Archive for the ‘Brand’ Category

Many of us are totally consumed by our jobs—answering emails, writing marketing and advertising plans, blogging,  making ads, designing websites, sitting in meetings, taking phone calls…

So, most likely, you may have missed these vital news stories in the press about our industry. These are tough economic times, and though cutting-back agency spend is not new, one gets the feeling that this time the clients’ intention is more long term. Perhaps ad agencies need to redefine their value add for clients.

Proctor takes no Gamble.

Procter & Gamble Co. Proctor & Gamble Co. Chairman-CEO Bob McDonald recently said the company will cut costs totaling more than $10 billion over the next five years, including $1 billion in external marketing spending and a reduction of more than 5,700 jobs in non-manufacturing areas including marketing. The 5,700-employee headcount reduction includes more than 4,000 next year in addition to the 1,600 previously announced for the current fiscal year ending June 30. And even as the company cuts jobs, it will continue hiring in high-growth countries such as China.

The marketing savings will come from a combination of having fewer marketing executives and spending more efficiently, including using more lower-cost digital marketing channels to reach consumers one-to-one; and more multi-brand group marketing initiatives such as its program around the 2012 Summer Olympics that spans 30 brands.

The cost-cutting aims to streamline P&G to compete amid slow growth in developed markets and aggressive expansion in developing markets, such as expanding its toothpaste brands, including Oral-B and Crest, to just about every country in the world except Japan, Korea and Pakistan, by 2015.

The cuts don’t just focus on media or agency costs but on all areas of marketing. Marketing costs are the company’s third-biggest spend pool, behind people and materials. To cut costs without sacrificing impact, P&G is using technology to shift spending from more traditional vehicles like TV to digital and mobile advertising and more efficiently target consumers to build one-on-one personal relationships.

Upon reading this news from P&G , one reader commented: “After decades of investing to build some of the world’s most powerful brands, big Bob decides it’s time for him to slash marketing, boost short-term earnings, and stuff his pockets with bonuses for creating quick profits. Then on to his next corporate “turn-around.” He and P&G’s board of directors are the epitome of America’s 1%.”

Despite revenue surge, PepsiCo announces 8,700 job cuts

PepsiCo (PEP) proposed a devastating strategy to its employees by announcing it plans to cut 8,700 jobs, or about 3% of its workforce. This, it says, is to offset higher costs for ingredients and to shift more of its spending on advertising to North America—by $500 million to $600 million in 2012.

It expects the restructuring will save the company $1.5 billion by 2014. That’s on top of $1.5 billion in cost cutting it previously announced.

Pepsi announced the layoffs as it reported better-than-expected fourth-quarter profit, but forecast a decline in adjusted 2012 earnings.

Like most snack and soda makers, Pepsi is facing higher costs for materials it uses to make, package and transport its products, including aluminum. Many companies raised prices last year to offset the higher costs. But consumers are still cautious about spending in the uncertain economy, so some companies are moving on to Plan B: cost cutting.

PepsiCo expects 2012 will be the second year in a row that it will encounter higher-than-average costs for commodities.

CEO Indra Nooyi said although it’s cutting about 3% of its 300,000 worldwide work force, the reduction is spread over 30 countries. The company typically adds 10,000 to 15,000 jobs in any one year.

One analyst questioned whether Pepsi should spend more of its advertising dollars in other countries, including emerging markets like India. While Pepsi’s snack business is stronger than Coke’s, he reasons, PepsiCo has been losing ground to Coke on the soda side as its ramped up its overseas business.

Unilever cuts agency spending to get leaner faster

Unilever, the world’s third largest consumer products company with 180,000 employees worldwide, recently added to the writing on the wall for advertising agencies when it announced that it had cut spending on advertising agencies and production companies. Whilst Unilever boosted marketing spending a modest 2% last year to $8.2 billion,  the agencies and production companies didn’t fare nearly as well from the giant cuts.

The company significantly reduced its production costs and agency fees. Surprisingly, they said this is “money that’s not directly driving the exposure of our brands to the community and consumers.” To make its ad spending stretch farther, they pointed to digital spending rising 15%, much faster than the overall rate.

Unilever achieved some of its savings in “non-productive” costs following a production roster review and consolidation. Currently, Unilever works with hundreds and hundreds of production companies, and thus launched a review in March of 2011, hoping to bring them down to a manageable number and to get efficiencies.

In February of this year, Unilever warned that 2012 would be a difficult year as growth in emerging markets slows and demand in Europe and North America stays flat at best.
The gloomy outlook sent the company’s shares price lower as it was revealed that emerging markets had slowed around 1 per cent over the past year after the group matched 2011 sales growth forecasts. Emerging markets are showing a little bit slower growth than two years ago.

Unilever controls subsidiaries in at least 90 countries. In England, Unilever workers at UK factories were on strike in mid-January, and the company refused to talk to unions about alternatives to its unacceptable and unilateral decision to close the final salary pension scheme. Unilever was founded on positive social principles but has aggressively followed a strategy of job cuts and outsourcing of over 100,000 of its global workforce over the last ten years, removing any semblance of social responsibility over work terms in the production of food and household goods.

