Welcome to the Monkey Shack!

Welcome to the growing community inside the Monkey Shack. The business and marketing landscape is changing dramatically each and everyday, and this is where we come to discuss anything and everything related to business and marketing trends, observations, and strategy.

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Richter7

I currently work as the Director of Strategic Planning and Research at Richter7, the most creative and decorated agency in Salt Lake City, Utah.

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Jun 26, 2009

On Hiatus


The Monkey Shack is on hiatus while I work on a whole new personal website and blog. Until then keep in touch with me via Twitter.

Leia Mais…
May 21, 2009

The truth is in the details

Yesterday I blogged about how Google search data indicated that Adam Lambert would be the runaway favorite to win American Idol. After all, he had an almost 4:1 margin over Kris Allen in search activity. So you can guess my stunned amazement when I learned Allen had pulled the upset.

So where did the numbers go wrong. I still believe that search data can be used to predict outcomes like this, but the analysis has to go a little deeper than simply looking at whose name is getting search fore most often. The truth was in the details.

I went back and looked at the data last night to figure out how this played out. I began by looking at both "Kris Allen" and "Adam Lambert" related search terms from the past 30 days, and discovered that "Kris Allen" related terms outpaced "Adam Lambert" related terms by almost a 2:1 ratio. A further indication of the momentum Allen had established in the closing days of the competition, breakout terms, or terms rising faster than Google can calculate the rate of increase, showed Kris had an almost 3:1 edge.

Google Insights Top 10 Rising Searches - Past 30 days

Analyzing the data from a number of different angles showed the same story. Over the final week of the competition, Allen's lead of the top rising searches grew to nearly 3 to 1, and search terms rising at a rate greater than 250% showed Allen with a slightly better than 2:1 lead.

Google Insights Top 10 Rising Searches - Past 7 days

A further indication of Allen's gaining momentum and Lambert's popularity erosion is seen when looking at the data on a per name basis. Looking at just "Kris Allen" related terms over both the past 30 and past 7 days, only searches related to his name and American Idol are found among the Top 10 Rising Searches.

Search terms related to "Kris Allen" - Past 30 days


Search terms related to "Kris Allen" - Past 7 days
When looking at Lambert's rising searches, it become evident that Kris Allen was invading those searches and instead showing Allen as the true dominant force.

Search terms related to "Adam Lambert" - Past 30 days

Search terms related to "Adam Lambert" - Past 7 days

The lesson from this? You must take a deeper look to attempt to discern or characterize the nature of the interest rather than looking at the sheer volume alone.

Leia Mais…
May 20, 2009

Can Google predict who will win American Idol?


The answer is, yes!

Now I don't follow American Idol. I have only watched one entire episode the past eight years. I didn't even know who the contestants were this season, but did know (thanks to Twitter) that tonight was the season finale. And while most everyone I've heard this morning thinks Adam Lambert will be this year’s champ, I think he will win for an entirely different reason.

Google.

I have never heard him or the other finalist, Kris Allen, sing, but I am tempted to run over to Wendover to put some money down on tonight's outcome. Online chatter and search volume correlates very closely with actual voting. It happened in the presidential election and its happening with American Idol. By looking at Google search trends (volume, demographic and geographic) for the past three seasons, patterns in the data appear that can predict the eventual winner of American Idol.

For example, in 2006, Taylor Hicks dominated much of the search volume from early March through the finale. Eventual runner-up Katharine McPhee passed Hicks for a brief window in late April and early May, but Hicks surpassed her and rode the momentum through the finale. In 2007, an analysis of search data revealed that Jordan Sparks received more related searches than Blake Lewis. Last year's competition saw the two finalists, David Cook and David Archuleta, trade jabs as the leader in search volume. But larger states, including Archuelta's birth state of Florida, leaned in Cook's favor and carried him to the title.

This year Lambert is crushing Allen in searches, currently holding an almost 4:1 margin over him. And unlike previous seasons, where the leaders have traded top search position week to week down the stretch, Lambert has held a sizable lead for the past month. The only state leaning towards Allen at this point in his home state of Alabama. Even the states which had strong support for Danny Gokey, the contestant voted off last week, show Lambert running away. For a marketing geek like me, the implications of utilizing search data to predict consumer and market trends is enormous.

Search volume utilizing Google Insights. Lambert Allen




Ladies and gentlemen, your 2009 American Idol winner, Adam Lambert.

Leia Mais…
May 18, 2009

Help! Where do I click?


If I didn't have ADHD before visiting ESPN.com this afternoon, I sure do now. User Interface experts and web designers said you couldn't cram this much graphic into this small a space, but ESPN has proved them all wrong!

Sometimes it takes one quick glance at something like this to remember that less often really is more.

Leia Mais…
Apr 30, 2009

Beware the Fail Pig!



The swine flu panic how now gripped the Twittersphere and turned the Fail Whale into the Fail Pig!

Leia Mais…
Apr 13, 2009

Thee Irrationality of our Rational Decisions


In his epic work Hamlet, Shakespeare once wrote, “What a piece of work is a man! how noble in reason! how infinite in faculty! in form and moving how express and admirable! in action how like an angel! in apprehension how like a god! The beauty of the world, the paragon of animals.”

It is remarkable when we consider the scope of everything our minds and bodies are capable of. I’ve watched in amazement the past few months as my one-year-old daughter has learned to walk, pull herself up onto the couch, communicate using sounds and hand gestures, and even feed herself (sort of). We can recognize and process the quarter of a million distinct words of the English language, not to mention the innumerable slang and regional terms, computer jargon, acronyms, etc. We can ride a bicycle or snowboard down a mountain. We can run at full speed, see something in the corner of our eye, then change directions. We can sing and learn to play musical instruments. Truly, humans are amazing creatures.

About one hundred years after Shakespeare penned the quoted lines from Hamlet, the belief that man truly was “noble in reason” moved to the forefront of Western intellectual and philosophical discussions. The Age of Enlightenment was based on the desire for human affairs to be directed by rationality rather than by instinct, tradition, superstition, religious faith or revelation.

In the midst of the Enlightenment, Scottish economist Adam Smith wrote The Wealth of Nations, arguing that people act in their own interest and do so rationally. In other words, consumers will carefully calculate the value of all the options and decide upon the best possible choice for themselves. If mistakes are made, the “invisible hand” of market forces force us to recognize our own irrationality and place us back on the safe path of rationality.

Ever since, economists, marketers, and us as consumers continue to think of ourselves in rational terms. The majority of economic scholars continue to hold to the theory of “economic man,” which suggests that purchasing decisions are the result of largely "rational" and conscious economic calculations of an individual buyer seeking to spend his income on those goods that will deliver the most utility (satisfaction) according to his tastes and relative prices. Many of these principles still constitute the foundation of our economic society today.

Imagine with me for a moment that you have an early morning meeting. You walk into the conference room in the office and take a seat next to a coworker who is taking a sip of their Starbucks coffee. If you were to ask your coworker why they decided to purchase their Starbucks that morning, what sort of responses might you expect to hear? Your coworker will likely describe how he or she enjoys the taste of the particular blend, and that the local Starbucks was conveniently located along their way into the office.

These may indeed be true, but they don’t explain why your coworker chose to drive past several other coffee houses along the way, or why they decided to pay $4.00 instead of helping themselves to the free coffee available in your office’s break room. Or why they decided it was even coffee they wanted in the first place. Is the taste of that morning Starbucks really that much better? Was the Starbucks location and wait time really that much more convenient? Or is something else at play here in the myriad of decisions we make on a daily basis?

