Lairig Marketing

Will Caribou Coffee Lead The Herd Off Social Media ?

Way back in the day – June, 2010, to be exact – we wrote up a very supportive piece on Caribou Coffee, a brand we expected would throw some major coffee-house competition Starbucks way. We especially liked its focus on customer experience and its plan to increase its commercial business.

For a while we were “spot on,” as they say. Caribou finished 2010 with an 8% sales increase, and followed that up in 2011 with an even better 15% growth figure. The commercial business successfully doubled as a part of the total business, from 13% to 26%. And operating income ticked up a full percentage point each year.

But something went awry in 2012. The business flattened out. That didn’t stop the big and oddly named German business conglomerate Joh. A. Benckiser (aka, “JAB”) from offering a 30% premium to Caribou Coffee’s then stock price, in December of last year. Caribou management took the deal.

Why not? JAB claimed it would let Caribou operate as a stand-alone business. The hardest part of taking the money would be keeping the JAB bureaucrats out of the way.

Three months later, the JAB bureaucrats apparently had enough of the arms-length relationship. In early April, Caribou announced that it would close 80 company-owned coffee-house locations, rebadge 88 others to JAB’s Peet’s Coffee brand, and limit Caribou’s focus to an 8-state region.

So there goes our hoped-for offset to Starbucks dominance. End of story, right?

Wrong.

Caribou management, believing that some marketing would perhaps keep the shops that remained in, er, business, decided to put up a harmless post on its Facebook brand page. Something about a bagel or what have you – the nonsense that most brands toss off to stir up a little “engagement” with their “fans.”

Now, remember that paragraph above about the closing of 80 Caribou stores? Well, turns out quite a few Facebookers couldn’t forget, and let the company have it, stuffing loads of vitriol right up the bagel. Whoever was managing Caribou’s Facebook page must have gone into shock. His or her first reaction was to delete and/or bury the negative comments.

That, as you know, is a “brand authenticity” no-no. Bad situation gets worse, and next thing you know the social media nitwit brigade is out in full force with teaching moments. Like this one, from Candy Tice, on Forbes.com:

“Instead of trying to plaster over the problem, the [Caribou] Facebook page could have been the place to dialogue about why these closures had to happen…They could be asking fans to post their favorite memory of Caribou stores that are closing.”

So there you have it: the new normal for social media will now require that brands vet all their business decisions online. Planning on buying a new fleet of trucks? Or moving the Finance team from the 4th floor to the 2nd floor? Or perhaps hiring five new sales people next month?

You’d best consult with your loyal likers and fan-ners first.

If this is the “dialogue” that social media gurus have been promoting all these years, we much prefer the good old brand monologue.

CMOs, Lies & Surveys (Part 3 of Many…)

Today we flip to the other side of The CMO Survey “coin” from the one we analyzed in Part 2. (New readers of this series who want to start from the beginning can click here.) If Part 2 was about the darkness of boring, old “traditional” advertising, then today’s side of the coin will blind you with its shininess.

One of the questions The CMO Survey asked its many non-CMO participants was this: “What is your social media spending as a percentage of your marketing budget?”

Let’s quickly repeat what we said in Part 1: any survey question about specific line items in a budget, especially if they are not real line items such as “social media spending,” put in front of someone who doesn’t have the actual budget in hand at that precise time will yield an incorrect answer.

And, if The CMO Survey instrument forced the respondent to choose from a set of ranges (e.g., 1 to 5 %, 6 to 10%, etc.), the result is entirely without validity.

What did the survey show? That social media spending will rise from 8.4% of the marketing budget now to 11.5% over the next year. Further, it would reach an astounding 21.6% five years from now.

As we did in Part 2 for the survey respondents’ guesses on traditional advertising, let’s debunk their social media hyper-inflation with some “external” checks.

Let’s start with media firm Group M, who found that in the U.S. the % of all media spend allocated to digital is 23%. Combine that with a Technorati Media’s 2103 Digital influence Report found that social media represented just 10% of the total digital media spend. Or choose the report from Nielsen subsidiary Vizu which found a slightly higher allocation, with 70% of advertisers near 10% - let’s take the total up to 15%, then.

