Privacy May Dog Online Advertising

A Texas woman is suing Blockbuster for sharing details of her movie rental and purchase activities with Facebook through the Beacon program, according to the Associated Press. An Advertising Age article I recently wrote looks at the privacy issues that are likely to face those marketing online, and this is a great example. It's not that "real world" marketing is any better. In fact, much of it is worse in terms of the information it collects, coordinates, and uses, but because of the time spans between collection and use, and the lack of apparent connection, this has been largely invisible. However, the digital world is making this more obvious, rubbing the results in the faces of people. Those in marketing had best pay attention, because these are issues that can too easily bite when you least expect them.

Can Brands Make You Behave Differently?

According to Physorg.com, a recent study from Duke University and the University of Waterloo suggest that even brief exposures to a known brand can significantly change audience reactions and behavior. The research, which is to appear in the Journal of Consumer Research (they've been coming out with some pretty interesting things), exposed college students to subliminal flashes of Apple and IBM logos. Then they were asked to come up with uses, outside of building a structure, for a brick:

People who were exposed to the Apple logo generated significantly more unusual uses for the brick compared with those who were primed with the IBM logo, the researchers said. In addition, the unusual uses the Apple-primed participants generated were rated as more creative by independent judges.

Apparently a follow-up study found that those who saw a Disney logo behaved more honestly than those who viewed one for the E! television channel. One of the researchers said that this might suggest to company to spend more on product placement and other opportunities for "brief brand exposures." But I wonder 1) just how well-established the brand needs to be, 2) how much advertising you'd have to do to make the flashes do anything, and 3) whether that would actually translate into any market advantage for the companies, or if the only result would be changes in non-purchasing behavior.

Loss in Confidence in Television Advertising

I hadn't run across this survey, but the Association of National Advertisers, in conjunction with Forrester, did a fourth biennial survey of corporate managers on television advertising, according to Advertising Age. The results aren't looking so good for the TV industry. In short, companies are looking to spend more online and less on television because in general - 62 percent of respondents - thought that television advertising had become less effective in the last two years. More than half reported that when half of all households use digital video recording, they'll cut spending on TV ads by an average 12 percent:

Eighty-seven percent of advertisers believe branded entertainment is the key to TV advertising in the coming year, and 65% of them are eager to try ads in online TV shows. And emerging technologies continue to lure marketers looking to experiment. Forty-three percent would like to try interactive TV ads; 55% are interested in ads embedded in VOD; and 32% would like to try ads attached to the set-top-box menu.

But what's bad news for television is good news for online. Maybe that's where the medium will eventually go.

Politics, Business, and Doing Brand

Al Ries had an interesting article in Advertising Age on branding lessons from the presidential race. (Sorry, but you'll need a subscription.) Politics has picked up branding from business and now offers some clear lessons on it. For example, Clinton staked out "experience," Obama went with "change," and then Clinton realized that the latter's pick was more in keeping with public sentiment, and so tried to shift and have it both ways:

It's too late. Obama has pre-empted the change idea. A typical example is the cover of the Jan. 14 issue of Newsweek with a picture of Barack Obama and the words "Our time for change has come."

Now, Clinton looks like a follower instead of a leader.

Ries then asks the question, if you wanted to establish a brand, what idea would you want that hadn't already been grabbed by someone else? He actually writes about choosing a word, but I think idea might be more applicable. The obvious problem that businesses face is that no one remembers their slogans. You don't get too many new hits as you once had with "It's the Real Thing" (Coke), "King of Beers" (Budweiser), or "When it absolutely, positively has to be there overnight" (FedEx).

Little doubt that if you're older than, say, 35, you've heard these and the sayings have stuck in your heads. Ries suggests that companies make three mistakes:

1. developing a slogan independent of the brand and broader marketing strategies


2. trying to get an "exciting" slogan without remembering that it only has meaning in context


3. thinking in years instead of the decades of repetition success can take

I think there's something to be said for all these, but I think they miss a more fundamental point. You can't have brand for something that you're not. Eventually people find out what your product or service is like, and if you're blowing smoke, your marketing will be worthless at best, and at worst will drive business away.