Each day we engage in behavior that most of us would consider irrational. Few of us will openly proclaim ourselves to be superstitious, yet how many of us will refuse to walk under a ladder? We avoid black cats. We discuss with some friends how well things appear to be going for ourselves, then instantly begin to search for some wood to knock on. If we break a mirror, the first though that comes into our head is that we have suddenly doomed ourselves to seven years of bad luck. Buildings and airplanes are often built without the thirteenth floor or row. We don’t consider ourselves superstitious, yet irrational behavior such as this exhibits itself constantly.

Whenever we are faced with a decision, or confronted with a product or brand, our brain instantly begins to process thousands of pieces of data and information. Some have said that we only use ten percent of our brains. Neuroscience findings, however, show that our brain is indeed 100% active. Our brain is divided into several primary functional areas and regions which are linked together. One area of the brain does not act independently of the others, and none of the functional areas of our brain are inactive, not even during sleep.

While our brains may be 100% active, the vast majority of our data processing occurs deep below our conscious levels. According to Dr. Gerald Zaltman, an emeritus professor at the Harvard Business School and a former member of the Executive Committee of Harvard University's Mind, Brain, and Behavior Interfaculty Initiative, about 95% of all thoughts, emotions, and learning occur in the unconscious mind—that is, without our conscious awareness.

Part of our own irrationality is due to the fact that human behavior is largely learned. As we grow up, we have experiences each day that leave an imprint upon us. The time our mother raced to comfort us after we hurt ourselves as little children. The time we struck out in little league at a crucial moment in the game. The times we were successful in school, and the times we weren’t. The conversations we’ve had. The teasing and compliments we received as children. The time we broke up with our first high school sweetheart. We are experiencing something every minute of every day, some of which are more memorable for one reason or another and thus may become more permanently retained in our short-term memory. Most become forgotten, but they remain somewhere, working behind the scenes to drive the decisions we make.

How many times have you misplaced car keys, eyeglasses, or the remote control? Is it because your mind did not take account of where they were placed? Not likely. Instead, the thousands of bits of data your brain is processing at any given moment—the sounds, smells, textures, and colors of the environment around us, the phone call we are expecting, the list of things we need to do around the house this weekend, all take up the limited capacity of our short-term memory and squeeze out the exact location of our car keys. The same thing happens with the majority of the experiences we have on a daily basis. We may not be able to recall most of them, but we had them nonetheless and they leave an indelible imprint upon our minds and the decisions we will make in the future.

In his book Predictably Irrational, MIT Sloan School of Management professor Dan Ariely describes an interesting behavioral economics study in which he and two other colleagues set up a table outside a large public building. At the table they offered two different types of chocolates—Lindt truffles and Hershey’s Kisses, with a sign hanging above that read “One chocolate per customer.” The Lindt truffle was priced at 15 cents and the Hershey’s Kiss at one cent. 73 percent chose the truffle and 27 percent chose the Kiss.

They then decided to change the price, offering the Lindt truffle for 14 cents and the Hershey’s Kisses for free. Rational theories of economics and consumer behavior would suggest there would be no difference in response. Both candies had been lowered by the same amount, one cent, and there was still a 14 cent difference between the costs of both of them. But this time, 69 percent passed on the opportunity to purchase the Lindt truffle for a good price and opted for the Hershey’s Kiss instead. Demand for the truffle fell from 73 percent down to 31 percent.

Ariely subsequently conducted other variations of the study, pricing the chocolates at different price points or even placing them next to cash registers so as to eliminate the chance that people were just taking the free Kiss because they didn’t feel like digging around in their pockets or purses for change. Yet in every case, the result was the same. He concludes his account of the experiment by saying:

“According to standard economic theory…the price reduction should not lead to any change in the behavior of our customers… And yet here we were, with people pressing up to the table to grab our Hershey’s Kisses, not because they had made a reasoned cost-benefit analysis before elbowing their way in, but simple because the Kisses were FREE! How strange (but predictable) we humans are!”
Another example comes from Martin Lindstrom’s latest book, Buyology, in which he describes a neuromarketing study which used fMRI data to analyze how participants responded to various branded sights and sounds. One of the brands included in the study was Nokia. Participants rated the images of Nokia phones extremely favorably. But there was an overwhelmingly negative response to the famous Nokia ring tone to the point of actually suppressing the generally enthusiastic feelings participants had when seeing the Nokia phones alone.

The data suggested it was highly likely that the sound of Nokia ring tone was damaging the brand. Consumers clearly had a preference for the phones design and features, so why would a default ring tone that could be easily changed be responsible for holding the brand back?

The sound of the familiar ring tone was evoking negative feelings in consumers, most of them probably unaware it was happening. Consumers connected the sound with the romantic dinner that had been disrupted by a phone call from the boss calling you back to the office, or the coworker who forgets to turn down his cell phone only for the Nokia ring tone to go off in the middle of a crucial conversation or presentation. The problem, Lindstrom discovered, was that consumers associated the sound with “intrusion, disruption, and feelings of annoyance…(and) had come to hold all of the lyrical charm of a nervous breakdown.” As a result, potential customers were being turned off from the brand. A highly irrational reason to decide against a brand, but a powerful one nonetheless.

With so many different variables in play, influencing and driving our decisions on a daily basis, marketers have even more reason to engage in meaningful brand building activities. Branding should not be limited to those with mega-budgets at their disposal. In fact, branding becomes even more critical when budgets get a bit tighter. No marketer will argue that getting through to consumers is tougher today than ever before. We have become overloaded with information to the point of ignoring it altogether. Or so we think.

As we have already discussed, nothing escapes our senses. We are constantly interpreting signals, making up our own perception and understanding of the brands in the environment around us. At the same time, we are constantly sending our own signals to those around us, leading them to make up their minds about our own personal brand. When companies neglect brand building, they are nothing more than a blank sheet of paper, leaving consumers to make up their own minds while perhaps waiting for something more distinct.

Imagine for a moment you have just entered an old European cathedral, temple, or mosque. The experience is an entirely holistic one as it engages all of your senses. You can small the fragrance of the incense, candles, or old wooden benches. You can hear the bells ringing, the subtle tones played from the organ, and the voice of the priest or rabbi or minister speaking. The sunlight streams through the colorful stained glass windows. You touch the stone walls, and recognize the unique architectural arches.

You may begin to have certain feelings as you walk around. Certain emotions or memories may begin to intensify. The experience of walking into the religious setting has communicated a brand message, a powerful one that has invoked the use of all the senses. But now imagine you walk into an entirely different religious setting, perhaps a simple church building. There are no bells tolling and no stained glass windows. What if the same religious leader had been delivering the same sermon in both places? Rational theories would expect people to feel and act the same, but our own experience tells us that is not to be expected. The environment and sensory experience has changed, and even though we may not have been consciously processing the sensory data, the subsequent emotions, thoughts (and decisions) become entirely different.

Picture in your mind a car mechanic. What do you see? Most people would describe someone wearing a pair of grease-stained coveralls and possibly carrying a red shop rag. Now picture in your mind the CEO of a Fortune 500 company making a presentation to a group of investors. What do you see this time? Perhaps you imagined a sharp-looking business professional, wearing an expensive looking pinstripe suit and a starched white shirt and tie. But what if you were one of those investors in that meeting, and someone looking like the mechanic walks in to present. Even if their delivery and knowledge and expertise were the same, would you trust them? What if you walked into the mechanic’s shop only to find someone in a three piece suit hanging over the hood of your car? Would you have the confidence they would be able to do the job correctly?