Global companies pull the trigger

Global companies from NEC Corp. (6701) to PepsiCo Inc. (PEP) and AstraZeneca Plc (AZN) are chopping jobs more than three times faster than they did in 2011. They are bracing for deeper recession in Europe and a slowdown in China. The announced workforce reductions surged to 94,369 in February 2012, up from 26,561 a year earlier. Employers based in Western Europe accounted for the biggest group of job-cut disclosures, threatening to add to unemployment in the euro area already running at a 13-year high.

Such firings are now running at the quickest pace to start a year since a 2009 peak, when the European and U.S. economies shrank amid the deepest slump since World War II.

Adding to the squeeze on global companies is decelerating growth in China, whose projected 8.5 percent expansion would be the least since 2001 after the government moved to squash inflation and prick a real estate bubble.

CEOs have learned to pull the trigger quickly on cuts to keep profit margins in line with expectations when economic growth cools,

Less than optimistic

According to Publicis CEO Maurice Levy of Publicis Groupe SA (PUB), the third- largest ad agency group, its European clients have scaled back marketing plans because of the recession. While they still see growth this year coming from the London Olympics and the European soccer championships, companies are being more cautious.

In the latest Bellwether report from the London-based Institute of Practitioners in Advertising, U.K. marketing executives say that companies are the most pessimistic they’ve been since the last recession and plan slower growth in ad spending.

British companies ranked their business prospects for the first quarter of this year as the worst in 11 quarters and said their planned increases for ad spending in 2012 are weaker than in any recorded year before 2009, according to a survey of 300 organizations. Digital marketing has become the fastest-growing part of the U.K. advertising industry as companies look for ways to save money, according to the institute’s report.

Chris Williamson, chief economist at financial data company Markit and an author of the Bellwether report said, “There are signs that companies have become increasingly reluctant to invest in traditional media campaigns, instead diverting money towards the Internet and direct marketing. This reluctance reflects lower-than-expected sales and profits in recent months, as well as growing unease about the economic outlook.”

To combat slower growth this year some ad agencies are planning to purchase more digital agencies in emerging markets where growth remains strong.

Should ad agencies brace for slowdown?

Data shows that ad growth eased in 2011 as sectors such as automotive, telecommunications, department stores and food companies pulled back their spending. This was due to lingering concerns about the general economy and health of consumer spending.

“The whole world is nervous—and nervousness usually leads to contraction, both for consumers and advertisers,” said Bob Jeffrey, chief executive of JWT.

Though many economists wish to believe the economy will not fall back into recession, the risks of a double-dip economic contraction have risen.

Analysts say advertising cuts will most likely hurt traditional ad vehicles such as print and direct mail but online ads and TV advertising are expected to be more resilient. Stocks of advertising firms have taken a beating.

Fears about a deeper recession in 2012 are increasing. Despite the economic trends, many ad executives say they are surprised they haven’t already seen widespread ad slashing by corporations.

However, ad executives aren’t taking any chances. Many are keeping a very close watch on expenses so they are prepared for further cut backs by marketers.

“With the numbers I have in hand I should be at least feeling relaxed but I am not,” said Mr. Levy at Publicis. While Mr. Levy hasn’t reinstated a hiring freeze as he did during the last recession he has told his ad and marketing firms to be more “cautious” in hiring.

It is about making “sure we aren’t getting too far ahead of revenue,” said Laura Lang, chief executive of Digitas, a digital-ad firm owned by Publicis. Her agency is keeping closer tabs on expenses such as travel and training dollars.

During the last recession (2007-2009) when U.S. ad spending fell 16%, many global ad agency groups were caught by surprise and had to move quickly to reduce headcount to offset sharp drop-offs in revenue. While wide-scale layoffs aren’t currently in the works, a hiring slowdown seems to be percolating, according to several recruiters. For the ad business, employees, the biggest expense, can represent more than 65% of an agency’s expenses.

Cutting staff is a tough choice to make in today’s environment,  but ad agencies are under extreme pressure to hire new talent as they try to keep up with the ever changing dynamics of a changing landscape.

Ad agencies have no choice really. They must continue to invest in talent.

It’s not wise to cut in a recession

Ad agencies have always argued that in times of recession it’s not wise s to cut spending.

A series of independent reports (compiled by the Financial Times) has demonstrated beyond any reasonable doubt that companies who maintain marketing spend – or even increase it – during recessionary times, perform dramatically better in the mid-to long-term than those who reduce it.

In a way, the logic behind these findings is simply common sense. When everyone around you is cutting their marketing spend and you are maintaining yours…your share of voice becomes relatively high and your brand share has a good chance of being greater when the good times return.

Spending during an economic recession is a brave thing to do. But it has its positive side.A recent McKinsey study identify a group of companies which ‘made strategic decisions that defied conventional logic’. During the recession, these companies maintained investment levels not just in marketing but in all key areas – deal making, R & D, advertising – arguing that tough times required greater effort and offered greater opportunity. Following that logic, many of them, perversely, had spent less in the above areas (relative to the competition) in the more benign market before the slowdown. The McKinsey study demonstrated that a contrarian approach to operating expenses improved the overall commercial performance of companies by no less than 17.4% relative to all industry averages between 1989 and 1992.

Less surprisingly, those market leaders who had maintained spend over the same period were shown to have extended their lead over their immediate challengers: whereas those who had cut back had lost share to their competitive challengers.