So, if social media represents 15% of 23%, how can the resulting 3.45% come near The CMO Survey’s result of 11.5% ? And that, by the way, is just a media allocation. Remember from our detailed look at a marketing budget here, there are several other line items to consider (and that social media must be 11.5% of, at least).

These include:

>>> Staff (and related Occupancy expense)
>>> Database Technology
>>> Agencies (In-house or external)
>>> Campaign Production
>>> Market Research
>>> Training

It is preposterous to believe that direct social media expenses could represent 11.5% of any, let alone all, of the above items. We challenge any marketer on the planet to show us such an accounting.

Until then, The CMO Survey’s result for “percent of marketing budget allocated to social media spending” (that last bit in quotes in case Google ever decides to crawl this site again) is hereby and forthwith declared null. And void.

Avoid.

We’re not done. In Part 4, we’ll look at what the “CMOs” say they’ll do with their overall marketing budgets. To prepare, you can ditch today’s sunglasses for the rose-colored kind.

The Sponsored Content Fraud No One Talks About

"Sponsored content” is a newish euphemism for “advertising.” A marketer writes something and pays a publisher to, um, publish it. It’s up to the publisher to mark the content so the reader knows it is there for marketing purposes, not as a piece of real journalism.

It’s been going on for a million years. Those multipage “articles” you suddenly come across near the tail end of a magazine, that boast how great the business environment is in, let’s say, Tunisia? Advertorials. Or, to sound hifalutin, sponsored content.

So how funny was it to watch the explosion of bunched underwear last week when online readers of The Atlantic couldn’t figure out that an “article” about the Church of Scientology (for Chrissake !!!) was “sponsored content”?

“This is fraud,” they cried. And the cowards at The Atlantic buckled and removed the advertorial.

Ignorance does not connote sponsored content fraud.

But outright deceit does. And we found it in what, at first blush, appeared to be a promising method for marketing. This isn’t “60 Minutes” stuff, but something no one else has exposed. So allow us.

A fairly new method of sponsored content involves getting a place on someone’s media property to put just the link to your content. Much cheaper than buying an entire page on The Atlantic. If readers see your link, and its headline is catchy enough, off they go to your website, for just pennies a click.

But the pennies add up, as they always do, when you’re talking fraud (see Richard Pryor in "Superman III"). Phony clicks = fraudulent clicks.

There are ad companies that claim they can speed up this process via Twitter, and make your link – thus your content – “go viral.” These middlemen tap into the thousands of Twitter users who exist just for this purpose. These Twitterers don’t Tweet about eating a ham sandwich or taking a dump. They Tweet your link, seconds after they receive it from the ad company/middleman you gave your money – up front – to.

That first Tweet of your link costs you nothing. The real money gets made (and deducted from your upfront payment) when the Tweeted link gets clicked on.

Who does all this clicking? The Twitter “followers” of the original Tweeter. And here is where the fraud takes place.

Almost all of those followers are fake Twitter accounts. Hundreds upon probably thousands. Either manually or by bot, your link gets clicked once every minute, nonstop, until your ad payment has been run dry. (You will also note that none of these “visitors” ever stay on your site long enough to read your content piece, nor visit any other page on your site.)

Let’s take a look at one such Twitter player the middlemen tap. Check out @CliffOwens3.

Open Cliff’s list of followers and at #4 you will find “Lala Woodall.” A beautiful looking gal, who has Tweeted ONCE, has 31 followers, and is following 2004 others.

Right below her is "Lamonica Wentworth," another beautiful looking gal, who has Tweeted ONCE, has 25 followers, and is following 2004 others.

Right below her is "Lana Ellingson," another beauty, with one Tweet, 26 followers and following 2006…then Lanelle Stock…Lanette Gault…Lane McGlone…and on and on for hundreds upon hundreds of fake names and fake Twitter accounts.