That so much of our decision-making is influenced by subconscious elements does not mean that we are unable to control ourselves or immune from the consequences of our decisions. Instead, by better understanding our own irrational behavior, we gain more control over ourselves and the decisions we make. The more rational we claim to be, the more irrational we really are. It is by acknowledging our own irrationality that we actually gain control.

Similarly, marketers need to recognize the irrationality of consumers and act accordingly. In a sense, the irrationality of consumers is understandable and even predictable, and can be used to design everything from products, brand strategies, retail store layouts, campaign tactics and more. Not because we have somehow tapped into the subconscious of consumers and have deviously “tricked” them, but because we are delivering meaningful and desirable products, services, and experiences that are both emotionally engaging and enhance the lives of consumers.

This is why traditional marketing approaches which assume that consumers will act rationally struggle for success. Each decision we make is influenced by countless factors, some rational and most irrational. Multiple emotions, instincts, cultural norms, thoughts, values, beliefs, and experiences kick in and lead us to a decision. When considered, we are far from the “rational creatures” that we, along with the philosophers, politicians, economists and others, have long supposed ourselves to be.

Even most marketers that understand the irrationality of consumers still heavily rely on research techniques and information that only works properly if reason rules the day. A company spokesperson for Microsoft said it well when they acknowledged that “human beings are often poor reporters of their own actions.” A focus group participant is unlikely to admit that the real reason they purchased the large McMansion that put them on the brink of bankruptcy is because it appealed so much to their sense of vanity and desire to show their friends they could afford such a house. New and innovative qualitative research techniques and methodologies, in addition to the more recent emergence of neuromarketing practices, are necessary in order for marketers to have a window into the human mind and the ability to decode what consumers really are thinking and feeling, and what is ultimately behind our consumer behavior.

In the end, Shakespeare wasn’t incorrect when he proclaimed, “What a piece of work is a man!” Scientists and marketers alike are only beginning to understanding the depths of the human mind. The veiled forces that shape our decisions each day are not frightening, but exciting. It does not make the job more complex for marketers. If anything, when armed with understanding, it gives us greater ability to promote our products and services and build brands in a more meaningful and thrilling way.

Leia Mais…
Apr 9, 2009

Wall Street Journal, you're next!


My recent white paper discussing the importance of branding in a recession (posted here), was today's featured story on UtahPulse.com. Another white paper is the final stages and will be submitted again for publication, with hopes of getting it in the printed version of the Deseret News or Salt Lake Tribune as well.

Next stop: The Wall Street Journal.

Leia Mais…

Atlanta airport goes subliminal


Airports might not be the first places you look for examples of unique brand experiences. For the most part they are all the same, large floor to ceiling windows in the main ticketing areas, not enough ticket agents at the counters, stressed-out passengers at security checkpoints, and rows of chairs in front of each gate with passengers sitting silently, waiting for the announcement that they can begin to board the plane in cattle-like fashion.

Could holistic sensory branding tactics change the experience of passengers at one airport? Atlanta's Hartsfield-Jackson International, one of the world's busiest airports servicing over 6.6 million passengers per month, thinks so.

Visitors to Atlanta's airport will hear familiar R&B classics with new lyrics meant to gently prompt passengers in a campaign to promote airport cleanliness. The songs, "Shake Your Groove Thing" by Peaches and Herb, "Bustin' Loose" by Chuck Brown and the Soul Searchers and "Fantastic Voyage" by Lakeside, were rerecorded by the original artists themselves.

Says Doug Strachan, Creative Innovations Manager for the City of Atlanta Department of Aviation, who rewrote the lyrics and invited the original artists to record the revamped songs, "Whereas words reach the mind, music reaches the heart. These are hit songs that people love ... real powerful, catchy and make you want to dance. If you can make someone dance, you can probably motivate them to do other things."

But the airport isn't just using music to reach passengers, it is also using scent. The airport also uses a scent called "Breeze," which uses a variety of different notes including vanilla and a little lavender, to help enhance visitors' mood. A custom scent that will be exclusive to Hartsfield-Jackson is in development.

Travel commentator Stefanie Michaels, also known as Adventure Girl, says anything airports can do to make air travel more relaxing is more than welcome, especially in the times we live in. "Movie theaters and restaurants have been using scents and those kinds of subliminal tactics for years," Michaels says. "Music makes people feel good and with the economy the way it is, people are just stressed to no end, so from a subconscious level it's a really wise thing for the airport to do."

Leia Mais…
Apr 7, 2009

The rise of cultural movements

From MediaPost's Engage:GenY blog. Post authored by Chip Walker.

In 2007, I fielded a global quantitative study of Gen-Yers in 13 countries and was surprised to find the No. 1 attitude unifying the generation was: "I would fight for a cause I believe in." A large majority of global Gen-Yers agreed with it from among dozens of other attitudes. My colleagues and I were all puzzled by this finding and weren't quite sure what to do with it. As I've created campaigns for Gen-Yers during the past couple of years, the meaning of this finding has become crystal clear.

Simply put, Gen-Yers have an activist bent. But their activism is different from the idealism and rebellion of their Boomer parents in the 1960s and '70s. For today's Gen-Yers, activism is not about rebelling against institutions -- there's simply not that much left to rebel against.

Belief in institutions like government and big business crumbled long ago. Rather, in a world of almost infinite lifestyle choices, Gen-Y activism is about young people knowing their own inner priorities and making a vow to live by them -- even in the face of adversity.

A big part of Gen-Y activism is what I call "self-activism." They treat themselves and their dreams almost like causes. It's less based on idealism and more a matter of necessity: If they don't activate the revolutionary inside, they simply won't get anywhere in today's hyper-challenging marketplace.

According to the Wall Street Journal, half of all new college graduates now believe that self-employment is more secure than a full-time job. According to a Gallup pool, over two-thirds of high school students say they intend to start their own companies. Clearly, an independent spirit pervades this generation, and it's fueled by a strong sense of their personal values and beliefs. Among GenYers' most important personal values are authenticity, altruism and community.

Yet, it is this generation's consumer activism that makes them a unique challenge for marketers. Gen Y-ers don't just want to buy brands, they want buy in to what a brand believes in. They flock to brands like Red and Livestrong that spark movements.

Some are social movements -- the sweatshop-free and socially responsible clothing movements are making clothing brands like Timberland, American Apparel and Patagonia must-have items for GenY. Others are cultural movements -- rather than selling processing speed, Apple invites GenYers to join a creativity movement. Obama became the choice of Gen-Y voters because he asked them to join a movement for change, not simply to vote for him.

Would your brand fight for a cause it believes in? Would your employees? Most Gen-Yers would. Today more than ever, GenYers are seeking to summon their own passion, courage and determination. Thus, if you want to connect with them, it's time to stop doing traditional marketing and start believing in something bigger than making money.

It's not easy for a brand to spark a cultural movement. But it's worth doing because it allows us to go beyond having a point of difference and actually have a difference-making purpose in the world. I, for one, believe Gen-Y's unique activist spirit will be its lasting generational hallmark, one that will change the future practice of marketing for the better.

Leia Mais…

Fight the recession. Grow a beard!

In an effort to stay ahead and be able to predict economic downturns before they happen, economists and financial analysts have looked to number of different indices for help. The most popular may be the "misery index," which calculates the unemployment rate plus the inflation rate. Other more obscure gauges include the "lipstick index," which keeps an eye on cosmetics purchases (they rise during a recession), and even the so-called "Mormon index," tied to food assistance and stockpiling.