FedEx had that great slogan, and backed it up with intense efforts to make sure that over 99 percent of the time, the package acutally did get there on time. Bush has had such a large market share that in economic reach, if not in taste, it really still is the king of beers. Coca Cola was the real thing because it established itself and for decades, any competitor, including Pepsi, was busy trying to be as big as Coke.

The single biggest mistake that I see companies make is thinking that a slogan can overcome ineptitude, disinterest, sloth, and greed. If you want a brand that will stick, don't talk the brand, do it. When you do the brand, you have orders of magnitude more repetitions of the branding messages, because they occur virtually every time someone does business with you. You then engage emotional and muscle memory, not just intellectual. This is a brand that will hold on to customers, and promise something valuable for prospects.

More (or Less) on Super Bowl Ads

I had mentioned the Super Bowl ads the other day and thought I was done - and I was. But someone else at MediaPost had a good point. Why didn't most advertisers make better use of email - and other parts of their marketing mix - to tie in the money they were spending in the ad? The one exception that the article points out (and it did have an email bias) was Budweiser.

Budweiser actually was quite clever in tying its online commercials into both an email campaign, a Web site, and a mobile marketing campaign. Weeks before the Super Bowl, you could see an “unaired” Super Bowl ad as well as enter a sweepstakes where you voted for your favorite Bud ad through your phone.

With the amount that companies spend on these 30 second extravaganzas, you'd think they'd want a better return on their investment. Or maybe their agencies tell them that they'll be the next Apple, with the famous 1984 ad, and that no other activity will be necessary. No need to measure results when you're building "brand."

Super Bowl Ads and the Failure of Business

Forget about the game. Forget about the upset and the ugly screw-ups on both sides. Look, instead, to the ugly screw-ups between plays: the ads. Companies spend millions for the time and then for the creative. The spots practically shriek, "We're gonna be on the Super Bowl! Let's show 'em how important we are!" Wtih animation, things blowing up, special effects, and casts that seemed to rival a Biblical epic movie, this was the opposite of tight budget.

But to what end? Other than knowing Budweiser had commercials - because they always have commercials (and I'll admit some fondness for the one about the horse training to join the team) - who do you remember? Hyundai trying to reposition itself as a luxury auto manufacturer but under the same brand? (You want how much for one of those?) Some automobile site, again with a couple of clever ads, but not memorable? CareerBuilders.com, whose ads seemed dull, which is probably not the best association for a business? It was about the commercials, which is fine, I guess, but do any of these companies do research into the history of ads?

Alka Seltzer ran an astonishingly clever series of ads in the 60s: funny, witty, pithy. There was the guy talking about the speecy, spicy meatballs, and the woman whose gastronomic adventures send her new husband seeking digestive relief, and "I can't believe I ate the whole thing. You ate it Ralph." And the company dropped them all. Why? Because while people loved the commercials, they didn't remember the product. Because the commercials became an end in themselves, serving a desire for entertainment, but not directly touching the issue of indigestion in an emotional way that would make people want to try the product for relief.

Does anyone test the results of the Super Bowl ads? I don't mean recollection, but actual sales. Do the companies make multiple times what the ads cost them in total? If not, they are wasting their money. I can't help but wonder if the really smart companies are the ones that avoid the Super Bowl and invest their marketing dollars into things more prosaic ... and profitable.

Dunkin Donuts and Brand Positioning

There was a great discussion on NPR this morning with Leslie Bielby, chief strategist for Hill Holliday, who was in charge of tweaking the branding and advertising for Dunkin Donuts. Not only is there a very funny piece about people not being able to say things like latte and cappuccino, underscoring an affinity with people who just want a cup of coffee. But perhaps the most interesting point that came out is how many people from an upscale background are trying to indentify with "regular" folks, and how that could play to DD's strengths.

