Advertising’s Disruptive Evolution

Have you ever wondered whether your company’s latest advertising campaign was effective in reaching its target market? The evolution of the digital landscape has forced marketers in all industries to reevaluate their business models in order to remain competitive with the latest start-up staffed by disruptive entrepreneurs and tech-savvy web developers. The emergence of internet-based marketing platforms such as Google, Twitter, and Facebook have upended the status quo of public relations and left legacy advertising agencies searching for ways to keep pace.

 

One of the companies embracing this challenge is Hill Holiday, a Boston based advertising firm with over 40 years of marketing expertise serving firms such as Johnson & Johnson, Chili’s, and Merrill Lynch. The company’s latest solution is an in-house incubation start-up deemed Project Beacon. This group isn’t developing the next Super Bowl commercial or trade show event, but is instead, focused on experimenting with the latest digital technology to help clients better allocate their marketing budgets. Project Beacon’s latest product, BrandFeed, does just that by providing an analytics platform for marketers to view the success of their latest marketing investment in real time. The BrandFeed subscription enables companies to actively monitor their social media campaign and quantitatively discern whether their intended message is adequately capturing their target audiences. This service provides marketers with the tools needed to measure success rates in ways that were previously unavailable or fractured among various services. This latest product represents just one of the many applications Project Beacon has developed to help clients manage their digital presence in the evolving digital landscape.

 

The advertising industry’s emphasis on product development as a supplement to promotional campaigns represents a paradigm shift in the advertising world that has only just begun.  One of the ways this trend is having an impact is by changing the revenue model of the legacy marketing firm. The traditional model was for firms to bill clients for the hours worked crafting their next campaign concept and developing the various elements to implement that campaign such as a series of commercials or ad placements. This model ensured that marketing firms were compensated irrespective of the success of their individual campaigns. This caused the primary brand equity for a traditional advertising agency to be the reputation they had acquired in the marketplace over time. Project Beacon embodies Clayton M. Christensen’s concept of disruptive innovation within this context of the traditional advertising agency. Project Beacon is Hill Holliday’s attempt to bring disruptive innovation in-house before the latest Silicon Valley start-up does it for them. Professor Edward Boches of Boston University put it best when he said, “The smart agencies have learned that they have to disrupt themselves before they get disrupted.”

 

I believe the new revenue model has followed another one of Christensen’s concepts which is the ‘Job to be Done’ framework. Much in the way one would “hire” LinkedIn to help expand their professional network, modern marketing agencies now realize that they are not being hired to simply create and develop the client’s next campaign, but to also be able to quantify the campaigns success in achieving the client’s targeting objectives. This new model has been rejuvenated to compensate firms for actually creating value rather than simply by hours billed. A critical component of this model is being able to quantify the success of the campaign in real time. By being able to quantify the successful elements within a campaign, marketers can adjust their advertising mix and better utilize the marketing budgets at their disposal to capture the customers they value so deeply. How is your marketing department or advertising agency quantifying the success of its latest campaign?

Adapting to Customer Wants: Keep Up Hollywood

A major competitor to movie theaters these days are the various home theater options viewers now possess. Just as there are many reasons to watch in the theater, there are many reasons to watch at home. This could be for comfort, cost savings, or a feigning interest in a mediocre movie release season. There are also options that are many times only available outside of the theater. Whatever the reason, movie watching at home has developed over the years and is only getting more relevant.

Home theater options have been a big industry for over forty years. Since the launch of early formats, like Beta and VHS, customers have been excited to watch movies on other formats than complicated and pricey 8mm reels. Fast forward to the present, and the digital age has upped the game to another level, leaving short period formats, like LaserDisc, HD DVD, or even Blu-Ray for that matter, left behind as a nostalgic memory at best. Even then, stronger offerings like DVD, which had been the standard for almost fifteen years, are inevitably being lost to streaming and downloadable content. Netflix, Hulu, OnDemand, Amazon Instant Video, and many others are all options to get the home viewing experience. Even premium and basic cable stations provide more content than ever, but are at the mercy of which films the studios release to them and at what cost.

The true disc believers still have the RedBox option, which (sort of) rose from the ashes of the fallen Blockbuster/Hollywood Video days. I remember not too long ago going to Blockbuster, I was the last of a dying breed. RedBox is really a “kiosk Blockbuster” that could have happened years before its time. Some studios are still pushing that disc format, not wanting to stray from the norm, much like I was avoiding moving away from my local Blockbuster.