Given these facts, one could argue that it is self-evidently more cost-effective to attempt to build share during a downturn, than in economic high times.

Mike Fromowitz

OCTANE

It’s an over cluttered with advertising messages world out there. And it’s getting busier and busier by the day, thanks to multiple screens and people multi-tasking across these multiple screens. Mobile phones. Tablets. Phablets (the phone-tablet hybrids). Laptops. Television. Digital outdoor. Cinema….

Marketers and their agencies, and media publishers are in a constant twist to create the next innovation — something that stands out in this clutter, breaks through everything else that’s vying for the attention of their consumer’s eyeballs. And grabs them. For 30 seconds. 20 seconds. 10 seconds. Even the time it takes to click. And Like.

It’s a tough battle. And one that’s getting tougher by the day. Innovations are running dry. We have seen page takeovers. Banners ripping from the top. From the bottom. Expanding. Exploding. Leading users from one banner to the next. From one site to the next, which the Magnum Pleasure Hunt made famous.

We have seen video banners. Tweeting banners. Games in banners. Tweets updated to banners. And to billboards. Augmented reality that puts people into banners…

It’s getting harder to innovate. Not innovate for the sake of it, but to grab attention. Get talked about. Spread the word. And go ‘viral’, that holy grail that keeps so many marketing and agency folks up at night.

In such an environment, and more so if you are a brand that thrives on being disruptive, unexpected, unbelievable, almost crazy in the things you do, it gets even harder.

Unless you are Lynx and you come up with an ‘invisible ad’.

http://bit.ly/JgPPis

Looks like this is a new recipe for that favourite old dish of marketers — Attention and Talkability.

It’s probably worked this time. Only to keep the Lynx brand manager up at night, thinking, what next?

That’s the point. Think ideas. Think beyond the media. Think beyond everything you have done. Or you see around you.

After thinking the idea, wrap it in your brand and its ethos. In a manner that’s relevant to your audience. Then serve it to them.

And sit back as you turn your audience into your media. Carrying your brand with them. Further. Faster. Than you would, if you were stuck with what’s available and what seems possible.

Brings me to a question:

What’s going to be the next big idea after ‘Invisible’ advertising?

Will it be ‘No Advertising’?

Hey, wait a minute, maybe there’s an idea in there!?

Indian TV channels using Bollywood stars to host reality and game shows is no longer new. Starting with Kaun Banega Crorepati over 10 years back, it’s been done. Over and over.  With minor differences. Such as the format of the shows. The stars hosting them. Or the prizes on offer.  Some have passed like a ship in the night. Others have shone briefly. Only to fade away from memory. Till the next season comes along. Or the next show, and its new superstar host.

Star TV has had its own share of winning shows over the years. And probably has the recipe that delivers success more often than not.  In terms of audience appreciation, and well as in terms of that currency of the TV business, TRPs.

So it was interesting to notice Star decide to make a drastic break from the norm with its newest show, Satyamev Jayate that debuted on 6 May. I say drastic because it’s broken so many of the ‘rules’ of TV shows.  Let me take a look at it through the lens of the viewer-marketer I am.

Satyamev Jayate is what I call a Docu-Reality-Talk Show, perhaps an all-new genre in television programming in India.

Yes, it doesn’t have an ‘entertainment’ factor either in it. And no oomph. No jhatkas. No tamasha. No laughs. No winners.  No prize money.

It isn’t hosted at primetime, usually late evenings that draw people to their television sets. Its promo films don’t give a peep into the forthcoming episode.

So by conventional wisdom of TV and armchair pundits, this is a set up for failure. Whether they are right, time and the TRP reports will soon tell.

But what’s interesting is the key ingredient that is in the show.  Social causes.  Brands in India  using Social causes are not exactly new. Tata Tea did it successfully with its Jaago Re campaign and consumer platform. Idea and Aircel have used it to support causes that ranged from saving paper to saving tigers.  And there have been several others.

But this is probably the first time a whole show (13 episodes) is dedicated to social causes. With the intent to present their stark reality. Up front and directly. To provoke audiences. To sit up and take notice.  To take action. To perhaps create a public movement that addresses the issues.

The only packaging one sees is the slick production quality. And the inimitable Aamir Khan as the ‘sutradhar’ , the  host of the show.  Yes, the packaging is what may make the stark content more palatable to watch.

Another interesting aspect is the time slot of the show – 11 am on Sunday.  Not conventional primetime, and arguably not what families would look forward to watching on a Sunday morning, which usually is spent in more casual and trivial pursuits than that which serious social causes present.

Early response to the show that I picked up from Twitter was mixed. There were many who applauded the show and were moved to tears. Then there were several who were cynical about the show and asked whether it would make any real impact on those afflicted by the issues that would be shown. There were others who brought up the commercial considerations around the show, and wondered if this would turn out to be any more than a media opportunity for advertisers to reach the eyeballs of the audience.

But then this is just some views, and that too from Twitterati, a collection of people who are usually fairly removed from the stark reality of such issues (the first episode covered female foeticide).  The good news is that Star TV has recognized that wide and deep reach into the heart of India is what could turn the show into a real movement. And therefore, for perhaps the first time, we have seen a simulticast on Doordarshan, the free-to-air TV channel managed by the government that has a reach many times more than satellite TV channels like Star do.