But now there might be another gauge economists can look at to evaluate the health of the economy: the length of men's beards. Esquire grooming editor and New York salon owner Rodney Cutler, who was also recently retained by Philips' Norelco as brand spokesman, says "recession beards" are on the rise as more men are letting it all grow out as an act of "playful rebellion," a sign of defiance and of not being a "corporate slave."

Not to mention a sign of not being employed. Hundreds of thousands of layoffs monthly are reducing the number of men who feel the need to shave daily. Some purport that facial hair is a visible, outward sign of one's masculinity, and that by growing beards, unemployed workers suggest that they have not been "unmanned" by their recent job troubles.

Observing the wave of layoffs across the country, workers at one financial services company decided that facial hair might be a great way to show solidarity with their unemployed friends. The trend has even spawned a handful of Facebook groups. And the 2009 NYC Beard & Mustache Championships unveiled a new category this year, the Recession Beard.

Leia Mais…
Mar 30, 2009

The Trouble with Twitter

Leia Mais…
Mar 25, 2009

TwitPic issues, anyone?



If anyone has tried recently to upload a picture to TwitPic only to discover it misplaces your photos and puts someone else's pic in your Tweet, perhaps the above graph showing TwitPc's traffic graph will help to explain some of their scaling issues.

Leia Mais…

What lawn care taught me about the recession



Over the weekend, my wife and I spent a good part of our Saturday working outside in the front yard. Most of our time was spent "thatching," raking up the thick layer of matted and/or dead grass that accumulates below the top layer of the lawn, especially after a winter of heavy snowfalls. The thatch on a lawn can be the biggest hindrance in growing a vibrant and healthy lawn, preventing water and essential nutrients from reaching the soil.

As we spent hours raking (we have the blisters on our hands to prove it), I thought about how well the process of thatching a lawn after the winter works as a metaphor for the challenges we face both in life and in business.

Until last weekend, we had not thatched our lawn since moving into the home. It had gone through three winters of heavy snowfall and two summers of hot, dry temperatures. As a result, the lawn was really starting to struggle in some areas, literally choking itself and struggling to survive the Utah high mountain desert climate.

In many ways, the current recession is like my lawn rake, getting rid of the areas of inefficiency that are choking a business and preventing it from healthy, vibrant growth. The recession's "rake" removes unnecessary or wasteful spending, undesirable products and services, poorly performing employees and management, inefficient business processes and models, and underperforming departments and companies. Once the thatch of business is removed, growth can occur.

You don't have to thatch your lawn every year, but should do so occasionally in order to keep it healthy. Same thing with recessions. They are cyclical. They come and they go. The important thing to keep in mind is that, while painful, they are necessary and in a counter-intuitive way, even desirable.

Leia Mais…
Mar 24, 2009

Unveiling the "Sixth Sense"



From Pattie Maes' presentation at TED. Fascinatingly cool stuff!

Leia Mais…
Mar 23, 2009

A really long post about the importance of branding in a recession

The following is the text of a white paper I published recently, outlining the importance for marketers to maintain their brand-building and marketing activities in the recession. Enjoy!

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THE IMPORTANCE OF BRANDING IN A RECESSION
By Thomas Nehren | Richter7 | March 2009

In recessions or other periods of slower economic performance, brand managers and marketers have to carefully consider how to wisely spend their valuable resources. In times of economic concern, one frequent response is to cut brand-building and marketing activities in an effort to better control costs. While it is in many respects the last thing a company should do, it is often the first thing they do.

Branding today has become more important than ever before. The current economic climate only heightens its importance, rather than diminishing it. Admittedly, a company’s executive and marketing management must have strong stomachs to follow a strategy that at times may seem counterintuitive and contrarian by investing funds in branding marketing while exacting tighter control over expenses in other areas.

Robert Frost once wrote in The Road Not Taken, “Two roads diverged in a wood, and I—I took the one less traveled by, and that has made all the difference.” This paper outlines four key points for marketers, brand managers, and business leaders to consider when facing the difficult decisions of why a brand should seize the opportunity created by today’s economic decline.

First, historical data and statistics show that companies that maintain or increase their marketing and advertising efforts in a recession do so to their significant advantage. Second, recessions brings about dramatic changes in consumer trends that only intensify the need for branding. Third, rational statements about product quality or superiority no longer provide sufficient room for differentiation. And fourth, advertising clutter can only be overcome by solid brand strategies based on emotional connections that embrace a consumer’s lifestyle. Unique plans based on alternative and/or guerilla media do not alone have the power to generate sufficient and lasting awareness and interest.

RECESSIONS CREATE OPPORTUNITIES FOR BRAND-BUILDING
During a recession, marketers are essentially faced with two options. One—cut back on advertising, hold on tight, try to ride out the storm, and promise that money will again be spent on branding once there’s extra to be found. Second— push forward with aggressive marketing to take advantage of a competitive landscape vacated by rivals.

It is an instinctive reaction for many to respond by cutting advertising and marketing expenditures along with other areas of discretionary spending. Such a reaction, however, often fails to distinguish between short-term operational and long-term strategic initiatives. Thus, long-term competitive advantage is sacrificed to instead meet short-term financial targets.

As stated by Robert S. Kaplan and David P. Norton of the Harvard Business Review, such attempts to play it safe or “cut fat and waste often slice into newly growing muscle, bone, and tendon.” Ironically, such a reaction to a slowing economy ends up only damaging the company’s most valuable asset: its brand. Another article from the publication states that "Advertising should be regarded not as a drain on profits but as a contributor to profits, not as an unavoidable expense but as a means of achieving objectives.”

Harvard Business School professor John Quelch, writing in The Financial Times of London, wrote that “instead of cutting the market research budget, you need to know more than ever how consumers are redefining value and responding to the recession.” He went on to say “It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times.”

The benefits to companies who continue, and in some cases expand, their marketing efforts during recessionary periods is widely documented. In the 1920’s, both the Kellogg’s and Post cereal companies raced neck and neck to dominate the emerging breakfast cereal category. During the Great Depression, Post cut back on their advertising while Kellogg’s maintained their strategies. By the time the Depression had come to a close, Kellogg’s had emerged as the clear leader in the category, a position they continue to maintain seven decades later.

Analyzing the recessions of the 1970’s, the research firm of Meldrum & Fewsmith showed that "sales and profits can be maintained and increased in recession years, and (in the years) immediately following, by those who are willing to maintain an aggressive marketing posture, while others adopt the philosophy of cutting back on promotional efforts when sales appear to be harder to get." Specific to the 1974-1975 recessions, the firm showed that companies which did not cut marketing expenditures experienced higher sales and net income during those two recessionary years and the two recovery years following than those companies which cut in either or both recession years.

Following the recession of 1981-1982, the McGraw-Hill Research's Laboratory of Advertising Performance analyzed the performance of some 600 industrial companies during that economic downturn. It found that "business-to-business firms that maintained or increased their marketing expenditures during the 1981-1982 recessions averaged significantly higher sales growth both during the recession and for the following three years than those which eliminated or decreased marketing.”

An additional study by Cahners and the Strategic Planning Institute found that businesses that increased media advertising expenditures during the recessionary period of the early 1980’s "gained an average of 1.5 points of market share." More recent studies of recessionary years during the 1990’s have showed similar results.

CONSUMERS CONSUME BASED ON EMOTIONAL REACTIONS TO BRANDS
Perhaps some of the reason for the response to cut marketing expenditures may be due to the fact that advertising, and more specifically branding, is often inaccurately interpreted to be nothing more than glorified awareness of a product or company. Such inwardly-focused branding efforts fail to capture the essence of what true branding is intended to be—an outreach to consumers in ways that are particularly relevant and motivating to the point of the driving sales, improving customer satisfaction, or supporting higher prices.

