A New Model for Coke

Coke pushing value-based Agency compensation model

“Under its new model, Coke will determine the value of assignments based on a range of factors including the work's strategic importance, the talent involved and whether other agencies could duplicate the work -- if they could, it's worth less. After those factors are used to set the value of a project, the agency's performance and the business results that follow determine what, if anything, the agency deserves to be paid beyond its upfront costs (which, in practice, are sometimes inflated). If all targets are hit, the agency could make as much as 30% on a project; if all targets are missed, the agency won't make any profit at all”.

Great idea! This further pushes creativity and encourages good marketing by shifting the emphasis to brands instead of sales.  A large part of why consumers are so wary of advertising these days is because a lot of ads are just junk.  Those junk ads are usually made because companies just want to make a quick buck.  Consumers today are smarter and less patient than ever, they have tools and they can control what they see.  So the ad industry is long overdue for a change…they need to make ads that really try to engage the consumer as opposed to flashing brands in the consumers’ faces. 

The tricky thing mentioned in the article is how one measures “value”.  I don’t think it’s that tricky…if you and a client can agree on certain goals, you should be evaluated by whether or not you meet those goals.  Goals may be hard to quantify in terms of numbers, but whoever said that numbers are the only measure?  Numbers are easy to understand and hard to dispute, and that’s why everyone uses them, but a value-based model calls for a more value-based way to evaluate campaigns, so the way in which we think about results would have to change.  Instead of putting all the importance on sales numbers, maybe we can shift to a more brand-centric evaluation.  This system forces companies to figure out their identity.  I understand that that requires a lot of work and almost a complete overhaul of how we think about returns, but I think it’s a good thing.  Most brands are so undifferentiated these days to the average consumer that the only thing that’s driving most consumer decisions is price, especially in consumer packaged goods.  However, I think there’s a lot to be gained by building a solid brand, and that’s not a new idea, it just hasn’t been emphasized as much as I think it should be. 

Back to the whole measuring value thing.  Think about something that is valuable to you, can you put a price on it?  Probably not.  So how can you measure how valuable that thing is if you can’t quantify it?  Well, you take other things into consideration.  Things like sentimental value and what it represents – all those things cannot be made into statistics.  Same thing goes for a brand, things like brand perception and brand value can’t truly be quantified because they don’t correlate directly to numbers.  Instead, they are great in terms of building a loyal consumer base.   I’m a Mac user, I’m pretty convinced that I’ll be a Mac user for life.  If there was another computer that did the exact same thing a Mac does, looked exactly the same way, costed $200 less, but didn’t have the nice little apple logo on the cover, I would still shell out the extra $200 for the Mac.  That logo is important to me because I identify with it, so I want it around.  Funnily enough, you can technically say that the Mac brand is worth $200 to me, so maybe you can quantify brand value after all.

Also, the value-based compensation model would shift more importance onto strategic planning, which is definitely a good thing.  Great advertising and effective communication come out of good strategic planning.  Take the Volkswagen “Drivers wanted” campaign, for example.  Arnold Communications took the insight gained from really good research and created one of the most successful campaigns ever. I think research provides enormous value for advertising, and if you conduct your research well and identify the necessary insights well, you are almost guaranteed to make a great campaign.  Because in advertising, you are just trying to get people to do something, so you need to really understand their wants and needs before you can figure out how to talk to them – and the best way to do that is to do really good research and analysis.

The thing with Social Media...