It boils down to the difficulty studios face to keep up with the home viewing methods customers prefer, which would make anyone hesitant on determining the best horse to bet on. I have a hard time keeping up with it, and I really enjoy watching movies on the most current format. I can only imagine how foreign this all might be to the occasional viewer. Distributors should focus not only how movies are viewed at home, but more importantly, how the customer wants to view them. With so many options, it is really important that the right movies make it to the right viewers. Currently, to get as much content as possible, a mix of them all is necessary, so availability is key.

As history shows, what customers really want is to see the content they want to see for a reasonable price, and they are willing to pay for this as most formats had big sales at the time it was relevant. Why not give them a better option? Often times I’ve thought to pay more for my Netflix subscription to get exactly what I want and lose all of the content that I don’t necessarily need. Sorting out customer behaviors and wants is a big hold up, but it becomes much worse for the sake of profit and inability to keep up with the latest demands.

In the meantime, I will continue my personal efforts on knowing what the new way to watch is. I recently was reading up on a newer site that is gaining interest, Popcorn Time. It offers the latest content with limited to no cost. Although the biggest hurdle it must overcome is the dreaded piracy label it has already been tagged with in its early stages.

Customer Loyalty – Acura Motors

In the current market of growing globalization and more temptations pulling at the consumers, companies have to work hard to be the consumers’ “choice brand”. In the consumers’ mind when one good or bad experience can make or break the relationship, maintaining a positive perception over the years is a hard objective to achieve. This is how Acura won me over.

When I first graduated from college and got my first full-time job, it was quite an exciting change in my life. Although I had always held part-time jobs and internships throughout college, I was barely making ends meet and was a quintessential “struggling college student”. So naturally when I began to make better money, my-not-yet-so-responsible-self traded in my leased Honda Accord for an upgrade. In searching for a car that was affordable but fitting for a 22-year-old, I decided on the Acura RSX, a two-door sports car. It was my very own and gave me a sense of pride and joy – until I got into a car accident.

One month into my car ownership, I was traveling on the I-5 North at 9:00 pm when the pick-up truck in front of me suddenly swerved to the right and exposed a love seat in the middle of the lane. My natural response kicked in and I also swerved to the right but over-corrected to the left and hit the center divider and came to a halting stop. My airbag had deployed and wheels twisted from the impact – insurance deemed it totaled. Thankfully, I walked away with only a scratchs and my life intact.

After several days of dealing with insurance and overcoming the trauma of the accident, it was once again time to decide on a replacement car…just one month later. I was extremely impressed by the safety qualities of Acura as I was sure the end result of the accident could have been much worse. Even though my initial decision to purchase the Acura RSX was somewhat arbitrary, Acura had won my loyalty for life with my experience in the accident. This time around, I wisely chose to be a bit more cautious and stayed away from the shiny two-door sports car and decided on a four-door sedan – Acura TL Type-S. I felt that even if it is not a sports car, the Type-S gave it a bit of flare that fit my more-cautious 22-year-old self – it was the perfect middle ground.

Although it is not unique to Acura alone in the automobile industry, it positioned its products with escalating and differentiating features that attract different segments of the population. The RSX appealed to me as a 22-year-old, adventurous, and budget conscious self, whereas the TL Type-S appealed to the still-22-year-old, but more conservative, and value minded self. Once it proved itself for its safety features, it offered an array of products that gave me options that met my changing needs. As I enter into the next phase of my life and in possession of my aging car, I am still loyal to the Acura brand and in contemplating a more family friendly car, my initial preference leans toward the Acura MDX, which now appeals to my 30-something, practical minded self. Despite the stiff competition by BMW X-5, Lexus RX, and Audi Q5, and many others that offer similar features compared to the MDX, Acura makes sure its products grow with the changing demands of the customers and targets to earn my business for life and not simply a “phase” in my life.

Et Tu, U2

I may be late to the party on this but maybe I don’t have any Apple products nor had I been educated in Myhrketing when U2 released their album, “Songs of Innocence” for free in collaboration with Tim Cook and Apple in September 2014. To U2, Apple, and my surprise the Apple public spurned this “free gift” that appeared on 500 million iTunes accounts. People demanded that the album be removed and in some extreme circumstances demanded entirely new devices. Apple was planning on making the album free for the 1st five years but was forced to create a tool for the public to remove the album. The fervor led to Bono, U2’s font man apologizing for his intentions.