Each recession brings with it changes in consumer values and mindsets, which affect the purchase decisions they will make long after the recession is declared over. The current recession, which began in December 2007, brought about monumental changes in consumer values and behaviors. The crumbling of financial marketers worldwide resulted in a level of insecurity and angst unlike any other period in memory. Consumers awoke to a realization on our interdependence and vulnerability, longing for someone to provide reassurance, direction, guidance, and escape from daily worry.

We are social creatures and crave relationships that shape our identity. We develop strong personal relationships with family members and friends. Online social communities and neighborhoods are built to connect individuals who share common interests and passions. We develop connections with pets, to our country, to religion, to sports teams, celebrities, even to inanimate objects. And we develop connections to brands.

At the heart of these connections are our emotions. Dr. Gerald Zaltman, Joseph C. Wilson Professor of Business Administration Emeritus at the Harvard Business School and a former member of the Executive Committee of Harvard University's Mind, Brain, and Behavior Interfaculty Initiative, argues throughout his books that metaphors provide context for the often subconscious emotions that drive our behavior. These emotions are a lens through which we view the world. Feelings of attraction, desire, fear, and love among others cause us to act upon our thoughts.

The need for an emotional element in a brand’s persona extends to all categories. In 2005, the Workers Compensation Fund conducted extensive research which showed policyholders don’t believe their insurance providers truly understand the disruption and impact workplace accidents, fraudulent claims and inefficient claims handling have on their business. A traditional and more rational approach might be to educate the consumer about these disruptions.

However, research also learned how most workers do not actively think about safety, almost believing they are invincible. However, once reminded about the impact an injury might have on their family, they became more sensitive to safety messages. WCF worked with Salt Lake City-based Richter7 and infused emotion into their brand by having family members, particularly children, take the lead in reminding their loved ones to “Be Careful Out There.”

The campaign moved both customer and prospect favorability towards WCF, as well as existing customer satisfaction, to all-time highs. More importantly, workplace accidents among WCF clients dropped more than 40%, while remaining flat or edging slightly higher among their competitor’s clients. The campaign communicated the important message of workplace safety, but took it one step further by attaching that message to an emotion, the love that a provider feels towards his or her family. Appeals to the rational side of our brains without simultaneously making an emotional connection fail to incite the desired response from consumers.

As humans, we are first and foremost emotional beings, and our behavior is driven only when intellectual thought or reason intersects with our emotional side. As consumers, our consumption behavior is driven in the same manner. A brand’s image, its core message, its experience, and persona all work together to allow for a relationship to develop and some sort of action by consumers to take place.

In their new book Brand Immortality, authors Hamish Pringle and Peter Field studied 880 campaigns and found that emotional campaigns were almost twice as likely to generate large returns than rational campaigns. When at a time when the emotions, and even the logic, of many consumers has been thrown into a state of disarray, a brand that pulls back and fails to establish itself does so at its own peril.

BRANDS OVERCOME “THE DILEMMA OF SAMENESS”
Consider a recent study conducted by Consumer Reports. In the study, over fifty various kitchen ranges were tested and evaluated. The ranges were priced anywhere from $400 to over $5000. Of the ranges tested, forty-seven were rated as “very good” and four were considered “excellent.” Two models were considered “good,” and not one was rated as “fair” or “poor.” The trend is not limited to kitchen ranges. The ratings for smart phone devices, vacuum cleaners, digital cameras, and most other categories similarly yield a wealth of highly-rated products with virtually none falling into “fair” or “poor” territory.

A product manager for any of the fifty-one kitchen range models rated as “excellent” or “very good” may have been both pleased by their high score, and at the same time disheartened that their product did not immediately stand out amongst the crowd of competitive models. It can be considered a “Dilemma of Sameness.” Little differentiation in terms of overall quality takes away a marketer’s ability to continue what has long represented the majority of all marketing strategies, a selling proposition based primarily on rational benefits and logical arguments of product superiority.

Never before have there been so many quality products sold in America as is the case today. While business can be proud of their advancements in quality and performance, consumers are left to navigate a sea of products, with only the smallest of differences to help them distinguish and choose which products represents the best value for them. That is not to say there is nothing that can be done to further and improve products or services, or to make them “remarkable” as Seth Godin has said, but often such improvements aren’t enough to change perceptions and actions in the marketplace.

When consumers perceive little if any difference in tangible buying criteria, they will always defer to the most obvious difference: price. Again from the book Brand Immortality, reviews of previous national and international campaigns found that emotional campaigns generate a wider range of desirable business effects, most notably in their ability to reduce price sensitivity by an enduring sense of differentiation for the brand.

Consider the popularity of touch screen smart phone devices. RBC Capital Markets analyst Mike Abramsky suggests the number of iPhones sold in 2008 at 14 million, and estimates that an additional 24 million will be sold in 2009. The staggering sales figures come despite the fact that Consumer Reports currently rates six devices higher than the iPhone, most of which are also cheaper than the iPhone’s price tag of $299 for the most recent 16GB model.

Even more interesting are results from a recent survey by internet monitoring firm comScore, which showed that the iPhone is proving most popular among low income earners despite its high price tag. The survey found the strongest sales growth for the iPhone came from households earning between $25,000 to $50,000. Sales in this sector of the market grew forty-eight percent, compared with just sixteen percent among households earning more than $100,000. The staggering growth and popularity of the iPhone is being driven by an income bracket one would expect would have been hardest hit by the recent downturn in the economy.

Logically, the iPhone would not appear to the best value when it comes to touch screen smart phones, and certainly not for lower income and more vulnerable households. But that hasn’t stopped consumers from spending. The difference is Apple’s iconic brand and strong affinity among its consumers.

Using kitchen ranges again as another example, consider the case of The Viking Range Corporation. The company makes professional-quality stoves for homes. These products are priced around $4,000. Stuck in the middle of the ranges classified as “very good” by Consumer Reports, the line has grown into a $400 million business. Interestingly, in their book Trading Up, Michael J. Silverstein and Neil Fiske point out that “Some seventy-five percent of Viking cooktops installed are never used.”

It would seem illogical that one would spend so much on a cooktop, only to never use it. But Viking isn’t selling a cooktop. It is selling a brand that tells a powerful story that resonates with a targeted group of consumers who seek to express their sophisticated individual style and tastes and adventurous spirit in seeking out new culinary experiences. A brand based on emotion. An emotion that drives behavior.

MEANINGFUL BRANDS, NOT GUERILLA TACTICS, BREAK THROUGH CLUTTER
Providing further complexity to the problem faced by today’s brand managers is the case of what many marketers have referred to as “advertising clutter.” The more of it there is, the harder it becomes for any one advertisement to stand out.

Complaints about advertising clutter are nothing new, dating as far back as 1759 when English author Samuel Johnson wrote, “Advertisements are now so numerous that they are very negligently perused, and it is therefore become necessary to gain attention by magnificence of promises, and by eloquence sometimes sublime and sometimes pathetic.”

Certainly, a growth in available products and greater access to them makes today’s situation for both consumers and marketers much different than was the case in 1759. It’s even more difficult than was the case just forty years ago, when advertising executive David Ogilvy blamed the clutter problem for consumers having “acquired a talent for skipping advertisements in newspapers and magazines and going to the bathroom during television commercials.”