I think the reason for why advertisers can’t reliably use social media as a channel is the fact that social media is too individualized and too customized for advertisers to create one broad strategy for.  Take Facebook, for example, more than 200 million active users.  That’s a large audience pool, and with the Facebook Advertising program, you can theoretically reach your target.  However, what I use Facebook for is different from what my friend uses Facebook for.  I am acutely aware that anything on there is public property, therefore, I am careful about what I am linked to.  I personally know and am friends with a majority of the 359 people I am Facebook friends with.  I delete inappropriate wall posts, and I keep my profile very grandma friendly.  However, a large percentage of my friends’ profiles are a lot more open.  While I am uncomfortable sharing anything personal on Facebook, they put anything and everything on there.  I think of Facebook as a tool to connect with people, they think of Facebook as an open diary.  People who use Facebook have vastly different views on exactly what it is, half the time, they don’t really know what it is.  For traditional outlets such as TV and Magazines, we know why people use them, and we can use this knowledge to reach them.  For example, by saying that someone reads US Weekly religiously, you can probably guess the demographic and psychographic characteristics of that person.  However, by saying that someone uses Facebook religiously, you can’t reliably say anything about that person.  There are so many levels you have to go through to figure out who that person is and how to target that person.  You have to look at what groups they are in, what applications they installed, what their interests are, etc.  And even then, you can’t be certain that they are interested at all in what you’re selling.  Today an LSAT ad popped up on my profile, I’m guessing that’s because I’m a college-age student and am a Political Science major and an a Fan of Obama and am in a group vaguely related to Justice and Law.  However, I’m going into Advertising, I have absolutely no interest in law whatsoever.  The ability to truly customize your own Facebook is precisely why marketers haven’t really penetrated the medium. 

Another thing that makes social media hard to crack is the fact that it’s always being updated.  Let’s stick with the Facebook example -- just a month ago, Facebook underwent a major structural change, the second in a year.  Its new design is a lot more Twitter-like, and hasn’t exactly been popular with its users.  Facebook, and social media in general, is constantly updating itself because at the core of it, it is technology, and is not meant to be fixed.  Social media’s instability in format doesn’t allow marketers to truly use it as a trusted channel with expectations of ROI.  Televisions may change its pixel depth and the thickness of the screen, but that doesn’t affect the way you use it – however, with each interface redesign, Facebook redefines the way it is used – the focus on feeds in its latest redesign is meant to encourage users to update their statuses more often. Therefore, it is hard for marketers to develop a solid campaign centered around an ever-changing platform.

While it is hard to effectively use social media as an advertising outlet, it isn’t impossible.  I think social media further pushes marketers towards engaging the consumer rather than just throwing stuff at the consumer.  The popular “whopper sacrifice” campaign successfully broke 233,906 friendships on Facebook before it was banned.  That’s more than a third of McCain fans on Facebook.  Even more amazing, the BK campaign only lasted a week.  This is just one example out of many that highlights the importance of the content and level of creativity of advertising rather than the superficial reach of it.  Also, perhaps shorter, more explosive campaigns are the way to go with social media. That way, you don’t have to deal with the constant facelifts, and you can invest less dollars for possible high returns.

In n Out Burgers

Businessweek has an interesting story about the marketing strategies of In n Out burger. Basically, they state that word of mouth marketing and strategic placement of the physical stores are responsible for the success of the chain. Yep, I agree. But maybe the reason for the chain's success is not purely due to their wom and placements, but also because they make your burgers fresh, and they don't freeze their beef or fries. And they have animal sauce, which is possibly the most heavenly combination of unhealthy stuff you can ever have. Burger King or McDonald's' products simply aren't that good, which is why they can't have a good w-o-m campaign even if they wanted to. Because the bottom line is, w-o-m marketing relies on the quality and appeal of your product, and BK and McDonald's product just can't compete.

On another note, In N Out also has an amazing ability to keep everything related to their brand in alignment. There is no confusion about what an In n Out burger is: it's simply GOOD. And the same (simple & good) goes for everything else about the brand, their menu, their look (the arrow's been around since they started), the consistency of the colors, the burgers, and their ads. I remember hearing a radio spot for the burger chain when I was in Southern Cal, it went something like this:

Girl: I love you.
Boy: You're my double-double.
Girl: Really? Ooooooh John!
Jingle: In n Out, that's what a burger's all about...

Simple and good advertising.

Draft Day!