They exist solely for the purpose of Cliff clicking on Cliff’s original Tweet of your link. So that Cliff collects a sh&tload of pennies (which he splits with the ad company you gave your money to).

We found dozens of Cliffs, each with hundreds of fake followers. Who will instantly eat up all your sponsored content budget, fraudulently.

One often hears the gripe that Facebook’s reported user numbers are not believable. We wonder now why no one has asked the same question about Twitter – just what proportion, exactly, of Twitter’s “user base” is simply ad-bot-like objects?

Consider yourself one of the fortunate handful who will ever be tipped off to this shady practice. Tread carefully when entering the dark world of sponsored Twitter links.

Else you might find your content isn’t being sponsored, but has been taken hostage.

Yelp Should Be Scared…But Not Of Facebook’s Social Graph

The Hooded One did it again. Here we were, slowly crawling back to the $42 we squandered on May 18. Facebook’s “big event” this past Tuesday was certain to give us another $3 kicker. Hell, we would get out if Facebook stock got back to just $38 a share, take the $4 loss, and call it even.

But no. A typically grueling, confusing, wonky and hubristic ZuckerPresentation left Facebook shares down for the day. And even lower the next day.

Yet, reading the media reports from the “Social Graph Search” big reveal (of which, of course, there are tens of thousands), one would think Facebook was onto something important.

When, honestly, all those reporters and bloggers should be saying just one thing: “We have no idea what the Facebook team was talking about.”

Worse, or “worst” perhaps, the words that investors wanted – needed – to hear were not spoken: sales, commerce, revenues, advertising.

Instead we got ludicrous examples of how one might use what is now a stream of effluent, mostly useless posts coming at Facebook users nonstop from their hundreds of “friends.” Here are some illustrations of what you can do in the near future with Facebook Social Graph Search (FSGS, shall we?) that some reporters heard, or made up (with apologies for grammar):

- Who are my friends who live in San Francisco?
> How could you possibly be “friends” with people…and not know where they live?

- Zuckerberg says that when he wanted to look for friends who would be interested in watching “Game of Thrones” with him…he did a search of friends who lived in Palo Alto and enjoyed the show. The result were 17 of his friends, including his sister…
> Do you have room for 17 people in your living room? And what a sad day it must be for a sister to know she can only be known to her brother digitally.

- Are you dying to know which friends appeared in photos with you before 2006?
> In a word, “no.”

- You can look up "friends of friends who are single."
> What if they are not on the market? Isn’t this what others might call “stalking” ?

- …to look up new product managers for Facebook, he might look up “people who have been product managers and who have been founders”
> That only works if those people are already in your network. LinkedIn would be much more useful for this.

And here was the supposed Yelp killer:
- What matters more – restaurants a site like Yelp says are good, or restaurants your friends think are good?

Within minutes, Yelp’s stock plunged 6%. And it fell another 4% the next morning. It was probably the only example anyone at Facebook’s event could understand, but it is a complete misread on reality. If our money wasn’t wasting away on Facebook stock, we’d pick up 100 Yelp shares ASAP.

Let’s say you are traveling to Dubuque and want to eat at a Mexican restaurant. Using FSGS, you might – might – find “friends” who have “liked” Mexican restaurants in Dubuque. But you wouldn’t know why, nor would you know if the results covered the entire set.

As an alternative, go to Yelp, type in “Mexican” and “Dubuque IA” and you’re pretty much done. How a stock can drop 10% on this scenario is beyond comprehension.

Yelp’s CEO and co-founder Jeremy Stoppelman, although way better looking than Mark Zuckerberg, hasn’t been “out there” enough, and certainly hasn’t exuded the confidence or gravitas, or whatever it is that ZuckerHoodie has, to put investors at ease.

If we ran the place, the Yelp blog, Twitter feed, and – why not? – Yelp's brand page on Facebook – would be churning at full tilt, explaining how much better Yelp is than the “social graph.” As of now, though, they sit, in a sort of deafening silence.