It’s also early days, as what will really help turn this show into social glue is its extensions beyond its airing on TV. Its outreach on-ground, its amplification through media. The opportunities it creates for people to get involved. And participate in the alleviation of the Social ills the show will portray.  Early signs point towards this being part of the plan.

But will Satyamev Jayate help awaken a populace of a billion people to the real issues around them, and ignite them into coming together to rid the country of its social ills? Or will it end up being a bold experiment in television programming that will merely inspire others to explore the genre of Docu-Reality-Talk Shows through their own unique lens?

Interestingly, shortly after the airing of the first episode, the only top 10 Twitter trend in India that did not pertain to the show was #PepsiFootyMania.  Interesting because, both Pepsi and Star through Satyamev Jayate are attempting to ‘Change the Game’.

So can such Social programming win audiences, and win their hearts too?

I’ll be tuned in to see whether Satyamev Jayate does.

(This piece was first published on Campaign India who invited me to write a viewer-marketer view of Satyamev Jayate.)

As the number of social networks continues to grow on what seems like a weekly basis, brands must continually assess and re-assess their social strategies to pinpoint the platforms that best serve their content. Every time a new social network begins to gain traction, you will inevitably wonder whether you need to form a corporate presence on the site.

In a joint study conducted by Buddy Media and global research firm Booz and Co., marketers listed a number of social networks and platforms that they spend time and money nurturing. In fact, five different social networks were used by at least 25% of respondents, and this was before Google+ and Pinterest became widely adopted!

I’m here, however, to tell you to start being platform agnostic. Stop focusing so much on where you should be playing in the social space, and instead start focusing on creating great social content that can live anywhere and everywhere.

As of December last year, Facebook had  845 million users globally, Twitter recently hit 500 million global users, while Instagram recently announced 33 million users since it started less than two years ago. Video sharing site YouTube boasts more than 500 million global viewers per month. The numbers vary as you shift from one geographical region to another. It’s easy to look at the statistics for the world’s biggest social networks and devise a strategy that plays to the strengths of these respective platforms.  This was a perfectly acceptable strategy a few years ago; however, the focus should now be on the type of content you are producing, rather than where you are placing it.

What exactly does it mean to be platform agnostic? How is this possible when each social network has its own intricacies and possibilities, and when users interact differently with each platform?

The key is to construct campaigns and support them with content that appeals to users no matter where they access it. When users are browsing Facebook, they spend a great deal of time looking at the News Feed. When they are on Twitter, they’re constantly scanning the Timelines of those they follow. When they are on YouTube, they are hopping from video to video. Your task is to seamlessly weave your content throughout your social endeavors with your website presence to make your campaigns “social by design.”

Being “social by design” means creating content across the web that is inherently social, rather than adding social features to existing properties. This could mean creating sharable content on your website with pre-populated share dialog back to Facebook and Twitter. Or it could mean embedding YouTube videos on your blog and Google+ Page.

Global Hotel Brand Starwood provides a booking site that allows users to input their desired destination and travel style to create an ideal vacation. In an effort to help travelers decide what travel style they fit, Starwood offers a short personality quiz to guide users. When users get to the end of the quiz, they are presented with their travel style. But to make the experience social, a pop-up also prompts users to share the result to their Facebook friends. This creates a social experience that expands the reach of the great content on the Starwood website. A link in the Facebook post serves as a word-of-mouth recommendation to drive additional traffic to the Starwood booking site, while creating a social experience in the process.

Another example of this is the recent partnership between American Express and Twitter. The idea is for American Express cardmembers to sync their Twitter account to their American Express cards. Certain hashtags dictate various special offers and discounts, and when cardmembers tweet using the hashtag, they will automatically receive a discount when they purchase certain items with their AmEx card.

The fact that this partnership involves just one social network, in this case Twitter, is not relevant because the idea of this partnership is the epitome of “social by design.” Instead of simply creating a microsite for American Express users, or solely giving American Express users discounts when they use their card, the campaign doesn’t just suggest social activity, but instead requires it. In order to receive the deal, users must share out to their Twitter followers. And because Twitter accounts are often hooked up to Facebook profiles, LinkedIn accounts and website sidebars, this content will almost certainly spread across a number of different social network platforms.

So what are the key things you must do to focus on the what, rather than the where?

• Determine your content first. Map out your objectives and strategy first and devise great copy, images and video assets that will function well on any number of social outlets.
• Make it social by design. Eliminate the silos that exist across your social accounts. Make sure that everything you do is driving social activity, and make it easy for users to share content to their own social networks.
  • Figure out platform distribution later. Once you have your content created, you can decide where you want the content to go. Ideally, it should touch every place you are socially connected. Remember, this is the least important step in the process, but your content still needs to live somewhere.

The ultimate goal is to create simple social experiences that live everywhere and get users to share. When you can accomplish this, you will graduate to a higher level of social marketing with the preparation to tackle any number of challenges presented by individual social networks.

I think many readers of this blog need to see this article edited by Frédéric Filloux (the general manager of the French ePresse consortium). The information here is very important for both marketers and adverting agencies. This comes direct from mondaynote.com and is based on new information from Nielsen’ Global Truth in Advertising survey released this month.