Ads and Historic Diminution of Thought

I've been listening to XM Radio and the old-time radio channel. There's a pleasure in listening to voices not engaged in bombast or wrapped in treacle. Aside from the audio drama and comedy, there is the occasional commercial from the 40s or 50s. They often seem humorous in this time, with earnest announcers mentioning the supposed benefits to consumers of some product. The juxtaposition seems humorous because of the contrast - back then, certainly big promised of big happiness from big buying. But the tone is unlike anything you might hear today. There is no rushing breathless voice urging you like a lover moaning in the dark, no dazzling effects to stun someone's senses. The pitches are generally calm and almost reasoned. Oh, it's not as though they were rational appeals. Clearly the marketers were appealing to emotion with a veneer or rationality for respectability. Yet, they were at least a tacit nod to some intellectual capacity on the part of the audience. Think of some of the classic advertisements, like the one asking, "Do you make these common mistakes in English?" Are today's advertisers savvier than their predecessors, trying to bypass any intellectual content? Or are they following a trend that actually doesn't work? Companies often think they are much smarter than their customers - though a quick look at the performance of most would make you wonder whether it was the customers who were smarter. Perhaps, by eliminating the attempt to even talk to the thinking portion of the brain, helping to create at least rationalizations for emotional desires, they are undercutting their own effectiveness.

Slippery Slope of User-Generated Content

There's an amusing piece in the New York Times about companies looking to customers to create ads and the pain of the experience.

This is a concept that I think is flawed because the companies generally aren't approaching it the right way. You aren't going to get a professional spot from the vast majority of consumers. The writing, production qualities, and acting are more likely than not going to be bad. There's a reason people make their livings doing this sort of thing. If everyone could do it, you'd see much better marketing on television.

You also aren't going to get a whole bunch of spots that sees your product the way you'd like to see it:

One of the most viewed Heinz videos — seen, at last count, more than 12,800 times — ends with a close-up of a mouth with crooked, yellowed teeth. When Ms. Kaplan Thaler [an advertising executive not involved in the Heinz consumer commercial competition] saw it, she wondered, “Were his teeth the result of, maybe, too much Heinz?”

Yup, often people will mock your brand, your product, what part your product plays in life, and your reasons for looking to consumers for your advertising content.

But companies like Heinz could learn something by removing the ketchup-tinted glasses. Forget for a second that you would hope to get a useful commercial out of this. Why not use it as a window into what consumers are thinking. How do they react to your product? What associations do they make subconsciously that come out through the work? You've essentially asked for an admittedly self-selecting set of customers to hold forth on what you do. For a company, this is the value that the Internet really provides - not using the web to promote your own view, but seeing how you are perceived and how people perceive themselves. Look for archetypes, themes, and associations that might help you talk the customer's language. That makes a whole lot more sense than hoping to find the advertising needle in the haystack of would-be funniest home videos.

More Online Ad Acquisition Madness

Within a 24-hour span we've seen WPP, a British marketing services company, acquire 24/7 Real Media (search marketing, advertising management, and digital media), and then Microsoft spend $6 billion for aQuantive (digital ad agency, marketing technologies, and ad space wholesaler). What seems to be happening is the logical continuation of Google's acquisition of DoubleClick and the alleged merger talks between Microsoft and Yahoo. Everyone's trying to get into online advertising - because they know that companies will spend ad money somewhere and it's likely going to be increasingly for digital forms. It's one huge growth area, and companies want to get in line for the cash payouts, and to control important future directions of communications and business.

One good rule of thumb is that the more companies pay for acqusitions, the more they'll ultimately have to charge to recoup the price. Furthermore, the crossover between marketing services and underlying technologies that make digital marketing possible have been significant. That spells potential conflict of interest and growing costs, which, if taken to an extreme, could make digital advertising a lot less cost effective.

A New York Times article notes this:

“To effectively compete with the likes of Google and Yahoo, Microsoft needs to have a large base of advertisers,” said Anthony Noto, an analyst with Goldman Sachs. Mr. Noto said that Google had more than 500,000 advertisers and Yahoo about 300,000, while Microsoft has only a small fraction of that. “As long as that gap exists, they will have an inferior ability to monetize their own product,” Mr. Noto said.

