Lairig Marketing

Foursquare: Four Whom & Four What?

We've sat on this one for a few weeks. Admittedly we are stumped by this whole foursquare thing.

It only makes sense if you use the lens of (A) loyalty and (B) narcissism.

On the one hand, letting customers tell a retailer, "Hey, I'm here for the tenth time this month!", is an interesting way to alert businesses that can't otherwise track individual patrons they should be recognizing such loyalty.

On the other hand, that each notification should be sent to the world seems dopey, and the fact that (a reported) 20 million people would sign up to do it is frightening. This takes the famous "I'm having a ham sandwich!" tweet to the next annoying level – “…at Joe’s Ham Shop!” BFD squared.

As for the narcissism baked into foursquare, we know from our previous post the future supply of self-lovers is near infinite.

But what exactly are marketers being counseled to do with/on foursquare? Here, finally, is the story that made our heads spin.

“During late March 2011, Walgreens awarded foursquare check-ins with 15% off eligible items and 20% off Walgreens-branded products.”

In addition:

“Walgreens…is running the first nationwide coupon on the foursquare mobile app. Walgreens patrons who record check-ins at the brand's 8,000-plus stores via their smartphones get a scannable digital code redeemable in store for 50% off Arizona Ice Tea.”

Then the requisite marketing speak:

"We're using mobile technology and social media to better engage Walgreens customers, to give them convenient channels to interact with us and to deliver products, services and savings they truly value, " said a Walgreens Marketing Hack.

Hilarious, isn’t it? Walgreens customers already chose their “convenient channel” – by entering the store. You don’t need coupons for people who ALREADY shop with you, driving down your margins in the process. You need coupons to drive the people who AREN’T shopping with you.

And to prove targeting and segmentation have no home in social media, who says ALL Walgreens customers like and want (a) canned ice tea from (b) Arizona?

Nothing new here that you couldn’t do offline. Executed against the wrong target. With zero personalization. And no way to measure ROI.

Foursquares for four round holes.

Grocery Stores – Here Today. Here Tomorrow.

An inquisitive Lairig Marketing reader asked how our post about car dealers might apply to grocery stores. Are they coming, or going, or what?

After all, the same Web-based threats that we outlined for the auto guys applies to food retailers as well – you can shop for food with ease online, with complete transparency of prices, configure your personal shopping cart, pay electronically, and have the goods delivered to the front door.

Remember Webvan? In 2008, CNET rated it the biggest dot-bomb in history.

Let’s look at the same three criteria we did for auto dealerships, and see how they stack up (stock up?) in the case of grocery stores.

Substitutes
There are plenty. But consider just one – the biggest threat. Somewhere near 45% of all meals are eaten out of home. Yet, for whatever reason, this isn’t zero sum. When we get home from the restaurant, we still want a grocery-store-sourced snack.

Convenience
Just like with car buying, the Internet wins again, with the exception of delivery. Yet a dozen years of history says we will sacrifice online convenience for the privilege of kicking melons in person, just like we do for the privilege of kicking tires.

The fact that the delivery experience is an out-of-shopper’s-control cluster f&ck only makes the store experience that more gratifying.

Prices
Seen the price of eggs, milk, cereal - COOKIES - lately?

The well-known razor-thin margins of the grocery industry are as predictable as Haley’s Comet. If their costs go up, then so do ours.

As with the auto industry, there is no burning need, recessionary periods aside, to take costs out of the distribution part of the equation. (We’ll prove this next week with a follow-up to our bold and once again accurate prediction that private label sales will stall/have stalled.)

So? According to Progressive Grocer, the number of grocery stores in the U.S. grew in 2011 by just over 1%. Considering there are over 36,000 candidates to be shut each year during a shitasmic economic time period, that’s pretty impressive.

This should sound familiar then – five years from now, there will be just as many grocery stores in the U.S. as there are today, plus or minus 10%.

Ironically, in five years you’ll also be able to, on occasion, spot one of the thousands of indestructible, and now marooned, Webvan delivery bins.

Car Dealers – Here Today. Here Tomorrow.