The survey underlines one key finding: For the vast majority of digital users, trust lies first and foremost in recommendations and opinions from their peers. As for the bulk of formats found on web sites or on mobile (such as various flavors of display advertising), they fall to the bottom of the chart. Nielsen’s study, based on 26,000 respondents in 56 countries, was conducted in Q3 2011.

By themselves, these figures provide the perfect explanation for the current state of the advertising industry and, more specifically, for the digital ads segment.

Then, superimposing the ad revenue structure of most news medias companies would show an alarmingly symmetry: these businesses derive most of their revenue, allocate most of their effort to the least trusted ad vectors: display banners of various forms (on web, mobile or social), online video ads, etc.

The survey also provides a grim view of what people trust: they put more of their faith in a branded website (58% positive), a brand sponsorship (47%) ad, or even a product placement in a TV series (40%) than in a display ad on a website or on mobile (33% each)!

Even worse is the general distrust of advertising: on this list of 19 ad vectors, only 5 are are trusted by 50% of the respondents.

Let’s focus on a few items:

Recommendation from people I know: Trusted: 92% Not Trusted: 8%
Consumer opinions posted online: Trusted: 70% Not Trusted: 30%

Problem is: traditional medias don’t own these two segments. Social networks and consumer websites do. It’s a key Facebook’s strength to have people engage in conversations around brands and products. (IMO: a pathetic waste of time). Interestingly enough, the social network environment doesn’t boost the despised banners that much: When served on a social network, banners gain a mere 3 percentage points (at 36%) against a plain website or a mobile context. This must be a matter of concern for Facebook’s revenue stream: its unparalleled ability to pinpoint a target doesn’t raise the level of trust.

Editorial content such as newspaper articles. Trusted: 58%, Not trusted: 42%

Not surprising, but worth a bit more thought. It pertains to the level of trust readers put in the medium of their choice — carbon or bits. As expected, a fair and balanced product review written by a non-corrupted journalist (every word in the sentence counts) will be trusted. That’s what I call the Consumer Reports syndrome. This organization deploys 100+ professionals testers — and no ads beyond the ones for its own paid-for services and extra publications. Among its enviable base of 7 million subscribers, half pay $6.95 a month (or, a much better deal, $30 dollars a year) to access ConsumerReports.org — this is good ARPU compared to other digital medias who only make a few bucks per year and per viewer in advertising revenue.

What does this mean for online outlets?

They should consider beefing up the volume of product reviews, while preserving the reliability of their coverage. This also raises the question of the separation between journalism, advertorial and plain advertising. By no means should a publisher accept blurring the lines: beneficial on the short term but damaging on the long run. Having said this, when I see a growing number of anglo-saxons magazines making big money from high quality advertorials, I tend to believe online medias should consider sections of their websites or applications harboring such content.

But two requirements need to be met: (again) no confusion whatsoever; and editorial standards for what will indeed carry commercial content, but in a well-designed, informative, visually attractive package. One important point to keep in mind: this type of service is typically out of reach for a Facebook, a Google or a Microsoft. But moving in such a direction requires unified thinking between publishers, the sales house (and the ad agencies they are dealing with) and the editorial team. A long way to go.

Ads served in search engine results:  Trusted: 40% Untrusted: 60%

Speaking of Google, here’s another interesting finding in the Nielsen survey: by and large, readers doesn’t trust search ads. To many viewers, text ads popping up on pages, on YouTube video or on emails, are seen as intrusive and irrelevant (to say the least: look at this hilarious site featuring inappropriate ad placements.) Still, search ads account for about 60% of online ad revenues. Why? Essentially because it provides a cheap, convenient, and totally disintermediated way of promoting a product. On this count, Google makes no mystery of its intention to vaporize the advertising middleman thanks to its superior technology.

The digital advertising party is just warming up.

The business will continue its ongoing transformation. Currently, digital accounts for 16% of the global ad spending. It is likely to gain 10 more percentage points over the next five years. Not all markets nor products carry the same potential: According to the Financial Times, Unilever currently spends 35% of its US budget on digital, compared with 25% in Europe and only 4% in India.

For news medias, the opportunity is that brands and agencies are still searching for the right formula. Brands face an incredibly complex challenge as they have to play with many dials at the same time: traditional ads, digital, web, mobile, apps, social, behavioral. And all are tightly intertwined, creating flurries of new metrics: ROI naturally, but also engagement, sentiment, feelings.

Like elsewhere in the digital world, the most successful players will be the genuine tinkerers. Software giant Adobe is said to spent 20% of its digital budget on experimental campaigns. They test, measure, adjust and iterate.

It is up to digital medias to go from passive to active in the quest for the right model.

Their economics depend on it.

MIKE FROMOWITZ

Octane

On Facebook you can currently share anything from a career limiting photo to lurid details of your private life. And now it seems you can share your major organs too…

In an exclusive interview with ABC earlier today, Mark Zuckerberg announced that Facebook users in the US & UK can now share their donor status and connect them with people who require transplants (the thought of someone spamming me for the availability of my spleen concerns me slightly).