Now aQuantive, which is based in Seattle, will bring many advertisers to Microsoft — and more.

I'd have to disagree a bit. What drives an online advertising business is not having a lot of advertisers, but having a lot of people who want to see those ads. It may be that Microsoft will get those people, but can they keep them? So far the company has done poorly in attracting audiences, so the question becomes whether they can maintain the viewers they will need for real success.

Microsoft Yodels Yahoo

(The following is a story of mine running translated right now in Newsweek Japan)

It only took one initial report a little over a week ago about potential merger talks between Microsoft and Yahoo to generate some of the biggest buzz the online industry has seen. Even as further stories suggested that the two companies were actually considering a strategic online partnership, interest was still intense because of one word: Google.

The search engine company has competed online with Yahoo and Microsoft and thrashed them both, becoming the premier destination for finding information and delivering ads. And so Yahoo and Microsoft hope that somehow the combination of the former’s audience – the top ranking web destination according to site ranking service Alexa.com, with visits from more than 25 percent of all global Internet users – and the latter’s technology leadership might let them compete more effectively.

Were this any other industry, the combined forces would be powerful: almost $51 billion in 2006 revenue and well over 80,000 employees. However, on the Internet, size isn’t enough. Customers must identify a company and its site as the preferred spot to get something done, whether to keep in contact with friends, share video, get news, or look for some piece of information. Lack that connection with people, and your business is bound for bad times. Microsoft and Yahoo is just one example in the online industry of how companies are trying to use alliances to gain a spot in the hearts of customers – though it’s not clear that the approach will often work.

Finding examples of corporations that are using acquisitions for greater customer contact is easy. For example, Yahoo bought the popular photo sharing site Flickr (recently closing its own service, Yahoo Photos, because so few people used it). News Corp acquired personal networking destination MySpace as part of Fox Interactive Media, the Internet division the company created in 2005. “That’s working out quite well,” says a top venture capitalist Todd Dagres of Spark Capital. “MySpace already had presence in the online world that Fox didn’t.”

The difference between these acquisitions and a possible Microsoft-Yahoo marriage is that they were targeted at popular but still niche properties that had enthusiastic customer bases. Amalgamating more broadly based companies, however, is too unfocused. Unless companies can catch the eye of the public, they will remain stuck where they are as their competitors blow past them.

Google is a danger to Microsoft and Yahoo because it competes with them in the vital areas of search engine services and online advertising, being far more successful at both. According to NielsenNetRatings, Google’s share of U.S. searches in March was 53.7 percent, while Yahoo had 21.8 percent, and Microsoft, 10.1 percent. So Google brings more people in who want information.

Then it delivers small ads whose content matches the search terms that users choose. The result is advertisements that people often actually want to read – and many advertisers willing to pay lots of money to Google. According to Karsten Weide, program director of digital media and entertainment at market researcher IDC, Yahoo was the online advertising leader until 2005, when Google blew past them. Last year, according to research firm eMarketer, Yahoo had 15% of U.S. paid search advertising, compared to Google’s 58.7%, and next year it projects Google as taking over three-quarters. “It’s dominant already and growing so fast that it will be difficult for the other players to catch up,” he says.

That spells trouble for the other two. According to Yahoo’s 2006 annual report, 88 percent of the company’s revenue came from advertisers. And while 80 percent of Microsoft’s income is from selling copies of Windows and Office product families, the company sees its economic future elsewhere because the old software lines are now mature businesses that are unlikely to offer high rates of business growth. Before becoming vice president of media development at PodTech.net, Robert Scoble was a Microsoft developer who also wrote a popular blog about the company. He remembers upper management stressing two years ago “that the growth of the company will come from advertising, not from selling another copy of Windows or another copy of Office.”

