Posts Tagged ‘Advertising’

February 23rd, 2010

See how business can use Twitter

Whilst most of the social media world is theorising about “social media strategy”, it can pay to follow those who lead by example. Here are three links to three companies who are using Twitter to sell product to a defined community of customer/followers:

  1. Dell Outlet - see one of their twitter pages here - Dell have Stephanie@Dell offering customer support on their page
  2. Misco  - see their twitter page here - Misco have added a deal of the day to their background.
  3. Viking Direct - see their twitter page here

I think these are great uses of Twitter. Each company can add or remove offers by the second. On the basis that “birds of a feather flock together” it’s highly likely that these offers will be re-tweeted to friends of colleagues of each first generation follower.  Links can be tracked,  sales can be measured, sales ROI can be calculated. On that topic if you go to the Dell Outlet page you can see that it has 1.5m followers which makes it the 89th most popular page globally (twitterholic). That gives Dell more followers than Paris Hilton, Stephen Fry or Sarah Brown.

To cut a long story short the Dell Outlet page offers these things: Utility, Relevance, Value.  If you can’t score more than 7/10 on each of these three measures, and you’re not a celebrity, then you will struggle to make twitter work for your business.

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January 5th, 2009

Sarkozy’s TV advertising ban and the BBC funding debate

French President Nicolas Sarkozy’s recent move to ban commercial advertising from state TV channels during peak time adds some colour to the debate about funding the BBC in the UK, albeit in reverse order. When recently asked whether the BBC should be allowed to carry advertising my answer was ‘no’, not because I share Sarkozy’s views on the beauty of ad free state broadcasting, but because such a move would be financially disastrous for the existing commercial broadcasters in the UK. Here’s why:

Firstly, adding the BBC to the commercial airtime market would be catastrophic for existing broadcasters, forcing many into financial ruin. According to Ofcom, the UK TV market was worth around £3.16bn in 2007. Broadly speaking, TV companies aim to take a share of advertising revenue that roughly matches their share viewing. The BBC took a viewing share of around 28.5% share of viewing in December (BARB). So if the BBC were to take a similar share of the UK’s annual TV spend then it would take around £900m in advertising revenue. But the market wouldn’t necessarily grow to accommodate this, in fact all the evidence suggests that the TV market is in terminal decline with Ofcom warning the market could actually dry up by 2020. So the BBC’s £900m would have to come from the existing (and declining) £3.16bn currently being taken by the UK’s commercial broadcasters. Unfortunately, the UK’s traditional terrestrial broadcasters are not in a position to be generous to the tune of £900m. They are enduring tough times. In the last financial year (2007) ITV reported profits of £188m (down 35% on 2006) and Channel Four lost £8.8m (down from £14m in 2006). So you can see that taking £900m revenue from existing UK commercial broadcasters would completely wipe out all existing profits and leave them staring at bankruptcy.

Secondly, the BBC’s potential advertising income falls way too short of its current licence fee income to be a viable alternative. The £900m the BBC might hypothetically generate from its 28.5% share of the TV advertising market is only around one third of the £3.2bn it currently receives in licence fee income. In fact, as we have seen, the total UK TV market is worth around £3.16bn, almost exactly the amount the BBC gets to run itself annually. Even if the BBC ad sales machine were so successful that it were able to generate a level income equating to double its 28.5% viewing share, that would still not be enough to finance the Corporation.

There has been a counter argument to these views stating that allowing the BBC to carry advertising would make advertising cheaper overall therefore encourage more advertisers to use TV and expand the overall size of the TV advertising revenue “cake”. But this is a fallacy for three reasons. First, advertising could not become cheaper because the broadcasters could not survive if their yield (£ income per viewer) and margins fell further; they wouldn’t exist so any cost reduction / market expansion arguments are rendered purely hypothetical. Secondly, there are cost entry barriers to TV advertising. TV commercials are expensive to make the availability of cheap airtime may not bring TV advertising into the reach of smaller advertisers. And thirdly, any ad budgets looking for a new home are likely to find a more than satisfactory reception on the Internet where short term tactical pay back is much higher than on TV.

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December 16th, 2008

UK advertising predictions 2009

I think 2009 is going to be a year of immense change in the UK media landscape. But it’s not going to be the same for everyone. I predict that it will be a bad year for the traditional offline players whilst newer digital players will find 2009 painful but manageable. For many traditional media owners 2009 will be about survival - particularly in print. There is no doubt that the UK media scene will look very different in December 2009 to how it looks in December 2008.