Recent estimates suggest consumers are exposed to over 5,000 advertising message each day. Media agency Mindshare reports that fifteen minutes of every hour is devoted to advertising and/or network promotions. TNS Media Intelligence further suggests that on top of the thirty-second commercials, viewers were also exposed on average to six minutes and twenty-two seconds of paid product placements during one typical hour of prime-time programming. During the third quarter of 2006, the CBS show Rock Band: Supernova contained over 1,600 product or brand shots within its episodes alone.

What makes clutter more challenging for marketers today is the increasing proliferation of advertising messaging, as well as the ease with which consumers can navigate around it. Armed years ago with a remote control to change the channel, ad blocking software for internet browsers, TiVo, and wireless devices now give consumers more ability to ignore marketing at the push of a button.

The change in the ways consumers consume media has brought about amazing new trends in communication and messaging strategies. Many of these new strategies and tactics provide a unique opportunity to develop relationships between brand and consumer like never before. Brands can engage consumers, walk with consumers, and become a welcomed and celebrated part of their lifestyle. In his book Buying In, columnist for the New York Times Rob Walker describes the phenomena of “murketing,” a description for the murky way in which relationships between brands and consumers have become “strangely interconnected, even reinforcing.”

The Toyota Scion branded itself as a car for the younger crowd they called “tuners,” a crowd who expressed their own unique style and personality through the way they customize their vehicle. The Scion’s marketing budget would have made even a mid-sized advertising agency scowl. Yet, the approach involved showing up at outsider and trendy parties, festivals, and events in urban centers. Scion hosted club events with DJs and gave away free copies of a Scion CD Sample Volume. They let editors of alternative publications test drive the vehicle for a week.

Scion embraced a lifestyle, reinforced that lifestyle, and gave consumers an outlet for their emotions. The car started wit a cult following to become now a mass-market success as the rest of the automobile industry questions its future.

Though an integral part of the campaign, it was not the creative use of alternative media and guerilla tactics that made the Scion a success story. It was the brand’s ability to understand the emotions and needs of a particular target audience. They embraced those need, and built a brand that didn’t just try to convey understanding through a cool logo and tagline and crazy marketing stunts, but through an entire philosophy surrounding everything about the brand.

The market is full of examples, from Tylenol to Red Bull, of companies who built a brand based on emotion, infused that emotion into their marketing, and provided experiences that reinforced that same emotional side of a consumer’s lifestyle.

THE CALL FOR BRANDING
The bottom line for any brand manager in a recession is this: one must aggressively, determinedly, tirelessly work to build the brand. It cannot be put on hold or placed on a back burner. Recessions come and go, and they will continue to do so. With the amount of competing messages vying for the slightest crack of attention, brands cannot expect to maintain or return to their position in the marketplace once brand-building and advertising is reduced. Once gone from the consumers mind, too often that brand is gone for good.

Instead, a brand must become even more diligent in its efforts to build a case for its own singularity and exceptionality. It must be built on emotion that is deeply relevant and resonant with a target audience in order for it to have the lasting power and be perceived as special enough to be worthy of not just a consumer’s limited pocketbook, but also their lifestyle. Brands have the unique opportunity often created by unpleasant economic environment to forge deeper relationships with consumers that are profitable for both the company and the consumer.

It isn’t consumers who fail to understand the meaning and importance of a brand. It is the failure of the marketer to communicate that to the consumer. When that occurs, and when money is tight and sentiment is weak, consumers will make the necessary and even unpleasant choice that many marketers are learning the hard way: They simply won’t buy it.

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Mar 20, 2009

Three Components of Brand Equity

A recent AdAge article focused on settling the argument over "emotional messages" and "rational messages" and which ones are preferable in marketing. The authors reference data that shows that emotional campaigns are almost twice as likely to generate large profit gains than rational ones, with campaigns that use facts as well as emotions in equal measure fall somewhere between the two.

Even better than an emotional campaign is an emotional brand, which, in general, generate a wide range of desirable business effects in improving profitability. Emotional brands reduce the consumer's focus on rational features and benefits and have a substantial reduction on price sensitivity.

"Brand Equity" is the sum total of all associations, experiences, and perceptions consumers have over time with a company, including its products, services, marketing, employees, retail stores, etc. As companies seek to establish greater Brand Equity, its three components must be considered separately.

Awareness
Unaided awareness is the foundation and first key measure of brand equity. Awareness comes from exposure, i.e. advertising, publicity, event sponsorship, store fronts and signage, email campaigns, direct mail campaigns, packaging, website, banner ads, etc. These things must be created with extraordinary style and creativity so they grab attention and have impact.

Understanding
Understanding comes from what you say about yourself, and, more importantly, what others say about you. Do consumers think about you the same way you think about yourself? In the past, understanding was shaped largely by the news media and word of mouth, but now social media gives brands a tremendous opportunity to listen to what consumers are saying and engage them in actual conversation. Imagine for a moment that your target audience could only think of you in one single way. What would you want it to be, and how many would say that very thing about you?

Loyalty
Loyalty comes through positive interaction with a brand. The more positive the experience, the deeper consumer loyalty becomes. Branding is a business strategy not just a marketing strategy. It is a long-term commitment, not a short-term initiative. Develop a positive experience through product design, employee training, creating a great shopping experience, and customer-friendly corporate policies. From a marketing perspective, look at highly personalized data base driven marketing programs, i.e. preferred customer programs, cross-sell programs, and particularly the personalization of your website.

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Mar 11, 2009

Slow down!



There is a reason we're supposed to slow down when we go around curves when we're driving. If we don't, our car's inertia becomes too strong to correct quickly enough and we end up driving off the road and over a cliff or into a tree.

On a recent road trip, we were coming over a mountain pass and around a corner that I misjudged and didn't slow down enough for. I never lost control of the vehicle (no I wasn't taking the photo above as I was driving), but the turn was sharp enough to wake up the passengers.

When developing brand positioning and marketing strategy, many business leaders, especially small business owners, take the corner too fast. Recently I consulted with several small business leaders on brand strategy, but once our brainstorm began they excitedly began discussing how they were going to talk to consumers and started brainstorming taglines.

Its natural. As humans we are impatient and want to get to our destination as quickly as possible.

But before you can talk tactics (how), you have to figure out what you are going to say and why anyone would care. Only once you have slowed down and done the first step can you begin taking the next step.

Otherwise you just might steer your business off the road.

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Hiatus



The Monkey Shack has been on hiatus the past few weeks. Oddly enough, the number of visitors to the blog has increased since I last posted. Thanks to everyone in our growing community for stopping by. These are interesting times for business leaders and marketers, and we'll be jumping back into cyberspace shortly!

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Feb 24, 2009

Back to basics for Toyota



On Monday, three top executives announced their retirement from Toyota. One of them was Mitsuo Kinoshita, one of the primary architects of the company's global expansion the past two decades. Incoming president Akio Toyoda, grandson of the man who founded the company, plans to focus on abandoning kakushin, or "revolutionary change," current president Katsuaki Watanabe's term for changing the way Toyota designed its cars and factories. It spawned technological advances, but in Toyoda's opinion led to cars that were often costlier to produce.

Toyota is struggling through the global recession that seems to have a bulls eye planted squarely on the backs of automakers. Though Toyota is in a stronger position than GM, it still forecasts a loss at the end of the fiscal year March 31. The company is stockpiling unsold cars in of Fuji Speedway and is moving forward with plans to shutter factories in both North America and Japan.

Watanabe spoke often about innovation kakushin, kaizen (continuous improvement) and kaikaku (revolutionary change). A corporate philosophy built on those principles pushed Toyota to become the world's largest automaker and earn a reputation for the best and most reliable cars in the world.

