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Friday, June 29, 2012

The Future of Flanker Products

The English language is an amazing thing. It is always evolving. Even marketing terms take on new meaning over time. Some 30 years ago I often would get in to discussions with friends and colleagues about “Flanker” products. At that time, a flanker generally referred to a brand that was perhaps number three in its category. In order to stand out and prosper, it usually had to move in to an uncontested area. The element of surprise was important so often very little test marketing was done. Examples used by many but often attributed to the talented Trout & Ries of Atlanta were National Rent A Car, Heineken, and Wendy’s.  National could not take Hertz and Avis head on, so they staked their claim to being the low cost provider in car rentals. Heineken let Budweiser and Schlitz duke it out in round one of the beer wars and became the number one imported beer in the U.S. appealing to a select audience and hitting them with lots of marketing support. Wendy’s let McDonald’s and Burger King go after the kids and they focused on an adult message.

As the years have passed, you do not hear the term “flanker” used in that context. Nowadays, the definition of a flanker in marketing and advertising texts and glossaries is “a new product introduced by a company in addition to its existing brand in a particular market category.” To me that is what we always called a line extension or brand extension.

My belief is that we are going to see a lot more flanker products or line extensions in our future. The main reason up to now is that it allows a major player to protect itself against small upstarts and changing consumer tastes. So Coca-Cola brings out Vanilla Coke and Cherry Coke and then caffeine free Cherry Coke. Such entries probably do not hurt the flagship Classic Coke very much but they do build up their own small base of aficionados, get instant trial and acceptance with the Coke name on the product, and they beat back smaller players trying to get a foothold in the category.

Another reason for the likely growth of flankers is media. As media fragmentation continues to grow, the cost of entry in to the world of brands gets higher and higher for a fledgling producer. A major package goods player can get the distribution easily and piggyback on its high existing awareness and strong advertising campaigns. If all else fails, they can buy out a small player who seems to be making inroads. This is happening all over the developing world and makes sense for global brands.

One recurring theme in media realism over the last couple of years has been that big players will get bigger and it will be increasingly hard for someone with a great idea and a great product to break through the consumer consciousness and succeed. As savvy global players keep grinding out new flanker products and trading on their enormous goodwill and name recognition plus their muscular advertising and promotion budgets, this trend should only accelerate.

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

Friday, June 15, 2012

A Passionate Case for Print

I have a friend whom I have known for some 38 years. Early in my career when I was struggling, he was always very kind and encouraging to me. He went on to become one of America’s foremost media strategists.  Over the last few years, he has been a Media Realism reader and frequently writes to me directly with some very trenchant observations. Recently, he sent me an e-mail suggesting that I consider writing a piece on media accountability and especially emphasizing how magazines still make sense in the world of 2012 media.

With his permission here are his comments:

“It seems to me that people in media are now facing a number of challenges.  A recording system that can wipe out commercials!  General Motors saying that Facebook and social media do not work.  We have all kinds of burgeoning media forms that buyers are being asked to support with no proof of anything including that stuff actually ran as ordered.  I frankly am surprised that advertisers are being so gullible as to accept somebody's so called great idea and give them money without any kind of proof of performance.  Is no one else concerned about this?”

“Meanwhile, we do have one medium whose feet keep being held to the fire -- print.  We have several services giving us their audience numbers.  We have an audit bureau that is checking that every single copy they claim to have sold is actually being sold.  Buyers are trying to squeeze every last penny out of them in negotiations.  We even have a way (through Starch) to tell how effective their advertising is.  And they are being treated like the orphan that was left on the doorstep on Xmas eve.  Yet, as far as I can see, it is the only medium out there that is actually telling us about the quality of their audience and can show us the ad actually ran and tell us something about its performance.  Perhaps we as media buyers should take another look at the world of print.  Maybe it should be the base buy for every campaign since we know whom it reaches and we know that it reaches.  No one else can make that offer to an advertiser.  By making print the very base of each media buy you now have a solid foundation.  It's not sexy and it's not high tech, but 2 x 4's on a concrete slab is not very sexy nor high tech either, but it provides a solid foundation upon which to build a house.  So perhaps an article can be written on rethinking the role of print on our media plan.  The foundation of a media plan.”

My friend raises some issues that are rarely addressed. Some colleagues from other media types weighed in with similar concerns. A long time radio hand e-mailed me the following: “Twenty years ago, the young planners at small and mid-sized shops did extensive rotation analyses of buys placed on our station. They kept us on our toes at all times. Today, if the number of spots and dollars match, we rarely hear from anyone. A dishonest broadcaster could rob people blind. I know that many media teams are understaffed but few are doing due diligence anymore.” A cable sports pro tells a similar tale. He writes, “When I started if I missed a spot in a game my phone rang off the hook. Now, I usually call the buyer to tell them of our problems. In zoned buys in big markets, I don’t believe that anyone is checking the patchwork quilt of spots and where they are running. I know that the dollar value is very low in many cases but some people are not doing their jobs.”

