Lairig Marketing

User-Generated Content Circa 1956

In what might become a week-long series, today’s post looks at the fever-pitch topic of “content.” Almost as prevalent as articles about Facebook, Pinterest, and “The Five Reasons You Need A Social Media Strategy,” you can’t surf very far without tripping over flotsam like this, from the current issue of B2B Magazine: “Content Marketing Becoming Vital.” zzzzzzzz.

Our perspective for today’s post looks at our old friend, user-generated content, which we took to the woodshed back in January of 2010. The most ironic thing about UGC over these last three years or so is that marketers believe they’ve invented something.

As with other digital marketing “innovations,” they are wrong. Consumers have been submitting “content” to brands for a very, very long time. The fact that it can now be done digitally doesn’t delete history.

Consider this date – July 11, 1956. That’s when 25 families from across the U.S. descended on Disney’s new California theme park for a free week of fun. Among them were the Barstows, whose nutty dad recorded the whole thing on film.

They got there by entering a promotion for 3M Scotch tape (or as we would call it today, by SUBMITTING USER-GENERATED CONTENT). All contestants needed to do was submit an entry that paid off on this half sentence: “I like “SCOTCH” Brand Cellophane Tape because…”

Little four-year-old Danny Barstow won for writing the words above and those below on a big poster:

WHEN SOME THINGS TEAR THEN I CAN JUST USE IT.

Actually, he didn’t write it himself. But he did add “DANNY” in all mismatched letters at the bottom.

Hard to know why 3M selected Danny as a winner. Probably because the Barstow family of five submitted SIX entries, all in one big-ass box. (As proof of how consumers have always been more clever than marketers, the Barstows cashed in their FOUR first-class tickets for FIVE seats in coach.)

The interesting footnote, as you might know, is that Barstow the elder put together a 34-minute 31-second documentary of the whole story in 1995 (and devotes the first six minutes or so to the family’s Scotch Tape contest shenanigans – see the film here).

In 2008, the Library of Congress selected the film, titled Disneyland Dream, for special preservation. How’s that for user-generated content?

And here’s something you don’t see with today’s contests. To enter, you had to submit proof of purchase of a roll of tape. Multiply the Barstow’s SIX rolls by the alleged million entrants (0.6% of U.S. population at the time), and you’ve got some real “social media ROI.”

One wonders about little Danny now, perhaps a grandfather. And about Danny III. No doubt wailing away at his iPad all day, entering dopey contests left and right.

Or, just maybe, Grandpa makes him do it old school.

Marketing Analytics: The Stuff In Between

Judging by the nearly infinite number of articles about “attribution” recently, we’d say marketing analytics “thought leaders” are on a crusade. Their intent is to move marketers away from the easy focus on first-order metrics like banner clicks and email open rates, and focus them at the other end of the spectrum – on the “sales” that marketing can (hopefully) take credit for.

This is a bit misguided. And, frankly, becoming very boring and nearly unreadable. As an example, here is an excerpt from a recent MediaPost “Metrics Insider” column:

“On a basic level, attribution produces reports with data containing insights at a single dimension, such as channel “A” is contributing X% to your success, compared to channel “B” at Y% and channel “C” at Z%.”

That is at a “basic level,” mind you.

Missing in this discussion is what Lairig Marketing calls, technically, “the stuff in between.”

Here is an example, using a financial advisory firm for illustration.

Let’s assume the “sales” end of the advisor’s marketing cycle is a face-to-face meeting where a customer signs up for a $250 financial plan. Prior to that is an initial meeting with the advisor, where the only goal is to press for the second meeting.

Prior to that is a series of touches with calls to action that push the prospect forward. In reverse order from meeting #1 might be these marketing tactics: a download of a sample financial plan, which was driven by interaction with an asset allocation calculator on the firm’s website, which was driven by an email to the prospect, which was driven by a webinar in which the prospect’s email address was registered.

This is “the stuff in between” – planned marketing touches that can be measured precisely, to determine where improvements are needed to increase individual response rates and send more prospects to the next step…ultimately increasing the number of people who show up at the second, final meeting.