It seems the inspiration for the idea came from dinnertime chats with his medical student girlfriend Priscilla Chan (conversation about organ transplants whilst tucking into a rack of ribs doesn’t do much for my appetite but each to their own).

Commenting about the new service Zuckerberg said “Facebook is really about communicating and telling stories… We think that people can really help spread awareness of organ donation and that they want to participate in this to their friends. And that can be a big part of helping solve the crisis that’s out there.”

All very worthy and well intentioned. And yet it seems that Mr Z doesn’t always practice what he preaches. As of today he hasn’t actually signed up to be an organ donor on his Timeline. In fairness he has been quite busy promoting the new service so maybe he simply hasn’t had time to update his status…

This year, I have had several requests from several SME companies of all sorts to work for them—literally for free. As an ad agency, we need to charge a fee and earn a profit or we’ll go out of business.

Not sure if it’s because of the economy, but our agency is being approached, more often now than ever before,  by clients who say they can’t afford to pay the usual service fees and would like us to consider some other means of compensation for the agency: “There must be a way we can work together?”

One potential client, a start-up technology business, came through our doors recently with his latest and greatest “opportunity”. The company, he said, has very little capital, has limited resources, and has had very inexperienced people create marketing and web design. “We are trying to raise money and hopefully will do so in the next few months.”

He added some icing to the proposition with: “It is open territory for people with your talent to really fix it. We have no dollars to pay at this time, we’re almost out of cash. Your fees need to be 100% in shares.”

Of course the client knew that asking us to work for shares was a long shot, but he wanted to give it a try.

Promises. Promises. Promises.

My partners and I have gone for a few of these deals in the past because the business ideas looked splendid.  Shares are promised. Options are promised. Some fees are promised too—”when the company is making money”. Or a percentage of sales may be offered—”once the company is selling product”. Even a small percentage ownership in the company may be promised.

Perhaps the opportunities reflect our passion for new ideas and new technologies, and in some ways, how innovative new products can be of help in our society.  Sad to say it, but a good number of these “opportunities” have turned into a big waste of our time and effort.

There is a problem with doing things for free.  Here’s one example:

Guess how long we’ve been trying to work with one of these technology companies? Since July, 2006. That’s 6 years! And I could write a whole list of promises made over that period of time.

And guess how many hours of our time we’ve wasting on this one?  Sorry, we didn’t keep time sheets, but I assume it’s between 5,400 and 5,600 hours, (for all our people involved). That’s about $700,000 worth of time (at $125/ hour—our lowest preferred rate).

It’s a given that most high-tech start-ups are high risk – the mortality rate is astronomical. If you are dealing with start-ups—which can be some of the most exciting businesses to work on—you must understand from the outset that this is about the ad agency taking some risk too.

When it doesn’t work out, you have to simply write it off without too much disappointment. What we’ve learned over time is, if you are going to work with start-up companies,  make sure the payoff matches the risk, and make sure it’s only a small part of your business effort.

The hazards of working without proper fees

Doing things without a proper fee can be hazardous. Some people assume that because you’re not charging a fee for your time, your time isn’t worth anything.

I can’t begin to tally up all the hours we’ve spent doing inane things over and over again, either because the client CEO doesn’t take the time to read things carefully, or because he thought we can just wave our magic wand and spit out great work.  The CEO only sees a few shares going out the door—not fees. Of course, if this was a pure fee assignment, the clock is ticking. And that ticking focuses the mind, and the CEO is less inclined to screw around because time costs money.

No doubt about it—charging a fee both for services you receive and services you render – focuses the mind of both parties.

Recently, I had the following message sent to me by a friend who runs a small ad agency:

“I spent my second day in a row working on my “freebie” projects and have had maybe 45 minutes to do any actual work for paying clients. Somethings wrong here! Still, putting one of these projects to bed today gave me a sense of satisfaction, whereas wrestling with one of my paying clients and doing his third round of corrections made me feel like I’m just spinning my wheels. Which makes me think of a quote I read recently: “Time: the most important non-renewable resource.”—Roger H.

The “small” favours can hurt

The problem with doing work for free—without a proper fee, is that it’s just that: free. Because you’re good at what you do, it’s hard to put less effort into a project, no matter what you’re getting paid. This leaves the burden of recognition for the favour on the receiver and it’s a long shot that they’ll remotely understand the time and effort you’ll be putting into their “small” favours.

As soon as those emails start flying, you take the role of the battered advertiser and they the role of a high roller client that you can’t afford to lose and will do anything to keep happy.

Suddenly, your no-fees project is going through hours and hours of time and actually eating into your work for paying clients!

People don’t respect things that are free

Free advice. Free ideas. Free work. None are valued.

People associate the value of service with the amount of money that is exchanged for it. How else do you think that lawyers can get away with charging $400 to a $1000 an hour? When you or a friend is in need of surgery, do you choose the heart surgeon who charges $200,000 per surgery or the one who works for beer? Some people naturally make the assumption that if it costs an arm and a leg, then it must be worth it.

My partner sums it up well: “In the context of shares instead of cash, it’s not “free”, it’s earning your shares. Truly free work in the hope that it will lead to something better, is the real folly.”