[note to daily readers - see you next Wednesday]

Remember when there seemed to be as many Blockbuster stores as Gap locations? Over the past ten years, the number of Blockbuster bricks-and-mortar sites in the U.S. have fallen by 80%. By the end of 2012, there will be fewer than 1000.

Why satellite-TV company DISH Network bought 1700 Blockbuster locations out of bankruptcy last year, and how soon they can reach a count of zero, are two gigantic questions.

The video stores don’t make much sense nowadays due to three major, and related, reasons:

• Availability of substitutes – kiosks, DVDs by mail
• More convenient options – streaming, Cable video on demand
• Falling prices

The last element was a killer for a business so heavily invested in service staff and real estate.

So why are car dealerships still around? Wasn’t the Internet supposed to “disintermediate” them, by allowing buyers to shop online with complete transparency of vehicle costs, letting them configure every last option, name their price, do all the paperwork electronically, and perhaps have the purchased car delivered to their driveway?

Didn’t turn out that way.

Instead of falling by 80% like the number of Blockbuster locations, the dealer count is pretty much the same as it was ten years ago. To be sure, we’ve lost 10% due to the Great Recession, but the numbers seem to have stabilized.

To figure out why there was no “Blockbuster effect” for auto dealers, let’s go back to our list above.

Substitutes
Trains, planes, buses, etc. Just not good enough. Americans vote with their wallets more than 13 million times a year to invest in their own set of new wheels.

Convenience
The Internet does win here, with the exception of the test drive (“virtual test drive”? ROTF LMAO) and final delivery. When they figure out how to stream a car then we’ll talk.

Prices
Unlike DVDs, cars costs just as much, or more, every year than the one before. There is no burning need, recessionary periods aside, to take costs out of the distribution part of the auto equation.

Five years from now, there will be just as many auto dealers in the U.S. as there are today, plus or minus 10%.

Blockbuster locations, on the other hand, will be gone, many perhaps converted into some sort of car-related business.

Flurry’s Flurry of Bullsh&t Data

With all the outcry over SOPA and PIPA, we continue to be amazed that no one (other than Lairig Marketing) – NO ONE – has bemoaned the privacy risks associated with online analytics vendors. Companies such as Flurry, who explains itself thusly:

“…the world's leading mobile application analytics and data-powered advertising platform, with more ground breaking [sic] services in development.”

No idea what that means, but we eagerly await the promised earthquake (sorry for the reference, El Cerrito).

Here is an example of what Flurry has access to:

“…[we take] a sample of 60,000 daily active users on iOS, from among a total group of 6 million for whom we have demographic data…”

Flurry knows who you are and follows you all around every single place you go on your smartphone, all day long. And there are dozens more similar companies. You either don’t know or you don’t care. Potentially a much bigger story than Google and Safari, but we digress.

Flurry has been able to parlay all this snooping into two large helpings of marketing analytics catnip. The trade press and blogarrhea live for headlines like this:

1. “Flurry finds mobile apps usage dominates Web.”
2. “Flurry finds time spent in mobile far outpaces ad spending.”

Let’s take the first one, um, first. There was something else Flurry found out in that study that no one mentions, ever: half of the 90 minutes a day an average that a smartphone user spends on apps is – drumroll – PLAYING GAMES.

All these people you see coming straight at you, heads down, on the sidewalk? Playing Pac-Man. Or whatever. (Still wondering why there is high unemployment?)

The next 30% of “apps time” is spent on social networking (read: Facebook – still wondering why there is high unemployment?).

And so you have one reason from Flurry’s first “finding” as to why its second finding is nonsense – ad spend is low on mobile because the apps people are using are not suited to it.

But that’s just a sliver. In fact, Lairig Marketing wrote about this “underspending” topic – BACK IN MARCH 2008 – when data pundits of that period were wailing about how online ad spend allocation wasn’t aligned with people’s time on the Web.

Here is a summary of what we said then, and still say now. Four years later, the % allocated to online spend is still lower than the % of users’ time on the Web – and therefore mobile will always be “under” – because:

• Cost of ad production is infinitely lower than TV or print
• Cost of online media is pennies on the TV dollar
• TV still has better mass reach
• Average people are not your customers

Please, please help us pass the word the next time you see this “underinvestment in mobile advertising” claim.