It can also inspire the addition of MORE stuff in between: “What if we sent a letter to the prospect confirming the appointment for the second meeting, throwing in a $15 Starbucks card to minimize cancellations?”

Instead of all this hard work, the “analytics attributors” believe they can automate data collection and analysis, and as a bonus, optimize the digital touch points (only). Ergo – they can prove that last month’s online banner campaign with a 0.09% click-through generated $24,550 in sales.

Oddly, that attribution effort results in more, not less, focus on clicks.

And all that “stuff in between”? Attribution pretty much leaves it as a big, black, unattributable box.

SocialCode Fans On Facebook Fan Value

Had another post in mind this morning, but a link drew me away, like a moth to a flame. I cannot resist the temptation of an article that claims to reveal – finally, ONCE AND FOR ALL – the value of a Facebook fan.

I read these for the humor. I was not disappointed when I clicked over to an article titled “Why Brands Still Need Facebook Fans.” As if anyone has been saying they didn’t.

The subtitle was even better: “Fans Are 291% More Likely to Engage With Brand [sic] Than Non-Fans.” To that I say: f*cking duh.

The article was based on analysis by SocialCode, a Facebook-only social media agency. I would put several of the words in that prior sentence in quotation marks, but then I would be guilty of writing like Stuart Elliott.

SocialCode tracked ads on Facebook over several months and divided users who responded into two categories: (1) users who were already a Facebook fan of the brand that was in the ad, and (2) users who weren’t.

As you might expect, fans clicked more often than nonfans. However, because the response rate was so much worse for nonfans, their cost-per-acquisition (CPA) was much higher (roughly $15, versus a $5 CPA for existing fans).

Net of the study should have been: “It costs $10 more to get a nonfan to respond to an ad on Facebook than it does to get a fan.”

But no, the article says this: “SocialCode is the latest firm to try to calculate the value of a Facebook fan as part of a new study. Their verdict: about $10 per fan…"

Since SocialCode HASN’T PUBLISHED ITS OWN STUDY ON ITS OWN WEBSITE as reference, it is unclear if that verdict is theirs or the author of the article – Ad Age’s Cotton Delo.

In any case, the “verdict” is bullshit, but will run through Twitterville like fire. What a shame. A sham.

This is value measured by a lesser-of-two-evil-costs approach. Since fans cost $10 less a head to acquire, then their value is $10? Nonsense. Value must be measured in terms of return – revenue, sales, operating income. There is none of that in this study.

While we are at it, here are some other interesting points to consider in SocialCode’s analysis:

1) Why would I need to spend a penny to get Facebook fans to do anything? Isn’t that the whole point of having fans – to deepen the engagement and relationship right there on the Facebook brand page? What is the point of spending money ON ADS to acquire someone I already acquired? From this perspective, the “value” of a fan is negative $5. Money eating itself.

2) Of the seven types of calls-to-action that SocialCode tracked, the one that received by far the lowest response (a paltry 2%) was “program sign-up.” Isn’t it interesting that the activity requiring the most commitment and providing the deepest engagement opportunity had the worst response?

As interesting as the conclusion that no one really gives a sh*t about meaningful analysis anymore.

Philadelphia Newspapers – Make Me A (Better) Offer

It’s rare that a marketer offers a deal that doesn’t draw traffic. Companies are pretty good at knowing whether a price off, or a two-for-one, or even a coupon (for God’s sake) will work, and at what price level.

Throwing in an additional incentive, like free airline tickets, is a bit desperate, but if the ROI is there, it can make sense in many cases.

So how to explain a deal like this one offered by the Philadelphia Media Network (PMN for short)?

“Customers who sign up for a two-year subscription to the package of apps [ed.: for 3 different news websites] for $ 10 per month will pay $ 99 for an Arnova 10 G2 Android tablets for a total price of about $ 339, a 65% discount.”

Eek. The kitchen sink and more. And the sink isn’t even a brand-name sink!

The News Bundle
The “package of apps” refers to The Philadelphia Inquirer, its companion website Philly.com, and sister paper The Philadelphia Daily News. The consumer can get any one of these as an app. What is the value proposition (other than price) of making me take all three?

