Lairig Marketing

October Updates & Highlights

OCTOBER UPDATES & HIGHLIGHTS

It’s that time of the month where I remind myself what a genius I am.

Elf Yourself Is On!
Told ya so. OfficeMax is indeed bringing back the biggest time and energy sink on the Web. I think it is hilarious that GrokDotCom has been able to SEO its slam story from last February as the #4 or #5 search result when you Google “Elf Yourself.” ZING!

Taking It to the Bank
I posted in June about how well JoS. A Banks has set itself up for the recession. The company proved it by recently announcing Q2 earnings 9% better than last year on a sales increase of 13%, with comp-store sales up 7%. Blowing away its competitors.

The Real Mark Hurd Stands Up
“Tack on the revenues. Cut some heads.” I posted this back in May when HP announced its acquisition of EDS. In mid-September, HP announced it will put 24,000 heads on the chopping block. Hope the blade sharpener is working.

I Drink Your Online Video Milkshake
I went into a rage in August, tearing apart two bullshit studies about “high” engagement with online video advertising. iPerceptions has just released a survey of 14,000 web users, showing the likelihood of click-through on video at less than half that of search and display, which would suggest a click rate in the HUNDREDTHS-OF-A-PERCENT, not 10% (one thousand times higher!) as the asshats at Break Media and Panache claim.

(No) Privacy Please
So Ron Lieber has this “Your Money” column in the New York Times where he dispenses “sage” advice to consumers during the economic crisis. He writes about a Web-based financial consolidation system called Mint:
“I began on Mint by entering…[my] passwords for American Express, Capital One, and Chase. That allowed the site to grab all of my transactions on the five credit cards I have with those companies and put them on a single list.”
And people continue to worry about online ad tracking systems while they hand over the keys to the castle.

Cell Phone Theft to Skyrocket

I’m not sure this post will end up having much of a connection to marketing, but nobody reads this blog so who cares? Worse than that - my thesis could be dead wrong. But I can’t find any research to warn me off, so here goes…

First, the requisite long wind-up. I firmly believe the most-underplayed story of the year is the developing mobile payments industry. People seem to be more concerned about Twitter, for example, a company that will never generate, in whatever lifespan it will have, the revenue that mobile payments will eventually do in a single day.

The story on mobile payments isn’t taking wing because the U.S. is only able to get about 1.5% of its cell phone users “payment-capable” at this juncture. Here is where everyone hopes to end up: a chip embedded in the phone that leverages NFC, or “near field communication” technology; you wave the phone at a payment device in a store for your soda and hot dog, and the money comes right out of your bank account. Complications abound, from phone manufacturers, to carriers, to chip makers, to point-of-sale device companies, to the banks themselves...so progress has been stymied.

While all this hoo-hah is going on, an interim step is being rolled out. It is so simple, you will plotz when you hear it. You preload a “contactless sticker” with money and affix it to the back of your cell phone. Wave it at the payment device. Voila.

This is where the story intrigues me. You see, with the NFC approach, you are protected and secure from unauthorized use of your phone. But with the stickers, it is free money, just sitting there. If you accidentally leave the phone on the table at Starbucks when you go to the ladies room, it will be the same as if you left a $20 bill on the table.

And when the thief is done waving your sticker down to $0, he will more than likely toss your phone in the garbage.

Look for a major announcement in the days or weeks ahead from a U.S. credit card company teaming up with a French company that supplies the contactless stickers.

Every new business begets other new businesses. Who will be the first to come up with the idea of “insurance for your contactless sticker?”

Senator Stevens & That Viking Grill

Say what you will about his guilt, or lack thereof, but Senator Stevens has no appreciation for great brands. He testified, in so many words, that he neither wanted nor requested the Viking gas grill the contractor dropped of at Stevens’ ski chalet.

At least the contractor had good taste. Maybe a Viking 53-inch, $7900 jobbie. Sitting there now, like a piece of outdoor furniture. What a waste.

At prices like that, Viking isn’t much of a middle-class purchase item. It rarely enters the consideration set for that matter, not with competition at one-tenth the cost.