Love the NFL draft! I feel like ad placements during the actual draft is such a steal. Football is the most watched sport in America, and people probably tune in to the draft randomly throughout the day. Granted, you're not guaranteed a large group of audience as you are with a Superbowl game, but the draft draws in so many different groups of viewers in terms of demographics. You can reach your typical NFL football fans, your college football fans (students AND alums), people who are flipping the channel between NBA playoffs and MLB games. So even if they only catch the draft for 10 minutes, you have the potential of reaching them through your ads -- and, it's probably not that expensive to advertise during the draft, certainly better than $3 million for 30 seconds.

BMW vs. Audi

Photo from Juggernaut Advertising's flickr.

What a great way to keep your customers happy and loyal. I really enjoy these brand wars. These ads tap into natural human competitiveness so well that even though I own a Passat, I'm like, pwned Audi, who's the better German car now?

Sex sells...bikes?

Photo from Adrants

Yeah, my first response was wtf? But then I thought about it a little more, and this campaign kind of makes sense. Johnny Loco is a European bike company, with their bikes selling upwards of 400 pounds. Their audience is one pining for Luis Vuittons and draped in Dolce & Gabbana. The photos for this campaign are very high-fashion, and are somewhat reminiscent of Gucci ads. The bikes aren't the central theme of these ads, but I don't think that's a problem. The photographs seem to be focused on the model, on the landscape, on her emotional connection to where she is. The bike seems to be just background. However, the bike is the thing that got her to where she is; without the bike, she would never have that expression on her face -- and look how excited/happy/peaceful she looks! Essentially, this ad places the viewer in the shoes of the model, and says: look, we can help get you here. That's a good ad.

Burger King Whopper Virgins

When I first saw the Virgin Whoppers commercial on TV I was quite taken aback, but no one else in the room really seemed to care. “Tiff, you don’t get it, the point is that these people are totally unbiased, so if they like the Whopper, then it truly must be better than McDonald’s”. Well, duh, Burger King isn’t gonna show you the 500 other people that picked McDonald’s crap in their own ad. Other than the often voiced “this ad is unethical because it represents the invasion of capitalism” complaint, I have another one to throw into the fray:

This taste test was rendered ineffective by:
Using a different test audience from their target audience, and
Using/showing only a few testers

Taste is very individual and specific, just because my friend likes Burger King doesn’t mean I will. Food evolves from and within a specific context of culture, and it differs vastly from one culture to the next. The subjects that BK used were obviously very different from BK’s target audience, so I don’t know how BK expected the taste thumbs-up to translate: this Thai man liked the Whopper, which means I will too…? Or: this Romanian lady liked the Whopper, she’s never had hamburgers before, so if she likes it, then I should probably try it too. Neither one conclusion really makes sense to me. Why would one person’s judgment on taste (especially if we grew up eating completely different things and have appreciation for completely different foods) have any effect on me?

If Burger King is saying that its burger is SO good that it transcends any cultural boundaries, then it needs to make that message clearer. The Virgins commercials are not saying that Whopper crosses cultural barriers, they are saying that the objective taster prefers the Whopper – an entirely different, I think, less effective message.

**On that note, “our burgers are so good that they transcend any cultural boundaries” is so much more effective! It ups the peer pressure element to the umteenth degree.**

The classic taste test is a good concept, but what BK missed here, I think, is the audience and how much they care about the subjects. The taste test only works if you can show and convince your audience that EVERYONE or a MAJORITY of people likes this thing; by using the element of peer pressure, the advertiser can get consumers to try something new or switch to a different brand. BK missed the peer pressure element…with the Pepsi/coke taste test campaign, Pepsi rolled out with some statistic about how 80% of those who tried Pepsi liked it better (not to mention their test audience matched their target audience). So if I’m a Coke drinker, I’m in the minority, and Psychology says that humans don’t like being in the minority, we like conformity, so there’s the incentive to switch: if everyone else likes Pepsi, then something must be wrong with me if I don’t. Where’s the incentive for me to eat a Burger King Whopper in the Virgins commercial?