The Bundle Price
If anyone was nutty enough to get all three apps, they’d be out $ 13. The guys in PMN’s accounting department must have thought a $ 10 bundle price was enough – “they’re getting a 23% discount!” The consumer sees it as a measly $ 3.00 off.

Not enough to push them over a new paywall. Compare it to The New York Times initial offer: 99 cents instead of $ 15.00.

The Incentive Product
“A tablet? Cool. You mean the iPad right? What? No? Oh, an Android one. OK. I guess that Samsung one, right? What? The Armada? Huh? The Terra Nova? What? What the f&ck is Arnova, dude?”

If you can’t give the best, you sow a big seed of doubt.

The Incentive Price
The “go to” price for an incentive is “free.” How can a consumer be expected to know if $ 99 is a good price for a tablet he’s never heard of? Especially when he sees companies all over the country giving away free iPads as incentives?

And putting that $ 339 total price in print is a Bozo No No. The shock of it will prevent the consumer from remembering this is over a two-year period, and the “65% discount” mention doesn’t even register.

Would you be surprised to know that, six weeks later, PMN still has half its inventory of 5000 Arnova tablets on hand?

Maybe it can give them to Best Buy, who can package them with HP’s TouchPad tablet.
For, like, a 65% discount, dude.

Truth In Labeling – Who Cares ?

More government regulation threatens. If you damn people won’t stop overeating, the Feds are going to try everything in their power to make sure food-package labels make you think twice about reaching for those chocolate cream-filled cookies.

The current debate, as you might know, concerns the acronym “FOP,” referring to “front of package.” For those of you who get all Andy Rooney-like frustrated flipping the package round and round and upside down looking for the nutrition label, help is on the way.

The Grocery Manufacturers Association (GMA) and Food Marketing Institute (FMI) are trying to get ahead of what will surely be tougher specs from the FDA, and have proposed their own solution to listing essential nutritional information on package fronts.

Millions of anxious hours, debate, and money that shall all come to naught. Why?

Because most consumers wouldn’t bother to read nutrition information even if it came as a post-it note hanging from the box.

Some University of Minnesota researchers did a study to compare shoppers’ claims to their behavior when it comes to reading labels. As you might expect, claims were higher than actual behavior. By a lot.

In the study, nearly one-third of consumers claimed to look for label information on calories, fat content, sugar, etc. Yet eye-tracking data in the study showed the actual viewing of this information was in the single digits.

Since the University of Minnesota study was conducted using computer simulation, with the nutrition “label” served up to the consumer, this finding is sort of astounding, and implies the results would be still lower in a “real life” shopping experience.

Which says FOP is FUBAR.

It makes me wonder about all the other useles drivel companies cram onto a label. How much of it ever gets read?

There are about twenty touch points prior to when the consumer reaches for the box or can (or whatever) on the shelf. If you’ve done your marketing job properly, the package just needs to have your name and the product picture on it.

Which will leave plenty of room for whatever else the FDA thinks should be on there.

AdWeek Still Weak

Michael Wolff tried. We even told you how optimistic we were about the “new” AdWeek. Alas, slightly offbeat, cultural-centric articles about the advertising industry hold no flame to the repetitive daily tripe about social media, search engine marketing, and mobile apps.

AdWeek will plod on, with its “journalists” attempting to mimic Wolff's style. Such as the article posted yesterday by Erin Griffith. A backslapping, suck-up pean to Coupons.com that told us nothing we didn’t know – yes, it has attracted lots of VC money; yes, it is valued at $1 billion; and yes, it will go IPO. So?

“Coupons.com is the silent, cash-rich killer of the once-fat Sunday paper ad section.”

Killer? That would be news to the FSI industry, which still commands 85%+ of coupon distribution in the U.S. [source: Valassis]. As Joe Jackson would sing: “You can read it in the Sunday Papers.”

Wolff’s style, sans facts.

“Redemption rates on old-school paper coupons [sorry to interrupt – but see the 85%+ share for “old school” above] have fallen from a sad [Wolffish] 1.6% to an even sadder [Wolffish] 0.6%...Coupons.com’s rate is more than 18%.”