Now they seek to distance themselves from those philosophies and focus instead on thrift and efficiency. Only time will tell if abandoning some of the core principles will help Toyota stay afloat and reemerge out of the recession even stronger, or if they will only sacrifice what decades of work has built and impede the company in the long run.

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Feb 23, 2009

The Great Recession



Last week, Billionaire investor George Soros said the the world financial system has effectively disintegrated and the resulting turbulence is actually more severe than during the Great Depression, then compared the current situation to the demise of the Soviet Union. Donald Trump said we are in a depression earlier this month.

Scary opinions coming from two very successful and influential global business leaders. But before you get too freaked out, consider that the US Gross Domestic Product fell 46% between 1929 and 1933. The current recession has seen it fall 3.86%. Unemployment reached a high of 24.9% in 1933, right now we sit at 7.6%. The stock market fell 86.7% during the Great Depression and took over 25 years to break even. Today stocks closed at their lowest point since 1997, down 49.8% from October 2006 and more consistent with the recessions of 1973-74 and 2000-03 (48.2% and 49.2% respectively).

While the current economic situation is certainly severe and likely to recover anemically next year, to say we are in a depression is nothing more than hyperbole, lack of perspective, and panic. We are not even close to the turmoil of the 1930s, and data indicates we are not going to come even close.

Yet consumer fear continues to hold the recovery back. Consumers have lost faith in business executives so they turn to politicians, only to hear Obama constantly suggest, "If the stimulus doesn't work, there's more to come," which further destroys confidence. The broken record rhetoric encourages investors and consumers to hold off, to see if a better deal materializes down the road. Even Bill Clinton says Obama has been too negative and needs to change his tone.

Results from a poll released this morning by CNN show what is really at the heart of this economic downturn. 73% of Americans say they're very or somewhat scared about the way things are going in the United States, six points higher than in an October 2008 poll. Nearly eight in 10 say things are going badly in the country, with just 21 percent suggesting that things are going well. The survey also says that three out of four Americans are angry about the way things are going in the country.

But three out of four questioned say that things are going well for them personally.

A Keynesian "paradox of thrift" mentality is settling in. Paradox of thrift is an economic theory which simply states that when everyone saves more money during times of recession, aggregate demand falls and in turn lowers total savings in the population because of the decrease in consumption and economic growth.

Consider a leaky bucket. A hole in a bucket, representing savings, is made a little larger, corresponding to people becoming more thrifty. Initially there will be a larger flow of water out. But this cannot continue indefinitely. Equilibrium exists when the inflow equals the outflow, and the inflow has not changed. This means that the water level must drop so that the pressure forcing water out the bottom will be reduced. Less pressure means less outflow, and at some lower level of water equilibrium will be reestablished.

Three-fourths of Americans think things are going well for them, meaning that economic turmoil does not exist as much in actuality as much as it does rather in the perceptions of the surrounding economy. Consumers fear that it is a dark, stormy sky outside and that the bad weather somewhere else in the country may eventually come to affect them. That's why so many say they are angry and scared, even though they're content with their own personal circumstances.

This mindset is totally understandable. Even last week I was too scared to buy tickets to Disney World for my family for these same reasons until I realized the mindset that was causing me to be hesitant. It is a mindset that is becoming deeply entrenched, reinforced by constant negativity from the leaders who ought to provide optimism and perspective. The paradox of thrift mentality is having an unintended consequence in delaying a recovery and prolonging and making the overall situation worse than it really is.

Marketers have to be bold, both for their own survival and for the good of the economy, and unapologetic in their encouragement of commerce and consumer spending. Constantly slashing prices and offering insane deals only causes a consumer to sit back and wait for a getter offer they know is inevitable.

Despite assertions to the contrary, consumers have not lost their appetite for spending. They still have their money and are willing to spend. They are resilient. They want to participate in the marketplace. But right now they need reassurance and encouragement. And this is what marketers must do.

Get to work, it's not raining as bad outside as you think it is.

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Feb 20, 2009

Tiger's back



After winning the US Open last June essentially on one leg, Tiger Woods took the rest of the PGA season off to recover from surgery on his stress fracture and torn ACL. He hasn't played a tournament since. With the sport's biggest star gone, television ratings and interest plummeted. Now the icon who brought golf into the mainstream is bringing it back from its 8-month spell of irrelevancy, announcing yesterday that he will play in next week's Accenture Match Play Championship in Arizona.

But am I the only one who thinks it is more than just a coincidence that Tiger chose to make his highly anticipated return at a tournament sponsored by Accenture, seeing as how they are one of his major sponsors?

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Feb 19, 2009

Fight or Flight




The "fight or flight response" is our natural instinctive response that prepares the body to "fight" or "flee" from perceived attack, harm, or threat to our survival. Its hard-wired into our brains, which means it is difficult to regulate when these instincts kick in. Because most of the businesses I know are run by humans (not all but most), business leaders and marketers possess these same instincts when they encounter threats in a business environment. You can fight it, or you can flee from it.

A large number of businesses have decided to flee from the threats posed by the current economic downturn. Marketers expect to cut an average of 3% from their 2009 budgets. Some would argue that lower customer spending leaves some businesses with no choice, resulting in slashed marketing budgets and eliminating experimental programs. Instead of fighting and addressing the threat (or opportunity) head on, they flee.

At best this "survivalist mode" reaction only protects existing share of voice, but more often it will see that share slip away and leave a brand poorly positioned to connect with consumers and separate from the competition in the eventual economic recovery.

Brands must be bold and recognize the recession for what it is, an opportunity to reexamine core beliefs and strengthen relationships with consumers. The recession brings about new customer attitudes, values, and behaviors. All it takes is one simple decision, to choose not to participate in the recession.

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Feb 17, 2009

Surviving the recession



Last year I bought a Dell XPS laptop for over $1400. I upgraded the machine to meet what I needed, and bought during a sale so I thought it was a bargain at the time. But today I went online to discover they are selling essentially the same laptop for $949. Other consumers who purchased new vehicles a few years ago are kicking themselves when they see the discounts and incentives some automakers are offering right now.

The recession has forced consumers to carefully consider where they spend their money. Companies across the board have reacted by slashing their prices, leading consumers to then ask themselves if they’ll ever consider buying anything at full price again. Ask Taco Bell if it could ever move away from having a 99 cent value meal.

In 2005, GM became the first automaker to allow customers to buy vehicles at the employee rate. The “employee pricing” promotion worked in the short-term, boosting GM’s sales 41 percent in June 2005. Ford and Chrysler then followed with their own employee pricing plans the following month. But that short-term strategy did little to offer added value to customers, but instead cannibalized their brand. Detroit’s automotive industry is now on life support.

During the Super Bowl, one automaker took a dramatically different approach. Instead of cutting back its advertising, Hyundai bought the spots vacated by GM. How do you think an assembly worker at a GM plant felt when GM said we weren’t going to advertise during the game, and let an overseas competitor come in and rub it in their faces that one of their models was named North American Car of the Year? I can’t imagine morale was at an all-time high at the GM plant the Monday after the game.

But that is a post for another day. Hyundai also took the time during the game to introduce its “Assurance Program,” where customers could return their vehicle without any damage to their credit if they lost their income in the year after their purchase. Instead of slashing prices, Hyundai added value.

As sales in the automotive industry continued their precipitous drop, Hyundai posted 14 percent increase in sales in January. I wonder why?