Yet everyone wants one. Check this out: half of nearly 1000 people who answered a recent poll on the website of leading New York City-based real estate firm Corcoran claimed they preferred Viking appliances. To my knowledge Viking does not have anywhere near 50% market share.

Viking is what is known as an “aspirational” brand. Others you might be more familiar with, because they have a little more sex appeal than an oven, would be in the luxury automotive sector. But sexy or not, Viking has become the appliance brand of choice for that moment we all know is just around the corner - when we get that big raise. Or hit the lottery.

If you know the Viking story, you know it began with aspiration. Owner Fred Carl wanted a commercial kitchen in his home, and damn if he didn’t decide to just build it himself. The rest is history (only since 1987, believe it or not).

Fred is a smart cookie. He extended the brand as broad and as deep across the kitchen as possible. So now you can at least buy his knife set, as an everyday reminder of how much you’ll eventually enjoy his oven (once you hit the lottery, of course).

Reality bites, even for Viking though. Remember my little diatribe on the difference between want and need? Except for Ted Stevens (oops, I mean his contractor), not even the rich need a Viking in the current economic environment. How do I know? This past Monday, Viking laid off 21 factory employees.

And keep this other data point in mind for the next business cycle. Viking laid off 48 workers in April. As in six months ago.

Aspirational brands can be a pretty decent recession tell.

How Would You Save Detroit?

This month’s “save” is off the normal track of a business fallen upon hard times. But like previous entries such as Krispy Kreme and Red Envelope, Detroit could use a little marketing TLC, as it reels from well-known issues:

• Implosion of the “Big Three” auto manufacturers, contributing to the second-highest unemployment rate among major U.S. cities (near 9%)
• Continuing population decline in the city proper, falling under 1 million in 2000, and now below 850,000 (although the suburbs have boomed until recently)
• Top-five ranking for home foreclosure rates
• Mayoral scandal adding instability to desperately required municipal leadership

And Devil’s Night is just around the corner.

More than marketing is required, to be sure, but that’s no reason to wait for a miracle.

Blue Ribbon Marketing Panel
Since the local ad agencies have a little more free time right now, put them on a pro bono panel to study other cities that turned themselves around. Sort out the “best of the best” marketing ideas, and get cranking.

Redeploy Manufacturing & Engineering Talent
There are thousands and thousands of experienced, hard-working industrial workers and engineers on the dole around Detroit. Most of them would rather be earning a living wage. Why shouldn’t every U.S. wind turbine, solar panel, battery pack, etc., be built in Detroit? Fete the VCs from Silicon Valley.

Have the Marketing Panel run campaigns across the globe to get companies to inquire about moving industrial and engineering operations to Detroit. The advanced health care technology industry is another nice target. (Of course, these campaigns aren’t going to work with executives who prefer to outsource overseas at 15 cents per day.)

Destination Detroit
Blitz the neighboring five or six states to draw in tourists to the new gambling industry and renovated waterfront. Get the local arts community energized. Help local hotels put together unique holiday/New Year’s packages. Draw in more events (like this spring’s Red Bull race).

And while we’re at it, convince Rick Caruso to build one of his shoptainment malls.

Detroit is not simply “too big to fail,” like some of the banks we are bailing out. Rather it is too important to fail. This country won’t heal without high-end manufacturing, and it won’t heal from the coasts. Detroit is key to our healing from the center, the heartland, the soul.

Arm & Hammer Throws a BYOW Party

If any company had a perfect set-up for being “green,” it is Arm & Hammer. As a civilization, if we were told we could have food, water and only one other thing, we’d be wise to choose Arm & Hammer Baking Soda. From what I hear, it has more uses than a collateralized debt obligation or even a credit default swap. And it is good for the environment.

The company can’t play that fact up too much though, lest it hurt sales of its liquid-based cleaning products. To that end, Arm & Hammer created a microsite “Jill’s Secret Solutions,” with the requisite perky housewife-type showing all the things its product suite can do.

