Too much of a good thing?

We’ve always thought of targeting as a good thing. For example, as marketers, we first identify our target audience, this includes demographics and sometimes psychographic features, and then we go after these audiences with messages that we think will appeal to them. Choosing where to place these messages has always been a big part of whether or not the campaign would be successful. And, ad dollars being what it is these days, media placements are even more thought about and streamlined. Just read a very interesting article from the NY Times about a new branch of Mediabrands, called Geomentum, that will “figure out how to divide ad dollars among the almost 40,000 ZIP codes in the United States, sometimes zeroing in on even smaller areas, like a city block”. This (and copious amounts of caffeine) just got me thinking: is this kind of hyper-targeting really a good thing? Can zeroing in too much be potentially limiting?

To start off, here’s a quote from the article:

“In a simple example, a company selling drugstore makeup for Asian women ought to advertise in neighborhoods where lots of Asian women live, and not bother pitching its products in neighborhoods heavy on white men. Once Geomentum narrowed down where Asian women lived, it would then analyze how a billboard in the neighborhood performed, versus a newspaper ad, versus a dollar-off coupon, by writing a long equation that linked store traffic and local product sales with all those variables”.

This may seem pretty logical at first, if this company’s target market is Asian women, why would they want to spend their money in a neighborhood full of white men? However, I couldn’t help but wonder…

True, putting the ads in an Asian-women-heavy neighborhood may save money, but it also puts the brand in a corner. For example, if the brand exclusively promotes its products in Asian women-heavy areas, then it may be seen by the general population as a niche product, one that only works for Asian women. This may prove to be problematic for company growth and diversification in the long run.

Also, as a brand, you can simply never know what someone is thinking when they see your product. For all the aforementioned company may know, the neighborhood full of white men may contain 20% Asian women – in the roles of girlfriends and friends. In this increasingly diverse, social, and integrated world, one can’t draw simple conclusions based on zip codes anymore.

So I think this whole super micro-targeting thing is good for the short term, as it may give brands a higher return, but as it always is the case, successful brands need to balance the short and long term benefits, and really think about how every move will impact the brand perception and value to its consumers. Much like the concept of sales and discounts, this super micro-targeting technique may help in the short term, but what about its value in the long run? Done right, this may be a valuable part of the campaign, but if brands relied too much on this, they may find themselves spending more money to fix their images.

Mainstreaming

I'm watching "So You Think You can Dance", and one of the judges mused at the fact that they have 3,000 audience members in the Kodak theater "watching dancers!". The implication being that Dancing is popular now, it's "in" now. Which got me thinking, can you mainstream everything now? I mean look at our TV programs these days: Top Chef (cooking? Why would you spend hours watching people dice onions?); Dancing with the Stars (old people trying to dance?); Project Runway (fashion is great, but nearly 4 million viewers per week? 4 million people watching designers cut and glue fabric together...); the Biggest Loser (watching a whole bunch of people running on treadmills)...all these shows turn mundane or otherwise niche activities into the feature presentation. What is it about these shows that keep drawing millions of viewers every week? Methinks it's a combination of good editing (HUMAN DRAMA!!!), and peer pressure.

Good editing first -- you need the good editing to draw viewers, they have to be entertained, and what better entertainment than drama? There's an interesting post at Mind Matters about how when we watch TV, we get less lonely because we experience something called the parasocial relationship phenomenon:

• "Parasocial relationships are the kind of one sided pseudo-relationships we develop over time with people or characters we might see on TV or in the movies. So, just as a friendship evolves through spending time together and sharing personal thoughts and opinions, parasocial relationships evolve by watching characters on our favorite TV shows, and becoming involved with their personal lives, idiosyncrasies, and experiences as if they were those of a friend"

So good editing is needed in order to establish that parasocial relationship. A good show will presumably be successful at this, and thus draw some audiences. But still, no matter how good the editing is, it's not good enough to draw upwards of 2 or 3 million viewers per episode.

This is where peer pressure comes in. The social aspect of watching these shows are valuable to us--for 2 separate reasons:

1. Participation in social context: We want to watch Idol so we can discuss it over the water cooler at work tomorrow: "ohmygod i can't believe so and so got kicked off! he was soooooo good!" If you're left out of that conversation, then you'd feel pretty alone, right? So you might as well spend an hour watching Idol just so you can join some conversations at work. Before you know it, you're emphatically expressing your grief over the loss of Sanjaya on Idol.

2. Demonstration of social value: These shows, with their format of competition, judge evaluation, and finally audience participation, have taken a step further than traditional shows in that they demonstrate a social value. They not only make the viewers part of the show (via voting or what not), but they also provide educational value. Through watching a half hour of So You Think You Can Dance, I now know the difference between par terre and en l'air . Equipped with this knowledge, I can participate in conversations that involve the show and/or the steps and throw in my two cents and sound like I know what I'm talking about. In this way, I can show off and demonstrate that I know stuff and that I am interesting: one way of attracting others.