There are many reasons for this disconnect. The first is that most people do not have the same taste in music as Tim Cook. Where Apple thought it was a gift, many thought it was punishment to listen to U2. The younger users may not know U2 while other may feel they are playing in faded glory. The second is possibly the vocal minority having more influence than the silent majority. The third reason is that it is an overreach by Apple to force music to an audience. Part of the process of art is to allow the market to support the artists and their work; not to have a corporation control the public’s art catalog without permission. Music and art is a very personal experience and Apple and U2 didn’t seem to understand that.

This leads to Myhrketing, understanding the consumer not product, and permission based marketing. The box at the end of the Apple agreement that everyone clicks may have given Apple the permission to provide the public with new music; along with other binding contractual terms. However, additional notifications and permission request prior to special occasions will aid acceptance and retention of the message, product, or goal. Apple did not do this and people were shocked that a company they like and trust would “spam” them; all be it expensive and to some valuable spam. U2 got caught up the belief their latest album must get to the people and be heard. Thinking their music is of quality and genre that every Apple user would want made them forget about the consumer. Tim Cook seconded this belief with his view of U2’s music and not his Apple customers. Jay-Z and Samsung did something similar a few months prior to U2 and Apple. Jay-Z’s “Magna Carta Holy Grail” had about as much acclaim as U2’s album but there wasn’t the backlash that U2 and Apple felt. This is because an App had to be downloaded first. Although Samsung did not directly ask each customer if they would like the album, they made the App available and downloading it was a form of permission. Samsung also limited it to the first 1 million downloads. This segmented to market into the people that truly wanted it. Recommending and making music available is far different than forced mass distribution.

This appeared to be a $100 million flop for Apple although there is still buzz about this stunt a half a year later. This was technically the largest album release of all time, topping “Magna Carta Holy Grail,” and will probably never be surpassed. Finally the noise from the summer has quieted down. Initially, Apple claimed that 33 million users experienced the album. That number climbed to 81 million in October. According to a study by Kantar of more than 2,500 iOS users, more than twice as many iOS users listened to U2 on their devices in January as the next most popular artist, Taylor Swift.

Artists are not businesses and do not need to focus on the customer to create art. However, based on how their latest album was received and sales from “No Line on the Horizon,” I’d recommend sticking to playing Joshua Tree and Achtung Baby on this upcoming tour.

Let’s do it!…. errr, how does it go?

For all you non-surfers out there, I’m going to walk you through what goes through a surfer’s head when he’s about to drop in on a big wave. First he paddles out into the line-up. On bigger days, that usually involves ducking diving, or dodging a few big waves before he’s in position to catch one. Sets come about every 20 minutes, so there’s a good amount of time of sitting and waiting for the waves to come. Also surfers have rules and there’s an unspoken “line” that each surfer is waiting in for his turn. All this means is the surfer is rolling over a few big ones before he gets to try for his own. The power of the wave is very apparent when it rolls under. It effortlessly picks up the surfer and puts him back down, and a set will do this about every 30 seconds, 3 or 4 waves in a row. By the time it’s his turn, he’s been hit on the head with large amounts of water, been picked up and put down several times and waited a while all while his nerves are going to his stomach.

Now he sees a bump on the horizon. He looks around at the guys around him and he’s given the OK, that it’s his. He paddles into position and then gets ready to sprint. Tucking his board under his body, he turns towards shore with the wave barreling down on him. He feels his tail get picked up as he’s paddling with all his effort. The wave is in slow motion and he keeps rising and rising and staring at the water below as it gets further and further away. A couple more strokes and he feels the wave start to push him forward. The moment of truth. The water below is 12’ or 15’ away, he can see the razor sharp reef at the bottom, the rocks sticking out that he’ll hit if he falls, and he can feel the power of what’s behind him. He has a choice. Grab the rails and pull back or push his body up and stomp his feet on the deck and take the drop. He hears a voice, “Just do it.”

Sometimes surfing feels like life or death and on some level it is, even though surfers actually rarely drown. Gary Gilmore was in fact in a life or death situation. Or really in his case it was a life then death situation as he was being executed. When asked if he had any last words, he said, “Let’s do it.” This phrase was the inspiration for Nike’s slogan, “Just Do It.”

The reason Nike’s slogan is so successful is every athlete goes through something similar to the surfer in the example. Whether I’m dropping into a big wave, hitting a kicker on my snowboard, or convincing myself to get out of bed to hit the gym, “Just Do It” is the mentality that’s the catalyst to action. Athletes need that extra push from their inner voice to do just one more rep, one more shot, one more lap.