Without defending itself against Facebook, Yelp’s real issue – the inability to scale the business in the medium term – will become more apparent, sooner than investors would like to see. That’s the kind of real “scare” that can take a stock down. A lot more than 10%.

Maybe Jeremy Stoppelman should start wearing a hoodie.

Twitter Hits Reverse Tipping Point?

Allow us to paraphrase something social media gurus have stated in (so many) other words (so often) the past two years: “OK, so Twitter stinks for social media ROI, but at least it is an excellent way to provide customer service.”

We now have evidence indicating the sand might be slipping from under the second part of that claim. In December, cable-TV provider Charter Communications announced it would stop responding to subscribers that use Twitter to communicate with it.

[In a cruel twist of the social media knife, Charter announced this…on Twitter !!!]

This is not a small potatoes event. For one thing, Charter is the seventh-largest pay-TV provider in the U.S. Secondly, as an industry whose service is hated more than lawyers for God’s sake, cable has been touting its “Twitter customer care” leadership since, well, pretty much since Twitter was invented (Google “Frank Eliason”).

The sad truth is that helping customers remotely is a nasty business. Moving some of that burden to Twitter can claim the following as key accomplishments:

• Raises the bar on customers’ expectations for response turnaround time over the moon
• Makes customers nastier than they would be if it were phone or face-to-face (i.e., “personal”) communication
• Airs all the dirty laundry publicly, a feeding-frenzy sh*tstorm just waiting to be unleashed

Here are examples from Comcast customers late on New Year’s Day, six consecutive tweets directed to @comcast (shown here as is, with no corrections to grammar, punctuation, etc.):

- Comcast is forever out of touch with their customers. And competence.
- Can you at least let me know you got my email, and when ill get a response? Thanks
- Your Internet service is slow and doesn’t seem to work consistently. This is not acceptable.
- Business class, you suck. Seriously. I can do more with residential than with BC.You can take my bandwidth, not my money!
- Terrorist company
- I feel like any tweet that @comcast gets hassss to be about how much people hate them

Should a company be required to respond to village idiot vitriol? Charter Communications, at least, says “no."

Now, here are examples from the Comcast Cares side of Twitter. Five consecutive tweets in response to complaining Comcast subscribers, from “Comcast Bill,” one more in a long line of customer-service worker-bees turned into pseudo-famous, um, worker-bees. Check out the typos, punctuation and grammar from Mr. Bill, again presented as is:

- I can arrnage, when works?
- I think we can send a tech onsite.
- I do apologize, that’s something i cannot change.
- What error message are you getting?

Should a company’s customer service be fast and cheap, but not good? Charter Communications, at least, says “no."

For Charter’s decision to shift the tide, executives will need to abandon shop-worn maxims such as “the customer is always right,” “the customer is not a moron,” and “more communications are better than quality communications with customers.”

Put together, those three maxims oddly clock in at exactly 140 characters. Yet all that…and who…Twitters might not be gold.

More LinkedIn Content Farming – Do You “Endorse” It ?

While we are on the topic of LinkedIn’s sorry move toward low-brow content, let us share this story.

The emails started filling our inbox a few weeks ago. Out of the blue, all these subject lines claiming – nay, screaming! – “So & So” (a LinkedIn connection of ours) has endorsed you! As the notices started piling up, our reaction went from “Oh, that was sooo nice of So & So” to “what the F is all this spam?”

What memo did we not get about this?

In the body of each email was So & So’s cute little LinkedIn headshot with a generic message, with yet another exclamation point: “I’ve just endorsed you for skills & expertise!”

But there was more to this mystery. In order to see what “skills & expertise” were endorsed, we needed to click into our LinkedIn profile. Which then required us to click an “Add To Profile” button to get these endorsements to, um, actually endorse.

The one bit of good news, perhaps, is that this new “pick a word, any word” method of endorsement replaces the tortured, phony paragraphs LinkedIn members were at one time forced to write for others. Or to beg for from others. Or, as it was soon learned, to “trade” written endorsements.