This lethal combination of good editing and social value is what makes shows like Top Chef successful. Now, if we can only convert that idea to advertising...good creative+social value? Sounds like a winning campaign to me!

Hallmark going mobile

Hallmark, the card company, has announced that it's launching a line of mobile greeting cards. Yay Hallmark! I love seeing companies embrace technology, it gives them a new channel of revenue and it gives consumers more choices. It's a win win situation. I mean, if everyone just did everything the same old way and never took risks and never invested in anything new, then there'd be no progress and we'd all be pretty bored.

Mobile stuff is really interesting. I think it's the fact that it's so customizable and personal that makes it interesting. The question now becomes how to really target consumers through the mobile channel? There're so many reports out there stating top 10 ways to market through mobile, top 10 mistakes to avoid...but I still think that one can't just go by those. An iPhone user is pretty different from a Blackberry user, would the same kind of messaging work on both? I don't think so...market research firm Gfk claims that ads work better on iPhones-- proof that marketers need to really evaluate and think about consumers in more specific terms than "mobile user". If marketers can tailor their communication strategy based on the person that's using the device, rather than the fact that the person is using a device, then marketers would have more success in reaching people.

ARGH!

So I'm on my Google Reader and THIS is what I see.



I am so not amused. This is like the most lazy, stupidest way to promote a product. It's like, what's with that? Isn't there any other way to make your burgers seem more appealing, or is it because your burgers taste so bad that you have to sink to such low levels to promote it?

BK ads really make me angry, they are in general pretty controversial, but not in a good way--it's simply irresponsible advertising. Not that advertising has to be totally peppermint clean, but there are some moral codes that you should stick to, right? Like basic respect for the other gender.

Jimmy goes Cheap

The designer Jimmy Choo announced its collaboration with H&M for a cheaper shoes and accessories line. The fashion label is the latest in a slew of high-end designers forging partnerships with stores in order to produce cheaper and more accessible products. This trend of going down market has me wondering about the whole idea of Brand Equity: so in school, I learned that you can earn money based off of your brand if you have a well-established brand. To establish your brand, you need to figure out a couple of things that are central to your identity, and your messages have to relate to those characteristics. These characteristics will in turn, earn your brand some value and theoretically, will make people want to 1. buy your product, and 2. become loyal customers. So for example, Apple's brand is hip, great looking, and easy to use. They stick to those in all their commercials and messages, so people would want to buy an Apple product because of those 3 reasons.

For luxury products, one of the central characteristics that they all share is exclusivity, and exclusivity by way of price. In order to be a luxury line, your products must be inexplicably expensive. So a high price becomes one of the central defining characteristics of a luxury product. This characteristic is usually reinforced in all of the marketing for luxury lines -- most print ads for fashion houses give off the expensive vibe. So if designers such as Jimmy Choo are lowering their prices, then can they still be categorized under "Luxury"? If they have both cheap and expensive products, then how much of the brand image is the label compromising?

I guess my main issue is that when you have a brand that wants to be both accessible and exclusive at the same time, it's hard to make it work. Many brands have solved the problem by introducing separate lines within the same label, such as Marc by Marc Jacobs and Michael by Michael Kors. And I guess it's a good solution for now...but the Marc Jacobs brand (the main brand) is still seen as less exclusive than say, Prada, when their products cost about the same.

The Starbucks Factor

Starbucks profit falls 77% on store closure charges

Some nuggets:

• This year Starbucks has taken additional steps to lure consumers to its stores. It unveiled a combination food-and-drink pairing menu priced at $3.95 and instant-coffee packets called Via. Much to his chagrin, CEO Howard Schultz has said Starbucks has become the "poster child for excess" and he wants to shake that image.
• Starbucks has been facing declining store traffic for more than one year, jolted by weak consumer spending, especially in California and Florida, states accounting for 30% of U.S. retail sales.
• Based on these figures, restructuring at Starbucks is showing some positive signs. In the quarter that ended Dec. 28, U.S. comparable store sales slid 10%, while the number of transactions fell 6% and the average value fell 5%.

And a reader’s comment:
Instead of closing stores Starbucks should have lowered their prices. Lattes are the first thing financial advisors advise clients to cut out of their daily budgets to save money. Compare Starbucks earnings results to McD's or any other fast food joint. Fortune500Earnings (http://www.fortune500earnings.com) is a good venue to do that. Lower your prices $0.50 and retain more customers.

