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May 29, 2012#

Warning to Facebook: Tread Slowly with Advertisers

Much has been made of General Motor’s decision to discontinue advertising on Facebook (just days before it went public), citing poor ROI.  It also didn’t get what it wanted:  GM’s request to run bigger, higher impact ad units, including taking over an entire page, was politely, though firmly, rejected by Facebook.
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March 16, 2011#

Is Groupon Killing Brands?

The social coupon craze has reached fever pitch.  Clearly it’s a boon for consumers.  But is it really good for businesses as well, particularly with regard to building and maintaining brand value?

As a short-term business investment, Groupon appears to financially payout more often than not.  A survey of 150 businesses that ran Groupon promotions between June 2009 and August 2010, found that the promotion was profitable for 66% and unprofitable for 32% of respondents.  It’s also fairly easy to determine your likely payout mathematically.

But if marketing is defined as increasing perceived consumer value in service of increasing sales at a profit, we need to look beyond Groupon’s short-term sales impact, and ask how it might be influencing perceived brand value.

On this matter, we have serious concerns.  Groupon, and its ilk, unfortunately is training people to expect a coupon on most anything.  And that means that unless people find a deal, they’re less likely to buy at full price, preferring to wait until the next coupon cycle.  This applies to current customers who are used to paying full price, and new customers who would now never dream of paying full price.  The result:  More and more people will be trained to only buy on deal, which, of course, diminishes the perceived value of a brand both short and long-term.

Sometimes what’s good for consumers is not so good for businesses or brands. Until the recent crises in Japan, disinflation has been a boon for consumers who benefited from lower prices on most everyday products, but clearly it has not been good for businesses as they watched their profits dwindle.  Similarly, Groupon offers consumers valuable discounted values, but companies may be sacrificing their perceived brand value in the process.

Let the seller beware.

December 11, 2009#

Free Branding

More and more, the things we used to pay good money for are being given away for free—paid for by advertising.  Movies, books, newspapers, music, you name it. 

 Even Ryan Air, it was recently reported, is giving away free airfare.  That’s right.  No Cost tickets.   All you have to do is accept being bombarded with ads on your food trays, coffee cups, throw-up bags, in-flight entertainment, all the while sampling free products throughout the flight.

 We can imagine the pilot announcing: “And now it’s time for flight 55’s Tostito Corn Chip Emergency Landing Report. Tostito–taste that can’t be beato! Okay everybody: BRACE FOR IMPACTTTTT!

 Getting into the spirit of things, we at David ID are now considering offering free branding services.  In return, we’ll simply ask our clients to opt into various commercial messages from our sponsors though out the course of our engagement.  For example:

 1.  Our PowerPoint presentations will have 30 second commercial breaks from our sponsors. We won’t have too many in the beginning slides though, so clients have time to get hooked.

 2. We’ll start wearing suits so our sponsors’ logos can be sewn onto the lapels.

 3.  All of our emails will have product placements seamlessly integrated into the contents of the note.  “Hi Tom. You made a great point about fees in the proposal. But first, let me tell you a little about Kraft Macaroni and Cheese…

4.  You must agree to opt into receiving all of our sponsors’ promotional emails.  No more than ten per day. 

 5.  You must follow all our sponsors on Twitter and every 6 minutes, agree to “Tell them what you are doing?” 

 We’re looking for a charter client.  Anyone interested?

 

 

 

September 23, 2009#

How to Build Brand Value (Part 2)

According to John Gerzema and Ed Lebar in their insightful book, Brand Bubble, the key to building strong and enduring brand value is achieving brand energy.

Brand energy occurs when a brand has high levels of brand stature and brand strength, the two primary metric categories examined in Y&R’s well known BrandAsset Valuator (BAV).

Brand stature captures a brand’s current value—it’s a lagging indicator.  The key metrics that go into it are esteem (“consumers’ perceptions of quality and loyalty”) and knowledge (“consumers’ awareness of and experience with the brand”).