Such worthless currency. So & So is “hard working, a team player, really innovates, smart.” HR Buzzword Bingo.

LinkedIn saw the tired writing on that wall. In order to keep recruiters happy, someone at LinkedIn came up with this new method, so easy a caveman could do it. The reaction from LinkedIn nonrecruiter members has been less than lukewarm. Lukecold, perhaps.

LinkedIn members are right to feel a bit sullied about this new endorsement method. In essence, we have been SEO-ed.

We are now but keywords, lowing like cattle on one big content farm.

LinkedIn Becomes Content Farm

It is official. With today’s headlining “What’s The Best Measurement For Success? Happiness” article from The World’s Chief of Drivel, Richard Branson, LinkedIn has succumbed to the “99%.”

No, not the 99% of OccupyVille. We refer here to the 99% who like their business content plain and simple. No looks under the dirty hood. No boring case studies please. No provocative takes against popular trends.

Just keep those “top five” lists and the same ol’ same ol’ stories about passion and fun coming.

Sir Richard, as we’ve illustrated before, can spew this stuff better than anyone. Rich, and rich as hell, he can – without a whiff of irony – toss this off:

“By focussing [sic] on people’s well-being rather than economic productivity, there is likely to be a knock-on effect for business too…Money is a by-product..”

Reminds us of the old joke, “How do you end up with $1 million from investing in the stock market? Start with $2 million.” In Branson’s happy world it would go like this – “How do you become a happy businessman? Make your first $1 million.”

Being part of the 1% who like useful content, we’d actually prefer to see Branson pen something like “why Virgin can’t run a profitable U.S. airline business.”

The LinkedIn link in this, if you will (see Mitt Romney), is that as of this writing, over 800 alleged business people/LinkedIn members have posted a comment on Branson’s happy talk. Amazing, as that is now four times as many words as his “thought piece” contained.

LinkedIn has figured out one of the dirty little secrets of social networking: garden-variety business people don’t want to be linked with the 99% who are just like them. They prefer to link with “thought leaders” like Richard Branson, whose next post will surely be about passion. In business. Or fun. In business.

But there’s another dirty little secret. For a public company like LinkedIn, this thoughtless content won’t have enough legs to outrun Wall Street. Since “blowing away” expectations on its November 1st quarterly earnings call, LinkedIn is inexplicably down more than 10%, almost three times that of the S&P 500.

Which leaves us wondering…Just how “happy” are LinkedIn shareholders these past couple of weeks?

Guerilla Marketers – Masters Of Jungle, Not Masters Of Marketing

As a counter to our previous post about the advantage of a Master’s in Marketing degree (versus a Marketing MBA), we have the “new normal-ish” argument that students don’t really need a graduate degree at all to succeed in the future world of Marketing.

The case is usually presented via a series of inane anecdotes, with no better example than this article from The Wall Street Journal, from April of this year.

In a nutshell, the article presents – in a positive light, mind you – the indentured servitude in which some companies place undergraduate students to conduct the lowest form of marketing – guerilla marketing. The students are euphemistically labeled “brand ambassadors.”

They are not technically employees. Nor are they technically paid. This is a form of outsourcing that would make even Mitt Romney blush.

Here are some excerpts:

“Students are slipping into lecture halls to write brand names and company URLs on professors' white boards…to plug the businesses of entrepreneurs in New York City and Silicon Valley.”

“Many of the start-ups give students titles like ‘Campus CEO’ or ‘director of social media.’ ”

“Sometimes the students identify themselves as company ambassadors; sometimes not.”

“Students earn neither cash nor college credit. Instead, ambassadors say they garner a different type of currency: résumé fodder.”

The companies featured in this story are Rent the Runway, foursquare, and Stylitics [sic]. Their student “ambassadors” write blogs, take and upload lots and lots of pictures, and endlessly harass their closest friends (and likely soon-to-be ex-friends). For free.

None of this effort involves any fundamental learnings of marketing, such as segmentation, positioning, and measurement.