And my thoughts (a bit rambly, it's Sunday, sorry)

Maybe I’m crazy, but isn’t the reason why anyone would buy Starbucks because it IS a premium brand? Starbucks’s entire value rests on its image – its snobby, bourgeois, yuppy image…the image is what drew customers in the first place, not the coffee. Why would you want to de-value that? When Dunkin Donuts rolled out with their cheaper version of lattes, they designed it to look like high-end coffee to attract those customers. The DD coffees were no longer the construction workers' coffee, suddenly you see BMWs rolling up to DD Drive-Thrus. DD brought themselves up to Starbucks's level by offering premium coffees, I don't get why Starbucks would then want to undercut their own brand. Like Prada isn't lowering their prices just because Steve Madden made a shoe that looks exactly like theirs. I don't get why Schultz has a problem with this Starbucks brand image, it does represent excess, it does represent luxury--what's wrong with that? Starbucks IS seen as elitist, but so are all the other luxury brands. Hermes farms their own alligators -- I don't know how much more elitist you can get -- yet demand for their product is still through the roof. Not comparing a Starbucks latte to a Birkin, but in their own respective industries, both are seen as luxurious, unnecessary brands, and it is because of that that both companies have made money. And yeah it's a recession, and yeah financial advisors advise clients to stop drinking coffee, but 1. coffee is physically addictive, and 2. for a habitual Starbucks drinker to stop drinking Starbucks is really hard. It is, because that means they must admit to the world that they can't afford Starbucks coffee anymore, which, to a habitual Starbucks drinker (yuppy, middle-upper class, snobby), is REALLY HARD TO DO. So I think, personally, that Starbucks should emphasize their premium-ness, instead of lowering it, because that is their money maker. When it comes down to the bottom of it all, Starbucks is simply not a cheap brand.

Welcome to the Real World

Back from my 3-week vacay in China! And boy, was I surprised/shocked by the sheer potential buying power of that country. The level of consumerism in China is something that I have never seen in my life, ever. If China's in a recession, no one sent out the memo.

Switching subjects a bit...the thing that I kept on noticing over and over again in China was the amount of fake stuff that was floating around. There were so many fake LVs, Chanels, Burberrys...you name it, they've got it. I mean, this homeless guy begging in front of a temple was wearing a fake Gucci bag. I wonder what Vogue may say to that -- maybe Zoolander really had it right, derelict is the next big thing.

And these fake products look exactly like the real ones, there are no awkward looking C's on the chanel logos, the LV's were placed exactly where they were supposed to be placed. Really, I could not distinguish the difference, and every time I saw someone carrying a branded luxury product, I found myself wondering, is that real -- and does it matter? I mean, if I can get the same bag for hundreds of dollars cheaper and no one would know, why wouldn't I?

This whole fake stuff business just begs the question of what do you do when there's an entire population that couldnt give two squats about whether they have the real thing or the fake thing? Does brand equity even matter then? I found the pervasive thinking in China to be "As long as the bags look real, it's good enough". These petty fake bag shops are benefitting from the multi-million dollar campaigns that luxury fashion houses are spending on building up their brand. Everyone's gotta make a living, right? And this is the challenge that faces luxury brands in the Chinese market. Why spend the money on the real thing if no one notices, or worse, if everyone thinks that you're carrying a fake bag anyway? It may be worth it for the companies to allocate some of the multi-million dollar brand building campaigns to combat this whole fake stuff. And I think the way to do it is not through the legal system, but through culture and peer pressure. Just think: if Louis Vuitton started a whole campaign in China about the differences between fake and real, and drove home the point that only the real ones are symbols of status and success, maybe people would start thinking differently. That instead of "looks real is good enough", maybe they would shift towards "only real is good enough".

Part of the reason for why I think a campaign that demotes fakeness and promotes realness would be successful is because of the Chinese culture. It really is an interesting culture. 5,000 years of history has left the country with tons of traditions, and status and appearance have become two very important values. There's a thing (for the lack of a better word) in China called "face", similar to honor but not really. Everyone wants to preserve "face", they want to be seen as a positive, successful, and generally good person. To "lose face" is more than embarrassing, it is downright unacceptable to some. This tradition of preserving "face" has led an entire population to value status and appearance. This is why, when you step out into the streets of Beijing, girls are dressed impeccably and women wear heels everywhere, even to climb the Great Wall. Everyone who is anyone or wants to be anyone knows that first, you've got to look the part. Marketers can tap into that whole "face" notion, and link fake bags to the idea of losing face. That by purchasing a fake bag, you are not showing off your success or status, but rather you are demoting yourself through your innate admittance of your inability to purchase a real one. Harsh, I know, but have you seen the level of fake crap in China? I'm convinced that there is absolutely no notion of intellectual or artistic property there.

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.