Archive for March, 2013

The Advertising Challenge

March 20, 2013

On Monday I flew back to the U.S. from Germany. On the Lufthansa flight I watched a short video called “World’s Best Commercials, 2012.” It featured winners of the New York Festivals International Advertising Awards. Apparently 430 senior advertising executives cast 430,000 votes and selected the finest advertising spots in the world.

My observation: heaven help us. If senior advertising executives think these are terrific spots then marketers have a huge problem.

The winning spots were certainly engaging. One featured spectacular scenes of nature. Another was a delightful spoof of the royal wedding that had all the participants dancing down the aisle, including the Queen. Yet another ad had thousands of exploding balloons. There were funny spots and sweet spots.

The problem is that the ads weren’t likely to do much for sales or brand building. Most had terrible branding; it wasn’t at all clear what the commercial was actually for. In many cases, the brand showed up in the last frame. Overall, the spots had terrible brand linkage, connecting the creative idea to the brand.

A number of advertising executives raved about a spot featuring a bear acting as a movie director. One after the other, these folks praised “the bear spot.” One observed, “Everyone love it when we saw the bear.” It seemed fairly unanimous.

Of course, praising “the bear spot” simply illustrates the problem; the commercial was about a bear. It wasn’t about a brand. What was the spot advertising? I have no idea. The creative idea came through but the brand didn’t

One reason people have trouble doing effective marketing is that they hire advertising executives more interested in creativity than brand building.

Here is a good piece of advice: remember that the creative team at your advertising agency wants to create engaging, award-winning commercials. These award-winning commercials don’t always drive sales or build brands.

I suppose it is no different from financial advisors. You want to believe that your investment manager always does what is best for you. But that is naïve. Your advisor wants to be successful and her success and your success are often two different things.

With advertising executives and financial advisors, be careful.

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Defending Your Brand is now one of the top five finalists for Expert Marketer Magazine’s Marketing Book of the Year. Many thanks for your support.

This week I head to Switzerland. On March 27 I’ll be in the UK talking about defensive strategy at an event organized by the Kellogg Alumni Club of London. Then back to Chicago to start the spring semester. And catch up on sleep.

Uber, New Product Strategy and the Critical Moment

March 11, 2013

Launching a new product isn’t easy. You have to come up with an idea, validate the concept, assemble a business model, develop a supply chain, create or break into a channel of distribution, begin production and get customers to notice you.

The most important thing, however, is creating a positive trial experience. Trial is the critical moment.

People have to be delighted when they try your product. This is the only way you will get repeat purchase. And to survive you need repeat.

Driving trial is costly; you often have to provide big incentives to motivate people. So trial purchases are rarely financially positive. The only way a new product will survive is if people make a second or third purchase without significant discounts.

People are usually curious and open-minded the first time they buy a new product; they recognize it as something new so they notice little things. If all goes well they will be delighted to have found something that will make their life a little better. If things go poorly, however, they will likely declare the item a disappointment. When this happens they won’t be back; getting someone to try a product for a second time is a challenge indeed.

You can do everything right on your new product but if the trial experience goes poorly you will fail. This is true even when you have a good product. A new pharmaceutical with excellent trial results, for example, won’t succeed if physicians have a bad experience when they first try it with a patient.

This week I tried Uber for the first time. Uber is an app that helps you find a taxi or car service. You type in your location and the app contacts nearby drivers. I was traveling this week so decided to give it a shot.

How did it go?

It was fabulous. I set up my account and asked for a cab. The driver pulled up in four minutes and I was off to the airport.

I like two things in particular. First, the interface is charming; it tells you exactly how long it will take to locate a car and shows you all the cars in your area. It is incredible. Second, the app gives you the name of your driver along with a photo. This is very comforting; it creates a feeling of security. And if I leave something behind I think there is a reasonable chance I might actually get it back.

So I’ll use Uber again. I’m sold. I might even tell other people about Uber.

If you are working on a new product launch, make sure people have a good trial experience. Everything else is secondary.

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Expert Marketer Magazine named Defending Your Brand one of the finalists for marketing book of the year. The next round is determined by vote; please cast your ballot this week at http://www.marketingbookoftheyear.org/

I’m just back from Colorado and Germany. I have several classes in Chicago this week, then I head back to Dusseldorf to teach for another two days in the Kellogg-WHU Executive MBA Program. Then I go to New York to lead a corporate seminar on building strong brands. I enjoy the travel but I’m happy I don’t do this every week.

Betting on the New York Times

March 4, 2013

Struggling companies often do better when they focus on their core brand.

There are good reasons to have many different brands. A broad portfolio lets you target different customers with unique brands. It also reduces risk; if one brand gets into trouble the other brands can help offset the declines.

The problem is that managing a big brand portfolio is difficult; each brand requires marketing investment and attention. Brands don’t thrive when you neglect them.

When an organization is having financial troubles, a large portfolio can be a major strategic issue. There is not much money for investment so some brands get neglected or, even worse, all the brands get little support.

This is why companies that get into trouble often prune brands and focus on the core. When McDonald’s stumbled, for example, the company ditched Chipotle and Boston Market and many other brands. General Motors made pruning the portfolio a key part of its turnaround plan. P&G rebounded under CEO A.G. Lafley by focusing on the big brands that mattered.

The New York Times Corporation is making a similar move. Last week the company announced that it was rebranding the International Herald-Tribune. The century-old paper would now be known as the International New York Times.

A week earlier, the New York Times announced it was seeking a buyer for The Boston Globe.

Last August, the New York Times sold the About Group, which includes About.com.

The New York Times Corporation, once a collection of media brands, will soon have just one main brand, the New York Times.

This makes perfect sense for two reasons. First, the company is struggling. The stock trades at less than $10 a share, down from over $45 a share back in 2004. Revenue is falling steadily. Profits have been inconsistent; the company made $160 million in 2012 but lost $40 million in 2011. With limited resources, the New York Times has to focus on the brand that matters; there just isn’t money or time to spend on other brands.

Second, the New York Times is a strong brand; it has high awareness and a loyal following. Readers value the product. The challenge is to turn this into financial returns. Perhaps the most encouraging sign in recent years is that readership held up better than expected when the paper eliminated free internet access and started asking people to pay.

The New York Times Corporation will succeed if it can ensure that the New York Times brand emerges as the most respected and trusted source of information and perspective in the world.

The other brands in the portfolio were distractions; the New York Times is making a smart bet.

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Expert Marketer Magazine named DefendingYour Brand one of the finalists for marketing book of the year. The next round is determined by vote; please cast your ballot at http://www.marketingbookoftheyear.org/

This week I am off to Colorado for an advisory board meeting (and some skiing). I then head to Germany to teach in the Kellogg-WHU Executive MBA program. That is always entertaining; the class is a mix of students from Europe, Asia and the Middle East which makes for some interesting discussions about branding and marketing strategy.


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