In the meantime, here is an example of what Flurry knows that ought to make privacy advocates sh&t their pants:

"...our analysis shows that females and males, between the ages of 25 and 34, who have higher levels of disposable income and a bachelor's degree or higher, more strongly interact with mobile ads.”

The Zero Moment Of Truth Gets A Zero

How did this one slip by? A new marketing concept, gone so far out of bounds, like your worst slice ever off the tee, that simply walking off the course seems a better option than hoping to find the ball and put it back in play.

Rip Van Winkle, phone home.

Perplexed by a recent article about something called “The Zero Moment of Truth,” detective work led us to an even perplexier finding. According to the Wall Street Journal, back in 2005 Procter & Gamble (a company which lately seems to be losing control of its marketing rudder) dubbed the in-store, at-shelf purchase decision as “The First Moment of Truth.”

Apparently feeling it was on to something, P&G (incorrectly referred to as “Procter” by our “dear” “marketing expert” Stuart Elliott) titled the ensuing product-usage phase as – * drum roll * – “The Second Moment of Truth.”

A chap from Google by the name of Jim Lecinski saw that the time period in the marketing cycle prior to purchase was unclaimed. So he took out his calculator and, voila – “The Zero Moment of Truth” was born.

There is a 75-page ebook if you are interested. We could not make it beyond page three of Chapter One, which declared: “Now there’s a new critical moment of decision that happens before…”

None of this is new. And none of it is clear. The “zero” concept is all over the lot – sometimes a single moment, sometimes multiple; sometimes a decision point, sometimes only education; sometimes measured in seconds, sometimes in days.

When it is all said and done, though, “Zero Moment” is one blatant big-ass advertisement for Google. Which makes sense, given Licenski’s title – Head of Sales for Google.

Hard to say who has done a better job of butchering the moment of truth concept – Lecinski or P&G. In vogue well before 2005, and always plural we might add, MOTs occur throughout the marketing cycle, any time that a potential customer is about to make a conscious, committed, and significant decision to move forward, or not (in the latter case, this is termed a negative moment of truth).

With all due respect to the folks at Google, an MOT is just as, if not more, likely to occur offline as online. In addition, MOTs are driven by how well a marketer meets a customer’s expectations, rather than Google’s portrayal of a bunch of consumer-driven activities.

Done right – i.e., exceeding the customer’s expectations at the key moments of truth – a marketer can eliminate P&G’s dopey “First MOT.”

Not for nothing, but you would have thought a Google Advertising guy would have picked a better reference to “zero.”

Capital None: Five Times Nothing Is Nothing

Jerry Stiller is a hoot. He could sell a Big Mac to a vegan. But he signed up for a pretty shady deal with Capital One last September.

If you live in an area with Capital One retail branches, you can’t miss the “5X” spots in which Stiller stars. The easy part here is exposing the bank’s borderline ethics.

First, Capital One states you will “always” earn five times the average national savings rate. That is a batch of bullsh&t. The interest percentage you will earn is set and fixed on day one, for a full 365 days. If the national average doubles six months from now, well, no soup for you.

Second, the fine print. You can get the “5X” rate for putting a measly $500 in your new Capital One checking account (note to existing Cap One customers – ha ha, thanks for being loyal, you can only get 1X). However, the fine print says if you don’t increase your daily balance to $5000 (that would be 10X, but would make for a lousy TV spot) within just two months, you instantly go from 5X to 1X.

This was a simple campaign for Cap One to create. Interest rates are near zero, and because of our excellent economy, aren’t going to rise significantly before this time next year.

So, if that was the easy part, what is everyone else missing?

That all this marketing by the few remaining large banks is wasted money. As we wrote during the $5 Bank of America fiasco, most Americans are married to their current bank due to laziness. That BofA blinked so fast on the debit card fee wins them the “Wussy Marketer Award” for 2011.

The CEOs of Citibank, JP Morgan Chase, Wells Fargo, and Capital One could huddle and agree to stop all marketing. It would devastate the ad industry, but the savings would drop directly into the CEOs’ fat wallets.