Yet Microsoft’s online advertising revenues have been flat at about $2.3 billion for the last four years while the industry has grown at an annual rate of over 30 percent, according to Weide. That means the company has faced a constantly declining market share. “I’m at a loss,” he says. “How do you pull zero percent in a growth climate like that? It’s an accomplishment in itself.”

The problem is that bigger is not necessarily better on the Internet. The attitude comes from an old strategy of traditional industries. By acquiring other businesses, a company could create economies of scale, driving down manufacturing and distribution costs and pressuring competitors. On the Internet, though, a small and reasonably funded company can quickly reach millions of consumers: look at MySpace or YouTube.

Microsoft’s difficulty is that it understands selling packaged software, not the media world of online, so it tries to copy someone else’s success. According to Scoble, Microsoft is preoccupied with FOG – fear of Google. “Microsoft has some technologies that are really good, but they’re in clone world right now,” Scoble says. “They’re trying to clone everything that Google is doing.” For example, Microsoft is emphasizing online ad sales and even giving away use of software business applications on its Live.com site. Unfortunately the drive to copy another means that the company remains reactive to the Internet and not developing the new services that will catapult it to the lead among consumers.

Yahoo has a grasp of media, but can’t force how consumers will react. Look at its acquisition of photo sharing service Flickr. That step was necessary because Yahoo’s own photo sharing service, Yahoo Photos, simply never caught on with users. “Now you’re going to bring that together with a behemoth like Microsoft and be able to operate in a nimble and innovate way in an industry that really thrives on rapid [change]?” asks Willan Johnson, formerly a vice president at Yahoo and now general manager of SupplyFrame.com. “Many have speculated that if that deal went through, you’d want to buy Google stock.”

In the view of Kim Caughey, a senior investment analyst at Fort Pitt Capital Group, the combined entity would have a hard time hiring the “cool people … to continually create new products to drive people to your web sites and capture eyeballs.” They would find a large-scale company a bad fit. “If they have a really great idea, venture capital will give them money,” she says.

Smaller entrepreneurial divisions might do the trick, but large companies typically don’t have interest in such endeavors because the returns are too small. Scoble found this when he worked at Microsoft and in 2005 urged management to consider purchasing such companies as MySpace, Flickr, or Internet phone service Skype when they were much smaller and less expensive to acquire. “I was telling them to pay attention to something that hadn’t yet sold for $20 million,” he remembers. “I asked, ‘Why aren’t you doing things in this market?’ and the answer was, ‘We’re too busy … running multi-billion dollar businesses.’” By the time large companies see the value, it’s often too late to acquire the truly innovative businesses that are now literally worth billions of dollars.

There still might be sense in a close alliance between Microsoft and Yahoo, even if not for an online consumer market. Caughey says there might be natural synergy for corporate customers – an integration of Microsoft’s commanding presence on desktops with Yahoo’s search technology. The two could become a way to pull together data scattered throughout a large company in the form of word processing documents, spreadsheets, and other files – an area that has caught Google’s eye. Or Yahoo and Microsoft could develop software and systems that would allow others to create the next big thing for consumers. Maybe even Google developers could give the products a test. They probably wouldn’t have to search too hard to find them.

Cocaine Energy Drink Un-Shelved

Redux Beverages, makers of the energy drink Cocaine, is withdrawing the product from the market, at least until it can devise a new name and packaging, according to the New York Times. This is the sort of business story that makes you wonder what in the hell these people were thinking. Ah, yes, here's what they were thinking according to Clegg Ivey, a partner in the venture:

“Of course, we intended for Cocaine energy drink to be a legal alternative the same way that celibacy is an alternative to premarital sex,” Mr. Ivey said. “It’s not the same thing and no one thinks it is. Our product doesn’t have any cocaine in it. No one thinks that it does.”

“We like to think we have a great sense of humor,” he said. “And our market, primarily folks from ages 20 to 30, they love the ideas, they love the name, they love the whole campaign. These are not drug users.”