While doing this paper someone asked me if it was risky for Nike to base their slogan on a murderer who was executed. Not only do I think it’s not risky, I think it’s the perfect situation to base their mentality around. The mentality wasn’t related the murders or even the execution, but about facing fear head on. There’s a moment in every athlete’s routine where they have to decide to pull back or push harder and the “Just Do It” attitude is what gives them that extra push. The mentality has always been there, it’s in human nature, Nike just put it into words.

New York Must be Famous for Growing Big Apples, Right?

The Big Apple, The Windy City, Bean Town. Many cities have nicknames both official and unofficial. All have their own origins that rarely have to do with their meanings today. The important part comes when a name turns into a perception or image in the mind of society. It’s easy to change a name, but very hard to change a perception.

The Big Apple is as you likely know, New York City, NY. But I’m willing to bet you don’t know why and never really asked. Well let’s see. New York City is big. Check. It’s not big in area but it is big in population, money, height and of course perception. And it must be famous for growing apples, right? No not really. It all started in the 1920’s with John Fitzgerald, a sports writer for the New York Morning Telegraph, creatively writing about horse racing. The prize for the horse at the end of a race was an apple. New York’s races were the most coveted at the time and so Fitzjerald would use the metaphor to call the races in New York, The Big Apple.

The Big Apple in this type of usage died out and “The Big Apple” just became known as the old name for New York. Later in the 1970’s The New York Convention and Visitors Bureau ran a marketing campaign that highlighted The Big Apple with a brighter image having nothing to do with horse racing or any real reasoning for that matter. People saw a big apple and thought more positively about a place that was going through some hard fiscal times. There’s the magic of The Big Apple. A name changed the city’s view of itself, changed the actions of its citizens and helped put an image of pride back into the city.
Companies do this too, but with the Big Apple it was very organic, didn’t have a lot of specifics behind it, didn’t really have a meaning, but somehow created an image that’s known to hundreds of millions if not billions of people. That’s power you can’t buy.

Companies pay huge dollars to get the same kind of reaction. When companies are able to place a positive image into the minds of their customers, the trust and loyalty go up and company becomes stronger. Getting that image into the minds of the customers is a difficult task. But it starts with picking a position, creating an image that portrays that postiton and getting it out there over and over and over again. What do you want your image to be?

Which Car Insurance Commercial Caught Your Attention?

How many car insurance company slogans can you recall right now— you know them by heart from their many TV ads. That is the power and success of advertisers and marketers using humor or satire. They add a great can’t-get-out-of-my-head jingle and a funny story, and the commercial leaves an impression. In the last few years it seems as if the number of these types of commercials that are character or slogan driven have increased.

As I was giving consideration to the notion above and how to start this blog article, I thought why not survey people and see what car insurance commercials came to their minds.   The first was my 13 year old son on the way to school one day last week. I asked him what commercials he could remember that were funny or that he liked the slogans (I think I used the word jingle with him). In the 5 minutes it took to drive him to school there were several he could recall (he obviously watches too much TV):

  • Allstate – Mayhem commercials. The Character “Mayhem” embodies all that can go wrong with your car (he is a satellite dish that fall from the roof).
  • State Farm – The commercial with the husband on the phone in the middle of the night with Jake, from State Farm. The wife takes the phone and says. “What are you wearing Jake, from State Farm? Numerous State Farm commercials with Green Bay Packers quarterback Aaron Rodgers “discount double check”, using his touchdown dance move.
  • Nationwide – Peyton Manning humming the “Nationwide is on your side” jingle as well as singing to it – “nothing beats that new car smell” and “chicken parm you taste so good”.

Other individuals that I spoke with mentioned these commercials:

  • GEICO – Many with the talking Gecko and also the one with “This Little Piggy” hanging out of the car window.
  • Esurance – “Insurance for the Modern World” – the nice old lady that manages to be comfortable with modern technologies and using Facebook by literally “posting” pictures on her dining room wall.
  • State Farm’s “magic jingle” (like a good neighbor state farm is there), father, son and grandma out in the desert, grandma saying “there are 15 calls ahead of us Jimmy”.
  • Allstate – several commercials were projecting spokesman Dennis Haysbert’s signature baritone voice through other people’s mouths. The one that someone recalled in particular was the commercial with the very young “smart girl” that called attention to Allstate’s accident forgiveness feature.
  • Progressive – Several people mentioned the Flo commercials. Most recently the commercial titled “family dinner conversation”, where she plays several of the characters around the table.