[As an aside, 5 cents to anyone who can solve these riddles: (1) Why would the “Jill’s Secret Solutions” microsite have a url that looks like something NASA created, http://armandhammer.com/default.aspx?ITEMID=4 ??? (2) Parent company Church & Dwight has its own Jill, with “Jill’s Cleaning Secrets” at
http://www.greatcleaners.com/cleaning-secrets.html. What the hell?]

All that baking soda must have caused Arm & Hammer’s other product managers to think, “Hey, what if we took the liquid out of our products, sold the base chemicals, and let the consumers add water at home?”

Bam!, as Emeril would say. Look soon for Arm & Hammer Essentials, an empty lighter-weight trigger-spray bottle and a cartridge you toss in. Just add water. (You also get a refill cartridge.) The product line entails a multisurface cleaner, a degreaser, and a glass cleaner.

It is rare to see any company understand what a customer value proposition really is, as well as to successfully put one together in the packaged goods space. A value proposition is more than having a set of product features - it is about addressing a meaningful need by delivering compelling benefits in a differentiated way.

Arm & Hammer Essentials nails the value proposition. By letting the consumer go BYOW, it delivers lower cost, which in the current economic environment speaks for itself. It also delivers a green solution, by reducing packaging and eventual landfill waste.

The idea is not entirely new - refills for many products have been sold in a concentrated version for years. But to start this way is a bit of twist. And it will be a hurdle, certainly, to get consumers to change traditional buying behavior.

That hurdle might be knocked down. The Essentials line is being aggressively backed by Wal-Mart in-store and online. Bam, Bam, Bam.

Media & Creative - The Unbundling Bundle

In May of 2007, Microsoft acquired aQuantive at an ungodly (premium) price. The company was comprised of a digital ad-networking business and a set of interactive agencies under the jammed-together moniker of Avenue A/Razorfish, the latter a result of an even-earlier combination.

I predicted at the time in an AdGabber/Adrants discussion forum that Microsoft would:

• Divest the Avenue A/Razorfish portion
• By end of 2007
• Because it wouldn’t be able to assimilate the agency culture

Looks like I am only going to get the first one of those right. My timing was way off, because my logic was misguided.

At the end of this August, word hit the street that WPP was in talks to take Avenue A/Razorfish off Microsoft’s hands. And just this week, the latter dropped “Avenue A” and is now simply called “Razorfish.”

So, it is coming together, but not for the reason I thought. My prediction was based on the fact that Microsoft, in all its years, has never been able to market and sell a sustainable, value-added services organization. And even though Avenue A/Razorfish represented well over half of aQuantive’s business, I felt the cultural friction would heat up in no time.

I missed the obvious. Microsoft’s pursuit of Yahoo was not a 2008 phenomenon - it was going on back in May 2007. The Redmond team wanted desperately to be in the media business, and aQuantive was a decent substitute when no progress could be made against Yahoo.

At the time, Microsoft must have believed, or was led to believe, that the media and interactive agency parts of aQuantive were synchronous. I don’t know who pointed it out, or when, but it now knows they are not. And since Microsoft is used to stratospheric operating margins, it will stick with the 50% media brings rather than the 20% agency work does.

(In an ideal world, Razorfish would be spun out as a public company, and regain its independence to continue its tremendous growth. The current economic and financial environment might preclude this outcome. A shame.)

There was a raft of advertising and media agency mergers in the early 2000s. They are all, officially or unofficially, undone. And last week at the ANA conference, client-side panelists spoke about by-passing creative shops completely, and going direct to their media agency partners.

All of this says we might be just about out of room for any more nails in the “bundled agency-media” coffin.
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JUST WONDERING…Who is getting richer off of Vista’s troubles this year - Justin Long or Steve Jobs?

Segmentation Is Dead - Long Live Segmentation

Every now and then you read an article about something so basic in scope that you turn to the calendar to remind yourself “Yep, it’s 2008. Not 1998. How could this sh*t be news to anyone?”

