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Friday, April 17, 2009

God is on whose side?

There is an interesting story from European history that may or may not be true. In the 18th century, Frederick the Great had 25,000 of his elite Prussian troops lined up and ready to do battle. Just before the festivities were about to begin, a gilded carriage pulled up. Out of the carriage came the local archbishop. Frederick approached him and said "Excellency, what are you doing here." The cleric responded "Emperor, I am here to bless the troops. Surely, you want God on your side."

In a blend of amusement and disgust Frederick responded "Go home, excellency. God is on the side of the big batallions."

Did this happen? It does not matter. But I feel there is a lesson here that applies to both 2009 media and marketing. These are tough and turbulent times for brands, ad agencies, and broadcasters. Who will come out on top whenever the smoke clears?

Think about the last year. There were then only a handful of AAA credited rated US companies. One was AIG, now in shambles, an embarrassment that is being bailed by US taxpayers. GE, the last of the original companies in the Dow Jones Industrial Average and arguably the best run conglomerate in the world according to many, saw its stock dive from 40 to 6 and its AAA rating is now a memory also. These were among the biggest batallions of them all and yet they suffered.

Things are tough and will continue to be for a while. Are there players who can hunker down and use the shakeout to build market share? A story from the Great Depression may be instructive. At the bottom of the depression in 1933, the leading cereal maker in the US was C.W. Post (later General Foods). A competitor of his was a Michigan company owned largely by one W.K. Kellogg. He was approached, as the story goes, by his ad agency about the upcoming year's budget. Kellogg doubled his network radio budget for the following year and kept the pressure on all through the rest of the depression and World War II. By the end of the war, Kellogg was the #1 player in the world, a position that it still holds.

Can brands do the same thing today? It is certainly possible but it takes guts and deep pockets.

Legacy thinking is dangerous. Here is a real life example that happened a few weeks ago. An old acquaintance was stumped regarding a media recommendation and asked me to take a look at the situation. He was completely open and gave me sales by DMA for his client's brand as well as Brand Development (BDI) and Category Development (CDI) indices.

After digging through the data for a while, I spotted something. The Category Development Index (CDI) was high in many but not all markets where the brand was weak. Coincidentally, many of these same Designated Market Areas (DMA) were Nielsen markets where TV pricing was really soft as a result of the recession.

I mentioned this to my friend who began a series of other analyses that took into account factors beyond simple media costs. He was pleased and recommended a special spot TV and local cable effort in several DMA's that simply would not have been affordable a year ago.

A strange thing happened. His president wanted to know why he was increasing the transaction count on the business during a profit squeeze. The client wanted to know if his fee would go up. Neither seemed to care about good marketing or trying to squeeze some extra cases of sales in markets that had traditionally been less than optimal. So, the plan stays exactly as it was last year and sales are down modestly.

Would my suggestion that my friend took, ran with, tested and expanded have made a huge difference? We will never know. What is frightening is that his CEO and his client had no concern for solid marketing or taking into account the current market environment. They, like most today, are nervous and very defensive.

We have said previously in this space that the emerging media world will be good to the firmly entrenched companies (the big battalions if you will). They have awareness, great distribution, strong market share, loyal users, and we would hope marketing savvy.

Also, there should be fewer new products being introduced by smaller companies. Where can someone with an idea, no matter how good, get venture capital money in this environment? It will be really hard. Look for more line extensions among the big players who can trade off the strength of their existing brands.

Those with strong balance sheets can almost buy share in the current environment if they stay the course and keep the advertising pressure on. Are there any W.K. Kellogg's out there in the 21st century? Which marketers will make a defiant bet against pessimism and come out of this malaise much stronger? Time will tell.

An interesting spin is that late in life Voltaire, the French political philosopher refined Frederick the Great's statement. He said "God is NOT on the side of the big batallions but on the side of those who shoot best."

It seems Voltaire may be triggering a future post on how a flanker or guerrilla marketer can survive in the years to come. :)

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

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