
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