Exhibit 1 - Macy’s, Aug. 13
“dunnhumbyUSA…will analyze Macy's customer sales data, develop customer segmentation models, and work with the Macy's organization to apply the learnings…”

Macy’s, with a billion trillion customer data points over a gazillion years, has never analyzed them?!?

Digging deeper reveals interesting, and conflicting, perspectives. dunnhumbyUSA is a child to the UK firm of the same name [aside: humbydunn would sound better, but it’s women first, evidently], which in turn is part of Tesco, the now-international grocer (see: Fresh & Easy, California). dunnhumby assembled the renowned loyalty program for Tesco.

Aha! Macy’s wants to create a kick-ass loyalty program too? Hard to say. The various stories also make reference to a “localization” effort, a brick-and-mortar “My Macy’s.”

Head-scratching time. Just a few years ago, Macy’s (Federated at the time) stormed the country, taking over and rebranding nearly a dozen different companies into a unified front of 850 “Macy’s only thank you very much” stores…so that it could turn around and LOCALIZE each store?!?

If this initiative is truly about loyalty, Macy’s is a few months late. If it is about merchandising, Macy’s will die trying. Here’s hoping dunnhumby shows Macy’s how to leverage its data for customer acquisition, using the tried-and-true strategy of attracting “look-alikes.”

Exhibit 2 - Computer Geeks, Aug. 19
“The hosted system from Sitebrand…allows Computer Geeks to speak to [website] visitors differently based on their behavior…first-time visitors, past purchasers, users who had visited specific sections of the site, shoppers from specific geographic locations and visitors who have spent longer than average on the site…and not purchased.”

That’s it? Five segments? Where’s all the quantum physics and black-box algorithms?

As I’ve posted before, companies are drowning in data, especially website information, and don’t have the time or expertise to make much of it. Companies like Sitebrand who have figured a way to keep it simple, actionable, and testable will win, time and again.

And so will its clients. Computer Geeks reported a 9% rise in e-commerce sales the first two months it deployed Sitebrand’s service.

Hard to believe, but overthinking segmentation can be worse than underthinking it.
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JUST WONDERING…Who will this country miss more - Wamu or Zima?

When Analytics and Creative Collide, Do Good Things Happen?

Let’s give Targetbase and Claydon Heeley a pass for believing they have invented sliced bread. This is not the first time someone has tried to package rich customer data into a creative brief, but merging these two entities signals a significant commitment to the idea.

Either agency, top of the heap in their respective countries, could have survived alone. Someone in the halls of parent Omnicom, though, convinced them to serve as the prototype for bringing left-brain and right-brain thinking into a single discussion.

Targetbase is regarded for its aptitude with numbers - “analytics” in the direct marketing world. Creatives are right-brained, and hate numbers. So translation is key. But output will be key-er. Will the message, positioning, layout, imagery, call-to-action, etc. be better?

On its new website, TCH says “It’s a bit like planning on steroids.” I’d challenge that, and say “It’s a bit like planning with facts.”

[Bonus website quote: “…if it’s useful to involve our clients, we’ll invite them too.” ZING!]

One example Targetbase gives for how this might work is with car leasing. If its customer analytics shows that a specific segment of lessees requires seven months of direct marketing prior to lease renewal, the creative agency should do more than it might normally do without these new insights, which is create one direct mail piece for contacting the customer just a couple weeks before the lease is up.

This is a major challenge. This isn’t the “one big idea” creatives are known for generating; rather it’s a series of ideas that build in a sequence. M-A-J-O-R challenge.

Targetbase has stated it will form more partnerships of this type. Before it gets too far ahead of itself, let’s see an example or two of how this helped Claydon Heeley’s creative output. Solve this riddle - how much help did Claydon Heeley really need in the first place?

For now, they’ve branded the new entity by jamming two well-respected names together. Any wager that in a year’s time we’ll see a rebrand to a funny latin-sounding name beginning with the letter “A” (Anfatico?).

Peanut butter and chocolate, or oil and water?
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JUST WONDERING…How did Right Guard become the official deodorant of the National Basketball Association? I thought Will Ferrell had the inside track with his knee-slapping ads for Old Spice?