Before we get into the detail, I think it makes sense to divide my 10 predictions into two groups: “structural change” and “reality checks”. The “structural change” predictions deal with fundamental corporate realignments that will be forced upon businesses in order to survive in the UK communications industry. The “reality-check” predictions relate to businesses that will have to make significant changes in how they operate to remain healthy and be in good shape to meet the challenges of the next few years. So below is a summary of what I think will happen in online and offline marketing and media community in 2009.

Structural changes (1-5):

1. The full effect of the flow of advertising revenue from offline to online media in recent years will make a profound impact on the the UK media scene in 2009. Media owner denial about underlying structural shifts in our industry will evolve into acceptance and the adoption of a ‘change or die’ corporate mentality. On reaching this enlightenment, media owners will use the recession as an excuse to make the big changes they’ve been putting off for years. There will be ruthless cost-cutting, divestment, re-structuring and closures.

2. In print, some established brands will collapse. One national newspaper will close or be sold. But the worst pain will be reserved for regional and local media which will come under severe financial pressure because of the combined effect of the shift to online, the crisis in the housing market and reduced expenditure from advertisers, particularly car dealers and retailers. Regional and local directories like Yell and Thomson will also have a very difficult year. All in all I predict regional media will be in for a torrid year, and suffer worse perhaps than any other channel.

3. In broadcast there is also going to be serious financial trouble. Some smaller TV stations may suffer badly and probably collapse. ITV’s situation will get steadily worse. Sky will continue to feel the impact of Freeview through declining rates of subscription growth, but its subscription base will make it less dependent on advertising revenue and allow it to weather the recession in reasonably good shape. Problems will come for Sky if the recession goes on for more than a year and consumers think twice about re-subscribing. Regional radio will suffer badly because of its dependence on cars and retail.

4. Online will not be exempt from any pain (see also 6,7,8) but it will be display advertising networks that have to bear the brunt of it. The whole area of blind networks delivering view based conversions will come under increased scrutiny. These advertising / business models will be under the magnifying glass of both advertisers and investors. Ad revenues will decline and investors will start to duck out. This will cause a shake out in online display advertising networks; some will fold and the lucky ones will be taken over.

5. On the agency side of the business, some traditional agencies could run into serious financial trouble and some may even go under - particularly those with an over-dependence on automotive and retail brands. As usual in a recession, those agencies able to prove a causal link between their activity and sales are likely to suffer less than those agencies who can’t.

Reality-checks (6-10):

6. The business models of social media stars like Facebook will come under increased financial scrutiny as brand owners realise it’s very difficult to communicate in these environments and investors realise it’s therefore very difficult to make money. Some social media sites will be bought up by bigger online and perhaps offline players seeking to broaden their offering.

7. Microsoft may concede it can’t win in paid search and may even surrender and divest from it. Even if this doesn’t happen, watch out for other significant online and offline investments from Microsoft.

8. Google will show signs of maturity and will be forced into making a big move to maintain momentum and investor interest. Anticipate something like a big traditional media owner purchase, the takeover of a big social media player or more mobile developments.

9. There will be significant shedding of non-core corporate assets across the board. More companies will lose patience with their seedlings and turn out the light. Rather ironically from a corporate point of view, traditional media businesses are likely to close their digital businesses. This will reflect the fact that the dominant business model in these companies cannot yet monetise online and digital profitably.

10. Consumers will be lackadaisical about very high speed broadband. As the revelations about high speed actually being slow speed gain more momentum, offers of higher speeds will be met with increased cynicism. As a result, take-up will be slow and providers may run into problems. Those companies betting that offering even higher speeds will add new life to a maturing market may lose.

Despite all this, here’s to a Happy Christmas and 2009.

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December 3rd, 2008

Can marketing use social media networks for advertising?

,So the mighty P&G has spoken about social media. When these companies speak the marketing community has to listen. These guys think long and hard about the issues to cut straight through the hype. I know because I did it for Unilever. I worked directly with Unilever digital teams to help them understand the real value of digital media to their business. So, what was the basic message emanating from P&G? Well it’s that social media is not “media” and there’s no point in advertising around “someone breaking up with their girlfriend”.

I disagree slightly with the first part of this criticism. Social media is a form of media because it is space which carries content and delivers an audience that can be traded for money. From an advertising perspective these are the core characteristics of a “medium”. The big question comes when we try to explore what type of medium social media actually is.