In the digital world, keeping track is getting better and pricing is more realistic. When it started, some things were way over priced while others way underpriced. If you pay on a cost per click or other metric, you have some protection. But, there has to be some real issues with ad networks that give you tons of exposure opportunities but are they the right people being reached?

Print has a business model that is problematic. A dozen years from now many titles will have gone 100% online to survive. The issue that my friend has raised about accountability is a profound one. Over the short and intermediate term, print may make a lot more sense than many see right now. What do you think?

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

Sunday, June 3, 2012

Is Facebook Advertising a Fraud?

A few weeks ago, Facebook launched its Initial Public Offering (IPO). Since then the stock has tanked from $38 a share to a perch in the high $20’s, which is a significant financial haircut for those who paid the IPO price.

Complicating things, General Motors announced the day before the IPO that it was discontinuing its $10 million commitment to Facebook advertising on the grounds that it was not working for them. Some people seem to be linking the poor early performance of Facebook shares with its viability as an advertising medium. I canvassed a number of people at conventional and digital agencies across the country and came up with some interesting findings.

First, the General Motors (GM) issue. Almost immediately after GM’s announcement of their Facebook pullback, the cable business channels had some serious digital players on talking about the decision. They generally said that perhaps the reason things failed for GM was that they were not using Facebook properly. A few of my panel members echoed that sentiment as well and then a Ford spokesman made the rounds saying that Facebook was working just splendidly for them.

I have no way of knowing if GM did not execute properly. A lot of the hoopla may be just because the investment bankers set the IPO price too high. Additionally, problems in Europe, particularly Greece and Spain, plus a miserable jobs report in the U.S. on June 1st have roiled markets and hit the majority of stocks negatively.

When you talk to young people and I speak with hundreds, they almost all use Facebook. It is perfect social medium for them. Many tell me that if a friend mentions a film that they like on their Facebook page, they are far more disposed to go to it. Young professionals in the bigger cities say it helps them screen restaurants and bars. “If a friend says that a particular place is a great spot for brunch, you can bet that I will check it out”, a young New Yorker writes. This is the most powerful form of advertising, word of mouth, and it is free!

Here are some composite comments from a wide variety of people regarding paid Facebook advertising.

“We like to put a promotional app (i.e., sweepstakes, etc.) on a brand Facebook page and use Facebook ads to draw participation and hike “likes.”  What is a like?  Simply put, it is an option on the Facebook web site that allows you to provide feedback on stories that appear in a friend’s or company’s news feed. You can be positive without adding any additional commentary. A lively debate is going on in media circles about how to evaluate the value of “likes”, but clearly a high number is beneficial.

Another media  director says that smaller clients can get the word out about promotions very cost effectively and with some pinpoint targeting in terms of demographics, geographic region, interests and sometimes even if they use a competitive brand.

Several people mentioned that a company Facebook page is a great way to build a database and metrics such as cost per visitor and cost per name acquired can be calculated when they give out coupons or special promotions on the company page.

An unusually thoughtful observer who entered the digital game quite early relative to most of us, wrote that Google Display Network (GDN) outperforms Facebook on all metrics and reaches far more people than Facebook. At the same time, he stresses that you can get more frequency with Facebook as users spend more time with it than Google (it seems that we can never escape Reach & Frequency!).

He goes on to say that “unlike GDN, Facebook does not offer mobile advertising, retargeting, contextual targeting or advertising on partner sites”.  He also stressed that Facebook mobile ads cannot be far away. Most of feel that most likely it will be mobile advertising that will be a key linchpin in global advertising going forward

More than one commented to the effect that Facebook needs to figure out how to get their advertising growth to keep pace with the increase in their user base.

So, is Facebook advertising a rip-off? It would appear not. Just make sure that you are in experienced hands that have the analytic caution to use it wisely and evaluate results objectively. And, remember,  more competition is coming over the next few years from companies that probably do not exist now.

Warren Buffett, the greatest investor of the 20th century, has often said that over time a stock’s price will reflect a company’s performance and prospects. But sometimes, it can take years to get there. Facebook is run by smart people who are likely working furiously on improvements to their advertising business model. Forget about the day-to-day fluctuations in the share price and focus on what they can do for you and your clients.

Finally, keep in mind that we are still trying to determine how different media types work together after one hundred years of trying. Isolating Facebook’s effectiveness is difficult and it should never be bought in a vacuum. An old friend who has reinvented himself as a digital media director puts it beautifully: “No one that we do it for uses Facebook exclusively. It is always a component of a broader mix of digital options.”

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