The U.S. Postal Service - Unsung Heroes of Marketing

There are few easier targets for consumer anger, disparagement and jokes of questionable taste than the USPS.

It is a massive, impersonal government bureaucracy. Counter service can be horrific. Facilities are typically decrepit. The price of a stamp seems to go up according to Moore’s Law. The whole thing is like a shadow operation, taking place behind walls, late at night.

Yet every morning, there it is. Our mail.

The marketing industry would be nowhere without a well-oiled USPS. Sure, plenty of people would rather not receive “junk” mail or catalogs, and more than a handful of pundits are eager to tell you Web 2.0 will obsolete the postal system any day now. But here are some astounding data points from USPS’s third quarter ending June 30th:

- Mail volume...48.5 BILLION pieces
- Overnight service...a record 97% on time
- Two-day service...a record 95% on time
- Three-day service...a record 94% on time

There were bad data points too, unfortunately. Volume was way down (recession anyone?), and with that so too went profit. This proves that just as our marketing needs the USPS, the USPS needs our marketing.

To that end, the USPS has not been bashful about marketing itself to businesses large and small. Your humble reporter tore the Post Office a pretty good one back in the day for promoting letter mail instead of its much more valuable express-mail pricing bundles. Well, not that it listened to me, but sonuvabitch if its current “Rethink Your Shipping” campaign isn’t all about just that! (I suppose consideration for a “Marketing Comeback of the Year Award” is due…)

And the USPS is all about the Web 2.0 thing. It just relaunched its (excellent) website, it has a blog, and there is a completely whacked yet award winning set of webisodes at "markoftheeagle."

Sometime in 2009, our country will mark its 370th year of official mail service. What will the Internet look like in the year 2378?
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JUST WONDERING…Sam Waterston is a great actor, but how many takes does he require to get this horrible “s” filled tagline out for TD Ameritrade‘s TV spots: “Independence is the spirit that drives America’s most successful investors” ???

Happy Holidays - If You Think Outside The Gift Box

Maybe the retail analysts and economists will be right about the coming holiday season. At least on paper, sales might grow at a slower rate than years past, or even decline. But I think there will be a lot of “hidden” spending on gifts this year, with traditional retailers bypassed.

This Christmas (or insert your favorite end-of-year holiday), I believe, will be about gifts people can use or consume, not things people can wear or look at (who needs another picture frame?). With that, I give you my “Great Gift Ideas for Christmas 2008” list.

• Booze, and lots of it - examples: flavored vodka, boxes of wine
• Entertainment - examples: restaurant coupons, theater tickets
• Personal Services - examples: hair salon visits, one-time maid service

Am I telling you this so you can start your shopping now? No. I’m telling you this in case you are a marketer for a discretionary product, or an agency exec who works with one. In the next three months, holiday shopping will comprise a large portion of discretionary sales. Get your share.

Don’t rely on gift cards, which are fast becoming a drag for the giver and the recipient alike. Make it easy and fun for consumers. Be as flexible as you can with pricing, selection and timing.

Here are two illustrations; enough, hopefully, to get your creative juices flowing.

Casual restaurant
Make up a nicely done index-card-size piece that says something like “Take the pressure off this shopping season. Treat your loved ones to a meal at (name of your restaurant). Purchase before December 1st, and get 10% off your selected gift price!” Attach this card to every guest check the server drops on his or her table, starting tomorrow.

Garden supply center
Avoid the ho-hum gift card scenario. Make up point-of-sale or end-aisle displays that list five top sellers for the spring season (potting soil, lawn fertilizer, etc.), saying something like “Give the gardener in the family something to look forward to this spring. Purchase now, get 5% off, and we’ll deliver it free when you tell us to.”

This can work online also, but the idea here is to grab the captive customer (without paying extra costs for traffic).

Wish lists are long, but shopping lists aren’t. Find a way to get on them.
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JUST WONDERING…How much of Nexium’s record-setting “purple pill” website traffic was due to men actually looking for the “blue pill”? And why do they spell NEXIUM in caps on the site but not on the pill itself?