Since the article included a faux interview with Coupons.com's CEO, there was no way to validate this crazy number, I guess.

Allow us.

Here’s how newspapers do it. Count all the 350 billion coupons printed and distributed per year. Denominator. Take the 2.1 billion coupons collected at retail. Numerator. Presto = 0.6% redemption.

What would be the equivalent calculation for Coupons.com? Take all the coupons posted on its site, regardless of whether a site visitor looks at all of them. Denominator. Same process as the numerator above.

The only way to get 18% is to seriously undercount impressions – by claiming only the coupons a user downloads (which would be equivalent to “clipping”) – or by claiming downloads as redemptions.

Net net: The 18% coupon redemption rate for Coupons.com is complete bullshit.

We’d welcome Erin Griffith into our Research Hall of Sham, except she didn’t DO any research.

We could start a Journalism Hall of Sham instead. But that would be redundant.

Coldwater (Creek) Turns To Ice

Loyal readers know Coldwater Creek. In 2010, Lairig Marketing created a faux stock index of companies we felt had strong marketing strategies and operations. CWTR was the first. And the worst.

We “purchased” the stock in May, 2010 just above $6 a share. It ended the year with a 50% loss. Out of curiosity, I looked up the price yesterday. I’m embarrassed to say Coldwater Creek is even further downstream.

With a stock price of $1.25, and revenue falling by double-digit percentages, this company easily qualifies for our “How Would You Save [company name]?” series. Where did we go wrong?

Marketing Investment
Back then, we were impressed with Coldwater Creek’s increased marketing spend in the fourth quarter of 2009, a big gamble. Little did we know it would subsequently CUT spending across all of 2010. For God’s sake, CWTR reduced the number of catalogs it mailed to customers by 10% !

Channel Management
We cheered the company’s progress in raising sales by 20% in Q4 2009 via catalogs and the Web. Little did we know, this momentum would be the biggest lost opportunity an apparel retailer in the modern day could suffer. Direct channel sales DECLINED in 2010.

Brand Management
We applauded Coldwater Creek’s decision to limit its constant price-off posture. Little did we know it would keep prices high for clothes that female customers would reject, calling them “matronly.” Oh dear.

The company knows it is DEFCON 1 time. Here is what it said in the 2010 annual report:

“We recognize that we need to reposition the Coldwater Creek brand and communicate to our customer that we are changing.”

Well, then, where is the DEFCON 1 response? Here we are in July, and nothing much at all seems to have changed about this brand.

Hard to imagine the lights going out on a $1 billion company, but take a look at Talbots for a reference on the brutality of the women’s apparel business. Roughly the same size company, fighting for its life.

There better be something magical in the water, else Coldwater Creek is going to run aground.

You Go To College To Eat, Not Learn

Consider this Part 2 of our “The Consumer Just Might Be A Moron” post from a year ago. Except the subjects in question today aren’t consumers, rather what I would call “consumers in training.”

Few would agree with me though, since the trend recently has been to highlight Gen Y/Millenials, and the cohort just behind them, as consumers extraordinaire. Such as:

• How much influence they have on their parents’ and their friends’ spending decisions
• How savvy they are as shoppers
• How they Hoover up digital media in a way that makes the rest of us look like stooges

In an earlier post, we called them “Gen F.” Use your intuition to guess what the “F” stands for.

Today, we pass along some new research that indicates the “F” doesn’t stand for flawless, at least.

A couple of academics in Belgium set up a study to test what college students on steady, cafeteria-based meal plans ate. Analyzing their “food diaries” before and after putting up signs designating the healthiness of the cafeteria food options, they found that the students ignored the information provided and mostly ate the unhealthy crap.

For example, 70% of the food the students consumed was openly and clearly designated with zero stars or one star (on a scale of three stars), meaning they were the least healthy options.

Maybe the cafeterias in this study had no Internet access, preventing the students from Facebooking and Twittering (aka functioning normally). Or maybe they were channeling John Belushi.