Sure they love the campaign. They probably also enjoy the red and white design of the can with the quasi-printed looking logo running vertically, a clear take-off on Coca-Cola. But, again, what in the hell were they thinking? Of course a business wants to make money, but people do have responsibilities beyond financial gain. Generating to the backslide of the collective mentality does no one any good in the long run. We've seen this recently in talk radio with Imus getting booted for racist remarks. There's plenty of criticism of the more destructive and misogynistic practicioners of hiphop and rap. We have so-called teen television channels pouring forth an alarming amount of sex, drugs, and other uncontrolled behavior, all to garner ratings and higher advertising prices. There should be some thiings that people are ashamed to do for money, and such activities are at the top of the list. By trading on sex or drugs, for example, they are simply legal forms of prostitution and drug dealing, except not as straightforward and honest.

TV Advertisers Get Taken By Their Own Strategies

The New York Times Magazine had an issue devoted to middle age, and one of the article was called TV's Silver Age. Part way in there is the following paragraph:

Every Wednesday morning, newspapers across the country run a chart of the previous week’s highest-rated television shows. Most television executives basically ignore that list. They have eyes only for subsets of those overall figures, particularly one they call “the demo.” That’s televisionspeak for viewers ranging in age from 18 to 49. The demo may seem nonsensical — after all, what does a high-school graduate have in common with someone becoming a grandmother for the first time? — but it drives the television business.

If your company does or even contemplates television advertising, read that paragraph and the three that follow. They lay out the following history of ad buying:

1. Nielsen audience ratings were once broadly based.


2. ABC, being last in the rankings, decided - strictly as a marketing tactic for itself - to emphasize the 18-to-49 demographic because the network was attracting younger audiences and it looked good.


3. Further, ABC argued that the baby boom generation was vital, because it was used to televion and was huge.


4. Advertisers bought into this and the special reports that Nielsen generated for ABC became the important numbers.
   
5. As demographics shifted, advertisers never got it through their heads that the old arguments for skewing young had less and less credibility.

As a result, the advertiers still look for young audiences without ever considering where the most consumer dollars are available to be had. If you've read through this far, here's the conclusion: folks, you have just been taken for, oh, about 20 to 30 years and have largely been wasting the money your companies entrust you to wisely spend.

How do I, a non-advertising expert, figure I can say this? Because I'm willing to look at the numbers. Now some good news: just because you've done everything one particular way for so long doesn't mean that you can't switch strategies. Here are some steps to at least start moving in the right direction:

1. Redefine your market segments. Make advertising segmentation match your customer segmentation as much as possible. If advertisers refuse, mutter "online ads" and the names of competitors, and that should make their spines bend over backwards.


2. Do some research to show how much per capita spending in your category happens in each of the segments.


3. Create a segment weighting factor. If, for example, 30-to-40 year olds buy represent 40% of your sales, the factor would be 0.40.


4. Compare average spending by your customers to the appropriate segment spending as a ratio. The higher the ratio, the more invested in your company the cusotmers are and the more important they should be to you and where you might be looking for more.


5. For any program, multiply the number of audience members in a given segment by the average category spend. Now you have a first approximation of how much money there is for your type of product watching that program.

Sure, "real" analytics would get far more complex, but you don't need to have a Ph.D. in mathematics to start understanding what is going on. Don't get snowed; get smart.

Lure of Lurid Billboards

The Washington Post ran a piece on how digitally-enhanced billboards have become an advertising powerhouse again, at least so far as billing goes. Most of the article will stand on its own, but one point I thought was interesting:

Though outdoor revenue still is a small piece of the ad revenue pie - CBS Outdoor made less than one-quarter of the revenue of CBS's television network last year - it is growing faster than every other traditional ad medium. At CBS Outdoor, 2006 operating income was up 21 percent over the previous year, the biggest gain of any CBS division.

But consider for a moment the relative dynamics. Television is a heck of a lot more expensive to produce than a client's ad, even if the billboards do have whizzbang effects. So maybe the comparative revenue isn't as telling as the amount of profit that stays in the corporate pockets.