They will expect it forever

Gamblers playing at the craps table look at the past behavior of the dice to, mistakenly, assume that the good luck will continue. Clients will figure if you did work for them once without a proper fee, you’ll do it forever for no fees. There is no reason why they should respect the hundreds of hours you have spent learning and researching the project. There is no reason that they should respect the professionalism you hold. When they come back and you try to get fees, they will meet you with resistance in the form of guilt. “I thought we were friends”.

From the onset, you have to set up the expectation that they are going to pay you a fee. It’s the only way to demand the respect that you deserve. Make sure they understand you are a professional. After all, that is the difference between a professional and an amateur. Professionals get compensated for their skills.
It may give you butterflies, but ask for the money. Do it openly and notoriously. Your clients will take it as a sign of confidence.

Conclusion

At some point, we all swear we’ll never take on another no-fees project again. But I must admit, we still suck at making good on that promise—especially when someone comes to our door with the “next new revolutionary product.”

What horror stories do you have?

Do you have a horror story about a project you didn’t charge a fee for? Or one that promised you shares or fees based on sales?

We want to hear about it!  Leave a comment below with any tips you wish to share with our readers.

Mike Fromowitz

OCTANE

One of the questions that is topmost on marketers minds usually is: How do we create content that connects with our audience in a manner that it gets talked about (and goes ‘viral’)?

There are many examples of content that’s achieved this objective, and each has provided ‘lessons’ that have been distilled into ‘rules’ by marketers and agencies alike. And every new success creates a new set of ‘To do’s’. Even I captured a few, triggered by a mile high story in a blog post on Campaign some time back http://bit.ly/Av4oPN

And yes, this blog post is inspired by the fairly innocuous tweet given below, that’s around the cancellation of the telecast of a recent popular Bollywood on a leading TV channel in India:

“The Dirty Picture telecast stopped on TV. & they give National Award 2 the movie & its actor. Incredible India. Height of double standards”

For those who want to know more about the movie and the buzz around it, there’s always Google. Now back to the essence of this post.

Twitter is full of tweets expressing angst and frustration at things not happening, flights being cancelled, traffic snarls and other such aspects of urban lifestyles. Usually, they get a few comments, a little chatter going and a handful of retweets.

But this seemingly tame tweet drew well over 100 retweets. In quick time. What turned this tweet ‘viral’?

1. The Context connected with what the audience related to. Dirty Picture is probably well known to most of the Followers of the person who tweeted this, and so that formed a instant connect.

2. The Content itself was an interesting interplay between the subject (Dirty Picture) and its having got recognition (National Awards) by the same government that had its telecast called off.

But more than these two aspects, I think what really drove this tweet viral was:

1. User involvement — Since the telecast of this film was widely publicized, it had a large audience tuned in to watch. So when the telecast was cancelled at the last moment, there was a general feeling of disappointment at having a perfectly planned Sunday, now gone awry. Then the tweet came along. Ripe and ready for its audience to use. To share their feelings about the cancellation.

That’s something for brands to keep in mind. Content with the most ‘social’ potential is that which is oriented around ‘involved’ users, rather than content that attempts to involve users by incentivizing their involvement. Too many brands think ‘involvement’ as an outcome of their content / messaging, rather than as a by-product of an already involved audience. Of course, it takes effort to determine what audiences are involved with and to create a meaningful connect between that involvement and the brand, but its effort that can pay rich dividends.

2. Recency and immediacy — Speed is of the essence in these 140 times, when attention is about what’s on the timeline here and now. Getting ‘social’ is about creating a connect around what’s fresh in recent memory.

Again there’s a lesson for brands here. Especially those that run Social through a pre-determined calendar of updates. Doing so, loses out on the very important element of getting in the audience’s stream as quickly as possible, and around what’s happening in their stream.

Blend these two elements of User involvement and Recency & immediacy with the brand in the right proportion, and you can well have the recipe to create a Social wave (even around a seemingly innocuous tweet).

Facebook is on a shopping spree, announced within last week, the purchase of Instagram for a whopping $1 billion dollars, and then Tagtile for an unrevealed sum, assuming much less than the former.

The last time a company made a billion dollar purchase, was Google back in 2006. $1.65 billion to be exact, for the purchase of You Tube. Back then, Google’s purchase was seen as, on one hand, an offensive move, to gain majority market share in the video market fast, with the acquisition of what was then (and still is), the most popular online video site. On the other hand, this was also a defensive move, competing with Yahoo, who was said to be in the bidding war till the very end.

Five years on, while the industry is still wondering how much return on investment You Tube has yielded for Google, if at all, Facebook appears to be on a similar path, acquiring Instagram, as a way to gain a strong foothold in the mobile photo world, and also to counter Instagram becoming a competitor in its own right.

What is interesting with both these acquisitions is that they both seem to make perfect investment sense. Why not? Both these businesses command large volume of followers with high level of stickiness to the site or app. Surely, advertisers would pay to reach and engage with these consumers. In theory, yes, advertisers would. In practice, however, often, consumers utilising these environments, are not necessarily receptive to advertisements, which potentially makes these environments, less efficient or not as cost-effective for advertisers as expected.

Because we are able to track metrics relating to engagement and interaction, we can now discern the effectiveness of digital environments to the messaging and relevance for the brand. There are occasions where campaigns run on You Tube proved great in growing awareness, but other times, we may find that consumers do not go beyond the impressions, therefore rendering call-to-action banner ads in this space ineffective.