Which would mean there is hope for Generation F after all.

What Price Loyalty ? (Part 2 of 2)

Yesterday in Part 1 we looked at a survey that showed consumers could, in so many words, give a rat’s butt about the loyalty programs they belong to. We hinted that marketers might be approaching this in the wrong way. Today we offer up what Lairig Marketing believes to be the right strategy for customer loyalty.

From the dictionary: loyalty means “being steady in affection.” Marketers have twisted the meaning to be “spending every last cent they have on us and telling all their friends to buy our stuff too.” Off the cliff.

In marketing-speak, it is simply this: “I bought from your company before, and my next purchase of the same item was, or will be, from your company also.”

The target for loyalty are the steady spenders. As a marketer, your job is to make sure they have no reason at all to go the competition; make sure that their steady spending always comes to you.

Loyalty is not a growth strategy. It is not a high-value customer strategy. You should have greater expectations for people who spend at the highest levels with you. Those customers are perfect for migration strategies, namely upsell/cross-sell strategies.

A great example of loyalty appeared last week. A regional grocer called Big Y introduced the billionth grocery loyalty card in the United States. However, it might be the first of its type to require a $20 “entry fee.”

Big Y’s loyalty approach is genius. It forces consumers to put some skin in the game. The $20 fee will prevent the type of apathy we saw in the survey responses from yesterday’s post. In addition, the rewards are pretty simple to understand – occasional deep discounts.

Compare that to a loyalty program that has seven different point systems based on what or where you shop, mileage you can’t ever use the way you want, or an outrageously craptastic gift selection that includes things like a clock radio with a telescope built into it.

The loyalty gurus have gone into shock. From a MediaPost article, Ted Zittell, from retail consultant McMillan/Doolittle (“the retail experts” ?!?):

“…you're asking shoppers to make a big change in orientation. They have to be shown how many baskets of groceries they're going to have to buy in order to justify a $20 membership..."

I doubt it. If there’s anything the past three years have taught us, it is this: consumers know their grocery math pretty well. Loyalty to a $20 bill is nearly off the charts.

What Price Loyalty ? (Part 1 of 2)

In the marketing world, loyalty is an abused term. Not as much as should be understood about it is. From my observation, there isn’t much attention paid to it in the marketing textbooks. Worse, most articles about loyalty, whether the theory or real-life examples, are dull as hell.

Loyalty has largely become defined by a piece of plastic, a credit card-shaped object that you can slide into your wallet along with, well, other loyalty cards. The estimates I’ve seen of the average number of loyalty programs Americans belong to range from 8 to nearly 14. That is a wide range, and indicates a deeper problem: consumers aren’t engaged enough with their loyalty programs to keep an accurate count of how many they belong to – “what’s in your wallet?” indeed.

It goes downhill from there.

A recent survey released by ACI Worldwide (yes, I had to Google the name too, to find out ACI is “a leading international provider of payment systems”) made a tiny stir in the marketing world. The findings about customer loyalty programs were pretty bleak. Stuff like this:

• More than 40% of consumers have had a negative experience with their loyalty programs
• A similar number said they have received rewards that were “too small to take seriously”
• 85% said they hadn't heard anything from their programs since signing up
• 81% claimed they didn't know the details of their programs, such as how to claim rewards

These numbers don’t make a lot of sense (if 85% haven’t heard anything, how can 40% receive rewards that are too small?), but let’s take it as one more indication of the deep problems the field of loyalty faces.

In a weird way, most of what you will read in reaction to data like this is a “blame the victim” scenario, i.e., it is the consumer’s fault for signing up for so many programs.

Nonsense, of course. Loyalty was the shiny new toy of the early 1980s, and companies were happy to get on board. What has kept these programs alive for so long, as useless as consumers seem to find them, has been data. Through that piece of plastic, marketers are able to capture billions of gigawatts of behavioral data.

But data won’t help you find your way if you don’t really understand what loyalty is. In Part 2 tomorrow, we’ll give the Lairig Marketing view of loyalty, and look at a unique loyalty approach one grocer announced this week that has shocked the loyalty experts.