So where’s the résumé fodder? Hello, Faddah?

On top of it all, Stylitics was mentioned in the article as planning “to roll out an ambassador program for high-school students this spring.” I think law enforcement’s term for this is “trafficking.”

How do the students benefit, if they are not paid?

Company managers “help ambassadors spruce up their resumes, write letters of recommendation for them and impart job advice.”

The most important job advice “imparted” is no doubt this: “Go out and find ten new brand ambassadors.”

Welcome to the future. Gorilla marketing.

The Runner-Up Script To Facebook's "Chair" Ad

Chinese food.

Chinese food is made so that people can sit down and eat without a lot of conviction or interest.

Anyone can eat Chinese food – especially people who are not Chinese. Like Jews on Christmas Eve, for example.

And if a plate of Chinese food is large enough, people can sit down together…and tell jokes or make up stories about the food. Like the ones about dogs.

Chinese food is for simple folk, and that is why Chinese food is like Facebook.

Mai tais. Chop sticks. Those cute, tiny paper umbrellas.

These are things Chinese restaurants use to make us forget what exactly is on our plates. So we don’t ask how is it possible that sweet and sour can exist at the same time. Or who the hell is General Tso.

Dance floors. Basketball. A great fortune cookie.

A great fortune cookie is something people read so they can have something to post to Facebook later on.

The Chinese menu.

It is vast, and often illegible. And makes us wonder how we could be so hungry – and alone – one hour later.

So maybe the reason we use Facebook is to remind ourselves that we are not alone. Although we are definitely very hungry.

“Social Media ROI” Should Be Banned

Google the phrase “Social Media ROI” right now. You will be presented with 55,600,000 results. We estimate that if you wait until tomorrow, you will have to comb through a million more. And so on and so on.

We also estimate that less than 0.0005% of the search results make a proper reference to the “R” in ROI. Which means a lot of people are writing about the wrong thing (but no doubt getting lots of readers, who are desperately seeking what can’t be found).

It is all Dell’s fault. Sometime back in 2009, the company announced that it had sold a thousand or so used computers on Twitter. The revenue claim was equivalent in scope to what Dell spends on photocopy paper in one day. Nevertheless, social media ROI was born.

Fifty-five-million stories later, and there hasn’t been much more than Dell to tout. Sure, there have been gabillions of “likes” and “retweets” and “views” and “shares.” But these and their ilk are not what “R” refers to.

Return on investment is a financial construct, not a subjective, qualitative dart toss. The return – aka the numerator – is equal to operating profit. That can only come from increased revenue or reduction in cost, and must be definitively attributed to the marketing investment made (which goes in the denominator – i.e., the “I” of ROI).

To see it in action, click here for our look at the ROI of the Hispanic social network site formerly known as Que Pasa.

Since no one uses the “R” properly when it comes to social media, the phrase “social media ROI” should be embargoed by all publishers, ISPs, and search engines.

The digital marketing industry site Digiday has been running a series on “the biggest challenges to measuring” social media ROI, interviewing various marketers for insight. Here are excerpts from today’s offering that help reveal why a dagger should be, um, dagged into the heart of social media “return”:

Joe Barbagallo, Volvo
“…the relationship-building nature of social media isn’t designed to directly [drive sales]…in the end, social media campaigns are designed to drive awareness and consideration.”

Erich Marx, Nissan
“Until there is agreement organizationally on what the social goal is, and what is ultimately most important, measurement of ROI that has any meaning will be a struggle.”

Scott Gulbransen, H&R Block
“Sometimes when people ask you what the ROI of a social program is, we need to…tell them it’s the wrong question in the first place.”

And, finally, to prove our long-running point about how f*cked up Campbell Soup is:

Adam Kmiec, Campbell Soup
"The challenge isn’t what to measure or when to measure. It’s not even how we derive insights from the metrics. The biggest challenge is convincing people to believe the ROI metrics."

Convincing people to believe something that’s not real? That is a job not for soup marketers, but for magicians.