Car insurance is a $161 billion industry obsessed with risk protection, but they seem to be anything but conservative when it comes to marketing over the last several years. The top companies are putting a lot of money into advertising that in the past was more in line with the beer and travel industries. Car insurance companies are placing a lot of funding into splashy campaigns, partnerships with celebrities and athletes, including Facebook pages and Twitter feeds. Flo from Progressive has over 5 million likes on her Facebook page and at least 32,000 followers on Twitter.

How much do all of these commercials cost? Are our premiums higher because of the talking British gecko and Flo? Do you select an insurance company based on their commercials? Maybe this advertising barrage brought in so many new customers and so much new revenue that your policy rates will go down? Experts say that isn’t likely, as the competition is to win market share primarily from each other.

Researching the cost was the shocking part to me.  Data provider SNL Financial  found GEICO had spent about $994 million on advertising. That was 22 percent more than next-largest spender State Farm, even though State Farm’s ad spending grew at nearly three times the rate GEICO’s did. SNL found that GEICO’s ad budget represented 6.5 percent of the premiums it wrote last year. Among the rest of the five largest auto insurers in the country, none spent more than 4.9 percent of premiums on ads. For the whole industry, in fact, the average is just 2.4 percent. (Allstate spent $745 million or 3.0 percent on advertising; Farmers spent $718 million or 4.9 percent and Progressive spent $536 million or 3.9 percent, according to SNL.)

Why the shift over the last few years to these humorous character and slogan driven commercials? It is primarily due to the shift from the traditional insurance agent to do-it-yourself rate shopping hyped by companies like GEICO and Progressive that educated millennials to seek quotes online. As we continue to see enhanced technology via computers, tablets and mobile phones, I don’t see the shift to this type of insurance advertising slowing down any time soon.

 

Customer Loyalty

NORDSTROM THE SHOE COMPANY

             In order to outperform the competition companies are developing ways to bring customer value to create loyalty.  The new way of doing business is by reversing the traditional organization pyramid where the customer is at the bottom and executive management is literally on top.  Successful companies have reverse the pyramid and put the customer on top and even along the sides.  These companies empower front line employees to provide the customer the outmost satisfaction.  Nordstrom certainly can be put in this category.  This is my story of how I became loyal to their brand.         

My first job in high school was at a department store in South Coast Plaza.  A friend worked there and he told me that they were hiring at the department store.  I needed spending money so needless to say, I jumped at the opportunity.  The first time I entered through the employees’ door at the rear of the store, I had to walk up the stairwell to the time clock.  As I looked up the wall, I noticed in big bright white stenciled letters the phrase “THE CUSTOMER IS ALWAYS RIGHT.”  At sixteen, I really didn’t know what it really meant.  It took me a couple of days before I learned the name of the company, Nordstrom.  I worked there for about three weeks in their Petite Focus department as a clothing runner.  Basically, I would get pieces of clothing from the dressing rooms and put them back on the racks.  I worked long hours, boring at times, but I liked the pay check.

A year later, during their famous Semi-Annual Sale, they were hiring again and I returned to work at their Women Shoes department.  Not until I worked there the second time did I realize that Nordstrom had four different shoe departments: Women Shoes; Men Shoes; Brass Plum; Children Shoes.  Why so many shoe departments I asked myself?  Nordstrom began as a shoe store and eventually became that department store that it is.  I worked in the stock room where there were 25 to 30 rows of ten feet high shelves with hundreds of shoe boxes all for this one department.  So many kinds of shoe models, colors and sizes.

I remember shoe salesmen running back to the stock room wearing three hundred dollar suits swearing left and right about the “bitch” that had tried on 12 pairs of shoes and she bought none.  Or the lady whose feet were too wide and the shoes had to be stretched to fit her.  But once the salesmen returned to the floor to meet the customer, they were the nicest, most polite people you would ever meet.  “The customer is always right.” I recalled seeing the slogan twice a day in the employees’ stairway.  This is when it clicked.  Whatever the client did, say, or want, the salesman was there to provide the service he or she deserved.  I admired the salesmen and the people that worked there.

I’m a client now and their service is one of the best I’ve encountered.  I may be bias, but I have not had a bad experience to date.  I developed a relationship with Nordstrom when I was an employee.  As a customer, I have loyalty to their brand.  This is the place I buy most of my kids’ shoes.  They always have what I’m looking for and if they don’t, they’ll find it for me.  When the employee is constantly reminded what the company’s values are, they act on them.  Nordstrom exceeds in communicating these values.  And their clients, like me, will always be loyal for those same values.