And nothing would change. New customers would still walk right in, basing their choice on branch proximity and ubiquity, and corporate scale (= false sense of security).

The best strategy for banks is the “Place” P. That’s why Chase and Citi are falling over themselves to make any deal for branch space in New York City’s Hell Kitchen, where 50-story apartment buildings are popping up like so many dandelions on a warm spring day. Trust me, when one of the banks reaches 11th Avenue, you will read about it in The New York Times.

Until then, we can enjoy the Jerry Stiller Capital One spots. They are 5X funnier than any ads the other guys run.

The Agency-Client Geography Paradox – Part 2

Yesterday, we looked at the industry phenomenon of long-distance relationships between agencies and clients. Net net: no wonder most of these marriages fall apart after a year or so.

To make matters more challenging, there’s another dimension to consider – the “decentralized” client. You see, it doesn’t really matter where your “corporate” client is located – Austin, Boulder, Nashville, East Bumf&ck – it matters how powerful the client’s regions or divisions are.

They probably don’t get into this on Mad Men, but back in the day the Corporate Marketing Department (first-letter caps to show just how goddam* important they were) pretty much dictated what the field did. Nowadays, a whole ‘nother story.

Corporate plays an often tentative role – as advisor, suggestor (made-up word), resource, template maker, etc. But all the real business decisions are made locally. If regional marketing wants to run a promotion this afternoon to chimpanzees, using tacky refrigerator magnets as incentives, it will. Without corporate ever knowing about it.

So, agency executive, take your lousy long-distance relationship and raise it to the nth power.

Now the good news. One agency has cracked the equation. Or at least it is making an excellent attempt to solve it.

Doner has Perkins Restaurant as a client. Doner is based in Detroit, Perkins is headquartered in…Memphis! With three regional offices, one as far away as Florida. The perfect set-up for Doner to lose this account within a couple of years.

Except that Doner decided not to do things the traditional way. Instead it built a “field marketing team,” pretty much from scratch. Doner also did something else a typical agency doesn’t typically do. It brought in four new employees to lead each field team, WITH YEARS OF INDUSTRY EXPERIENCE.

From the Doner press release:

“…they will be responsible for account management and local store marketing, each working with specific Perkins locations to promote the brand in targeted areas.”

The true meaning of this kind of press release goes right over the heads of trade pubs like AdAge and AdWeak. But I weep with joy.

As good as all this Doner-Perkins news is, their romance has one more very large wrinkle. Two-thirds of Perkins Restaurants are run by franchisees.

And those guys hate anyone who tries to tell them what to do.

Wired Takes Blogging To A New Level – The Basement

It has taken a while, but publishers and marketers are discovering just how hard it is to maintain a successful blog. The Web, like any other thing consumers interact with, is a popularity contest. Good, thoughtful content doesn’t win. It doesn’t even matter. Nearly impossible to make money at it if you’re not one of the popular ones.

The answer? Sell out.

But like all things Web, first dress it up with a douchey term: “conversational media.” Social media gurus with too much time on their hands, but I digress.

Recently, Wired magazine launched a "conversational media blog” called Cloudline. Sponsored by IBM. You will recognize that name as one of the biggest cloud vendors around. With a “line” of cloud products and services to sell.

The right-hand rail of Wired’s Cloudline blog is all IBM content. Basically, IBM has brought its IBM.com cloud content page over to Wired. Soon, we will also see full blog posts written by IBM employees.

A blatant show of commercialism.

But back to that “conversational media” thing. Since no one will define it, I’m left to think everyone is referring to the comments section of a post as “conversation.” Which is really a f&cked up way to look at it.

Here’s an analog analogue to this digital conversation meme: I go to the town square and make a speech from a soapbox. I finish and walk away. One by one, three people get up on the soapbox and blurt some inanity, in response to my speech or maybe not, to the crowd. I come wandering back. Someone whispers in my ear what was said. I laugh and go home.

It might be media, but it ain’t no conversation.

For grins, Lairig Marketing will track the number and sentiment of comments on Cloudline and report back periodically.

Irony or what? Wired’s Editor in Chief is Chris Anderson, who we dished on for his unworkable treatises on “Long Tail” and “Free.” In its ride to the basement of blogging, Cloudline debunks both.