In an email I received this morning, brand expert Martin Lindstrom noted, “As every business goes about cutting their marketing budgets, slashing development costs and sticking their heads underground, experiences shows that those who take a chance on doing the opposite will emerge on the other side of the recession with the brand fresh in the consumers mind. A brand is first and foremost an investment, so why jeopardize the many years and millions of dollars spent building emotional connections with your customers? Now is the time to show the world that your brand is a survivor, and when Noah is calling, you'll make it onto the Ark. There are only few spaces left.”

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Feb 12, 2009

Joaquin Phoenix goes Amy Winehouse



What do you think? Has Joaquin totally lost his drug-addled mind, or do you think he is up to some sort of mockumentary PR stunt?

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Feb 11, 2009

Cessna fights back



In what may have been one of the biggest public relations blunders in recent memory, the CEOs of Detroit's "Big Three" automakers flew to Washington DC on private jets to request government bailout money. Then word leaked out that Citibank, also a recipient of $45 billion in government funds, had ordered and was about to finish the purchase of a luxurious $50 million corporate jet from a French manufacturer.

The media and public both skewered the Detroit CEOs and Citibank at the time for their use of corporate jets. Its like asking your nurse for caviar and champagne when you're on life support. The Big Three disbanded their fleets. Citi canceled their order for their jet. And in the wake of the unexpected public backlash, orders for business jets have taken a sharp nose dive.

Across the industry, new orders for private jets have almost evaporated, and hundreds of existing customers have sought to defer or cancel orders that were placed in higher-flying days. In addition to layoffs, some jet makers have cut production by as much as 56%. Cessna Aircraft Co. is laying off more than 4,600 people, or roughly a third of its work force, to cope with the sudden drop in demand for private airplanes of all sizes.

Now Cessna is fighting back. In a campaign that launches today, Cessna will run an ad that says, "Pity the poor executive who blinks," and gets rid of the company jet. "One thing is certain: true visionaries will continue to fly." In another ad, Cessna says "Timidity didn't get you this far. Why put it in your business plan now?" Instead of retreating, Cessna argues, companies should adjust and make sure they are flying the right type of aircraft.

So far, Cessna is the sole jet maker to take on the negative publicity with a high-profile ad campaign. Total cost of the campaign, developed by Dickerson-Grace in Denver, is unknown, but a spokesman for Cessna did say the company has "redirected more than half of our promotional budget to this campaign."

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Feb 10, 2009

Pay more taxes!

Reed Hastings, the CEO of Netflix has reached out to President Obama and asked him to raise the taxes of anyone that makes over million dollars to 50% per year! But what Hastings may not know is that he can already pay more taxes. Angry Netflix subscribers who would rather not have their taxes raised so they can pay for things like, umm...Netflix memberships, can print and then cut-out the sheets below and include them when sending back their DVDs.

The cut-out sheets can be downloaded here.

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Feb 6, 2009

Why I'm cancelling my satellite package



My wife and I recently had the conversation about whether or not we should keep our Dish Network subscription or just cancel it all together. We'd had the same conversation before, but we've never actually gone through with it. As soon as the topic came up this time I immediately began trying to think of all the possible things I would ever want to watch on TV but would no longer be able to. What if I wanted to catch the game one night? What about when my wife wants to watch The Hills or Jon and Kate Plus 8? What about when our 3-year-old wants to watch a cartoon on Disney Channel after breakfast?

I've made similar lists when we have had the discussion in the past, and each time we agree that we'd better keep Dish instead. But I'm no longer convinced that is true. Let's start with my son. He would rather watch Cars for the 15,000th time than watch anything else on TV. Second, he and I watched two episodes of Handy Manny and Mickey Mouse Clubhouse on my BlackBerry last night before he went to bed. As for my wife, she watches The Hills or The City online more often than she does on TV. And I'm never home enough to actually watch a full game (I didn't even watch a full quarter of the Super Bowl), but have instead gotten used to following games on my phone with ESPN's mobile GameTracker.

Go to the web site of any network and you can watch full episodes of pretty much any show, at your own convenience. I haven't seen a single episode of The Office on TV in two years, instead watching them online over the weekend. Same goes for 24. And with sites like Hulu or Joost offering free movies and TV shows, rarely do you come across anything on television that isn't also readily available in its entirety online.

Internet users in the U.S. viewed a record 14.3 billion videos in December alone. That's BILLION, with a "B" (cue up Dr. Evil). Hulu visitors watched more than 24 million videos the same month. Joost users viewed 818,000 hours of video in January, up 25 percent from the previous month. The future of television is online, and that future has in many ways already arrived.

That's it, I'm gonna call Dish Network right away on my phone. As soon as my son is done watching cartoons on it.

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Feb 5, 2009

Super Bowl post-mortem

I know I said I was going to post my reaction to the advertising from the Super Bowl, but I felt the ads were so poor that it has taken me the better part of the week to stop shaking my head at the work my industry released on that stage.

Personally, I thought the Denny's ad was the best one from the game. It was funny and entertaining, had a great promotion behind it, and got people to think about having breakfast at Denny's again. I hadn't even thought about Denny's in years, but they solved that in 30 seconds. Over 2 million people went to take advantage of the offer. Denny's CEO Nelson Marchioli said "This free offer is our way of reacquainting America with Denny's real breakfast and with the Denny's brand." Nicely done.



The other one I felt was a successful ad were the two Hyundai advertisements, one of which showed Lexus and BMW's reaction to Hyundai Genesis being named North American Car of the Year. In step with last year's Super Bowl ad, this one resorted to changing perception of the automaker without the juvenile, throw a snowglobe in someone's crotch sort of humor that others have come to expect from the game. Instead they fixed the biggest problem with their brand, that no one could pronounce their name. In another spot, Hyundai introduced their "Assurance" program which allows buyers to return the car with no penalty should they lose their income at some point in the following 12 months. Another great program to add significant value, all done without discounting or cheapening their product.




At Richter7 we held our annual Ad Bowl party the Monday after the game and rated each ad. Here is a clip from our party as covered by a local television station. (Just click the image and be forewarned, KSL puts a preroll advertisement in front of the clip so be patient).

Video Courtesy of KSL.com

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Jan 30, 2009

Is $3M for a Super Bowl ad worth it?

First of all, its not just $3 million. Factor in production costs, and the total to advertise in the Super Bowl can easily exceed $5 million.

But the answer to the question is, well, it depends. For FedEx, the answer was "no." The advertiser pulled out of the game for the first time in 12 years due to the "unprecedented economic waters." Even GM, who is still sponsoring the Super Bowl, will not advertise during the game, largely because everything they do with bailout taxpayer dollars opens them up for further criticism.

But despite the economy, many jumped into the game for the first time. Rookies include Denny's, Teleflora, and Pedigree. The commercials will also include innovative media buys, including a one-second commercial for Miller High Life pitching the beer as "good and honest at a tasty price." Frito-Lay solicited consumer-made ads and will air one during the game, even offering $1 million to its creator if it is picked number one in USA Today's Ad Meter. And DreamWorks will air the first ever 3D ad for its upcoming film "Monsters vs. Aliens" and is distributing glasses for the spot through partnerships with Pepsi and Intel.

Most of the airtime was purchased prior to December, when the stock market was still above 11,000 and a recession hadn't yet been officially declared, meaning some of the advertisers (and their media planners) might now be regretting their decision. Yet expected to draw just shy of 100 million viewers, the Super Bowl is still the biggest platform imaginable for any national advertiser and even boats a fairly reasonable CPM of $30. Not to mention the fact that this is one event where people tune in to actually watch the commercials and not TiVo through them.

I'll check back in on Monday and give my grades of the advertisers and my thoughts on whether it was worth it for them or not.

Enjoy the game!

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