In reality social media is not social media, it’s personal media. Social media is really comprised of groups of individuals sharing their personal communications. These social media communications are online versions of personal phone calls, text messages or letters. And whilst in some cases individuals may be prepared to publish these communications, it doesn’t follow that advertising placed in them will be effective. Such advertising is the equivalent of a radio ad in a phone call.

Advertising media planning is no longer about reach (and sites like Facebook certainly deliver reach). Twenty-first century media planning is about going deeper than reach, it’s about delivering mindsets, engagement and involvement. And it’s a fact that whilst an individual is deeply involved in a personal communication, like dumping their girlfriend, they are unlikely to engage with advertising in or around that communication. This notion was encapsulated by David Ogilvy who once observed that you’re more likely to get the best direct response from an ad placed in the afternoon movie repeat than in the latest episode of Dallas (The big hit drama of the day). In other words, advertising can’t win when competing with high value content.

A few months ago on I wrote “Advertising on social networks is a Web 1.0 technique in a Web 2.0 world. It may be the case that carrying ads is not a sustainable route for these networks or for advertisers.” I think this remains the case. It’s a problem for the likes of Facebook though, because if they cannot monetize their inventory their value will fall. So how might sites like Facebook monetize their inventory? I think their answer is to monetize the relationships they have with their users. But this isn’t an ad model. It’s something more akin to Seth Godin’s permission marketing and value exchange. Facebook has a brand franchise. It needs to provide added value to its users by teaming up with partners and offering deals to its users. Social media should be an enabler which allows companies and individuals to exchange value.

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December 1st, 2008

Advertising Frequency and Diminishing Marginal Utility

Economists have a concept called Diminishing Marginal Utility. This means that each additional time a consumer consumes something they get less satisfaction from consuming it. So, if I have one coffee, I find it very satisfying, two could be OK, but by the time I get to three I’m not getting much additional satisfaction, infact, I’m going off coffee pretty fast. And if I were to drink ten coffees I’d feel like I was being tortured.

Now let me apply this thinking to the world of TV advertising and in particular, sponsorship. In the UK, quality drama is a favourite for sponsorship. One of the reasons for this is that these programmes attract a high quality loyal audience who make an appointment to view. Certain drama strands can be sponsored heavily in a cross-programme deal covering different programmes in the same genre. Whilst this may appear to present great media value it can mean over-exposure for both brands and consumers. Seeing a break bumper a couple of times is fine, but seeing the same branded break bumper ten times in the same evening can seem like drinking that tenth cup of coffee.

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September 27th, 2008

Dairy Milk gets the gorilla, but Galaxy gets the growth

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So, Dairy Milk with its Drumming Gorilla TV ad campaign has posted a sluggish 2% market share growth whilst ‘run of the mill’ Galaxy has romped home with a 12% growth. Research has shown that the Gorilla ad is more memorable than Galaxy activity, but clearly this success in recall does not seem to have translated into success in sales. Quite rightly, this result immediately ignites a discussion about the sales value of creativity. You can get into some of that here.

Not entirely unconnected to this is the debate that took place on the 4th August at the IPA - “Who makes better planners? Planners or creatives?” Veteran creative Dave Trott and planning sophistocrat David Golding battled it out with Trott arguing that it’s time planners got back to building sales rather than using advertising “to provide a window on a brand’s soul and to build the brand’s ‘equity’ in people’s minds”. Golding defended the principle of using the brand as a source of insight, and quite valiantly by all reports.

I’ve worked on projects with both of these characters, with David Golding on an existing client account at WCRS and Dave Trott on a creative pitch at WTCS (as was). Dave Trott worked in an interesting way. He did his own planning in his own mind, based on very considerable experience. His approach was intuitive - he visualised the target audience as people he knew (in this case his mother and her friends) and asked himself what type of message would engage her. Then he wrote those messages down and turned them into a visualized campaign for TV and press. Trott’s campaign was a distillation of the communication problem, solved, simplified and then visualised. Dave Golding on the other hand was measured, considerate, analytical and logical. He’d be as likely to base a campaign on what his mother thought as a judge would be to discuss a legal technicality with a courtroom security guard. The work that resulted was memorable and strong. So here’s the question - if the insight for the Dairy Milk Gorilla campaign were to have originated from the grey matter of either Golding or Trott, which would it be?

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