Brand strength reflects the brands future growth potential and value.  Relevance (“consumers’ perceptions about how appropriate the brand is for them”) and differentiation (“consumers’ perception of the brand’s unique meaning to them”) make up the key components of brand strength. 

Brand value = Brand stature + Brand strength

The authors argue that increased pricing power, loyalty and brand value (as a percentage of a firm’s market value) are the bounty of achieving brand energy. 

To attain brand energy they recommend focusing brand management efforts on the following:

1. Differentiation—This refers to positioning, product and marketing communications.

2.  Vision—This concerns the parent company’s reputation.  How does the company treat its employees, customers, and the world beyond its core business?  Consumers increasingly look to the company beyond the brand in making purchase decisions.

3.  Invention—This has to do with the “tactile and sensory associations that come from direct product and service experiences.”  It can be built through “product innovation, brand iconography, package design, applied technology, retail environments and customer service.”  

4.  Dynamism—This has to do with the way brands present themselves to consumers in marketing communications, through advertising, promotions, events, guerrilla stunts, etc.   The best in brand dynamism taps into the popular culture, excites consumers and facilitates word of mouth.    

All in all, an excellent prescription for all of us charged with fueling our brands with energy, momentum and superior value.

 

September 22, 2009#

How to Build Brand Value (Part 1)

In their excellent book Brand Bubble,  John Gerzema and Ed Lebar,  both at Y&R,  make a strong case that the vast majority of products and services have been losing their brand value over the last 5 years. 

Based on their data, collected since 1993, brand trust worthiness rankings have fallen 50%, quality perceptions are down 24%, awareness is down 20%, and brand esteem and regard have fallen 12%.

These findings are consistent with other reputable sources such as the Henley Center in the UK, whose own research shows that of the 17 largest, most iconic British brands, 16 have shown decline in consumer trust since 1999. 

Similarly, the Carlson Marketing Group has found a significant reduction of consumer loyalty since 2000.  Their study shows that today only one in ten consumers have a genuine preference for and commitment to only one brand in a given category.  The number was four in ten in 2000. 

Gerzema and Lebar attitute this serious brand problem—some might even call it a brand crisis—to three basic causes.

1)  Too many brands.   With so many competing products and services vying for our attention, most of good quality and reasonable prices, consumers are finding it increasing difficult differentiating one from the other.     

2)  Lack of creativity.  The democratization of creativity on the internet has raised peoples’ creative expectations—they want more big ideas, faster, from brands. 

3)  Loss of trust.  Over the last 10 years the number of trusted brands has fallen by a half.  This is largely due to consumers loss of faith in institutions, corporations and leaders.  

So what’s to be done?  How do marketers build back value into their brands to sustain competitive advantage and regain consumer trust and loyalty?

More on this tomorrow. 

 

 

April 29, 2009#

Don’t give up on your brand

Yesterday’s advertising column by Stuart Elliott of the NY Times  recounts the experience of retailers who are offering discounts of  50% only to find that consumers are waiting till they get discounts of 70-80% . In a deep recession, like this, converting prospects into buyers can be very difficult but is “cheapening” the brand the only route? What are these marketers teaching their customers about the value of their brands and once the recession ends will these customers ever see these brands as being worth the full price?

To close the deal,  many seem to believe that the brand has no role to play and that companies must push bigger and bigger discounts.  Branding and selling for many have become unconnected activities.  The urgency today is for branding to get off its comfortable penthouse home and get into the fray of selling. Our Dominant Selling Idea philosophy is based on this belief and we have been working with clients to redefine their value propositions by leveraging their brand not discounting their brand.  The key for marketers is to return to the core of their brands and embrace analytical tools that can help them sharpen their messages. These tools  can help model the impact of a high number of branded selling ideas and identify the messages that have the highest likelihood of getting customers to plunk their money down.

This is no time to surrender your brand.  It is time to leverage your brand to its fullest.