CMOs Need to P More

Another week, another CMO survey. Another one that will have the lifespan of a horsefly. Or maybe the tenure of a typical CMO would be a better metaphor.

Anyway, that marketing juggernaut, IBM (*sarcasm*), last week released an executive summary of results from interviews with 1700 CMOs. The marketing trade unsurprisingly picked up on a couple of unsurprising points:

• CMOs still aren’t ready to use all the customer data at their disposal
• CMOs haven’t put social media at the top of their priority list (tsk tsk *sarcasm*)

Everyone seemed to miss this little nugget at the bottom of page 6 of the eight-page summary, which followed a chart illustrating, for the billionth time in CMO-survey history, that “marketing ROI” is the brass ring:

“…if CMOs are to be held responsible for the marketing returns they deliver, they must also have significant influence over all four Ps of marketing: promotion, products, place and price. Surprisingly…CMOs told us they exert a strong influence over promotional activities...But in general, they play a smaller role in shaping the other three Ps.”

Let’s put the price “P” aside for a moment (let the Finance guys figure out how to balance margin goals with pricing the market will bear). How can CMOs succeed if they are not contributing in a big way to product and go-to-market initiatives?

Hint: they can’t.

Which means the Marketing department and all its minions fail too. (P.S. To understand what’s really holding Marketing back, the next survey someone does should be at the middle manager level – they’ll get an earful.)

Some Things Marketing Should Do With the Product “P”
- Align offering strategies with targeted customer segments for both acquisition and upsell
- Manage the flow of new-product introductions, and ensure each one’s value proposition is tight
- Monitor, analyze and drive customer feedback to the Product Development/Engineering team

Some Things Marketing Should Do With the Place “P”
- Know what % of sales comes from which channel, and what the corresponding marketing investment % is for each
- Be a key part of an annual plan for channel strategy – the best path(s) to market for each product
- Gain a deep understanding of the customer journey for each segment (hint: don’t assume the entire purchase process is done on Twitter)

Each one of these “things” could be its own post. It’s hard work, and requires a lot of cross-organizational effort.

Which is good. Because the more it gets around to the other parts of the company, the less likely other departments will wonder why Marketing is P’ing so much.

Citi Strikes Tin Once Again

If you’re reading this, then that means you are not at the annual Mommy Blogger conference, “BlogHer ’11,” in globally convenient San Diego. Thousands of attendees, almost outnumbered by the number of speakers, and dozens of corporate sponsors.

But don’t look for Citi. The financial company couldn’t pony up enough scratch to make the lowest rung of sponsorship (“Exhibitor Level”), where you will find such luminaries as CouponCabin.

Perhaps Citi feels it is doing enough for Moms with its latest marketing initiative. We’ve talked about Citi’s advertising before. And we’re sad to report that the marketer has not found a cure for its “tin ear” syndrome.

To kick off a partnership with BabyCenter.com, Citi recently sponsored a survey of Moms. Guess which of these is the correct title of the study:

A. How Much Will Your New Kitchen Cost You?
B. How Much Will Your Home Equity Line Cost You?
C. How Much Will Your Variable Annuity Cost You?
D. How Much Will Your Child Cost You?

Did you choose “D”? No? Tsk Tsk. Really, what is the difference between a mortgage and a baby anyway?

So far, the study results have garnered zero Tweets (which means this study has zero Klout!) and all of three comments on BabyCenter.com. Here is the first one, verbatim and in full:

“This article is not accurate. I have four children and it has cost us NOWHERE near the amount listed above to raise them. Ridiculous. Who reads these anyway?”

Indeed.

Don’t expect this sort of controversy to be discussed over the next three days. Here are just a few examples of what BlogHer ’11 attendees will be sopping up:

Blogging Your Way to Self-Acceptance
Food Photography That Will Feed Your Soul
Your Blog Can Make You a Social Media Marketer (ed.: Duh!)

Come to think of it, San Diego is the perfect location for this conference. The sun shines there all the time.

But if by chance the Moms do latch on to the “baby cost” matter, the lone Citibank branch in San Diego is just an 11-minute walk from the convention center.