There are also occasions where You Tube are utilised by advertisers as destination sites, e.g. view brand videos on You Tube, where other media channels outside You Tube are used to drive viewership to You Tube. In such instances, advertisers are not necessarily spending on You Tube to get their audience, although our friends at You Tube would certainly recommend that you should.

I suggest that there is a flaw with the thinking that online advertising budget should go where the consumers are. This is only half the point. More accurately, advertising budget should be allocated to environments where consumers are in the mindset to act or perform actions that you desire of them. E.g. if you are reading a piece of news content on a news portal, brands could provide you with a piece of content in the same context as the article you are reading. Or if you are viewing videos, brands could be delivering videos of the same genre, or if you are searching for great deals, that would be the optimal environment and time for brands to present transactional content, i.e. deals, this stimulus would be on the mark with your mindset. Brand and consumer are on the right page, ready to make a connection or transaction.

In a traditional online publisher portal environment, while it is seen as a one-way online publication with limited social features or functionalities, it still plays a pivotal role in carrying advertising messages. Consumers in these online environments are more receptive to advertising. Banner ads were born in these environments, which meant that consumers are more tolerant of advertising in these environments than in social networks such as Facebook.

So back to the most recent Facebook acquisition move, the consumers are emerging the winners here. I applaud Facebook for recognising primary consumer needs, always seeking to integrate and enhance user’s experience. The purchase of Instagram is congruent with this move.

 It’s early days for Facebook with Instagram, but we can be sure many digital marketers like me, are wondering what innovative ad products would evolve from this acquisition, that would not distract, but enhance users’ experience, and yet allowing advertisers to effectively reach and communicate with their audience in the social space.

You see much written today about a technology, data and analytical driven marketing future. Whether it be location based activity or marketing automation, we are seeing swathes of new opportunities arise that allow brands to better engage with audiences.

While the talk of ethics is relevant, those that innovate and dream to create better brand future through new techniques and tools simply have a progressive view. When direct marketing boomed in the 90’s, opt-in  /opt-out legislation protected audiences and I see that this approach will also evolve in a brave new world. Governments will, or should, inform and protect their citizens. Ethical brands will support this.

Also, audiences will opt-in because they see value in doing so and I am keen to showcase the opportunity for marketers when audiences do opt-in. In particular, I want to show that data and analytics are not just for digital and mobile, but can be used in events.

I am not talking about virtual events / exhibitions or things that look to replace face-to-face. They have their time and place and events are still hugely popular. I am talking more about how people are now using the cloud to continue to build upon the equity that “event brands” have built with their respective target communities. Give event access to people who are not there and stimulate on-going engagement.

Being a passionate bodyboarder, the evolution of the International Bodyboarding Association (IBA) has really caught my eye (http://ibaworldtour.com/). With the right vision and plan they have made our sport into somethingway more accessible, yet hold competitions in some places not accessible to most of us (or most of us dream about getting to). Through the web we can now watch live feeds of the competition, access on-demand podcasts, get inside stories and share these with friends. But more than a competition, it is also an opportunity for niche surf riding misfits to stay connected and informed. It becomes a place where the community gathers. This is all built around event equity and gives the brand custodians the much needed finger on the pulse they need.

Many public events have looked to execute a similar formula. Many public events and their participants fail to capitalize on the equity they have. More so, many marketers feel that they cannot afford the investment to capitalize on the equity of their private events because of cost.

Terms such as hybrid events do not capture the essence of what is possible. The creation of apps are great, but also often hastily proposed because they are popular and the best returns-on-investments are often missed. The challenge facing marketers is that many providers are focused on providing tactical solutions as opposed creating strategic backbones that allow for community creation, broader and on-going engagement.

In a recent discussion with Kenes Asia, they revealed to me quite simply how their strategic view to how their clients should engage with audiences is creating more value for their clients. Kenes are in the business of Medical Congress Organization and Association Management. They are very clear on why the target audiences attend their client events – the content and to stay connected with their peers. What Kenes have done successfully is that they simply have made it easier for this content to be captured, distributed and used.

At its heart is a technology backbone which neatly plugs together all the elements of mobile, engagements, touch, scan and web into a cloud solution. Delegates no longer have to travel home with extra kilograms of paper. They have more room for gifts for the wife and kids so have no excuses now.

However, the strategic value lay in the ability for other community members to access this content through integration and syndication through existing communities.  Creating strategic value through the ability to provide their clients the opportunity to continue to engage with their audiences after the event and deliver on on-going education needs through such engagements as e-learning. Knowledge on personal preference and behaviour allows for improved value creation by allowing clients to design the next engagement better.

Given the on-going investments made on events in B2B and B2C marketing, there is room for improvement where marketers can create better value from their investments whether it is a corporate conference, product launch or road-show.

The view of an event as being simplyfour walls and a roof needs to change. An event is simply one engagement in a lifecycle of engagements. The engagement at event happens on the show-floor, but can also happen in the cloud. The opportunity of data and analytics is not just for better event operational management. With a long-term view on defining how events should be run, marketers can look to take advantage of the interconnected world.

And for the doctor in Tokyo who could not travel to Glasgow for the congress he attended last year. He does not need to miss out.