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Archive for June, 2006

Very cool little graphic (props to MIT Adlab for the heads-up) that shows that no matter what you may have heard or read about the demise of newspaper advertising, it’s still worth its weight in… well, paper. Green paper.

What does this graph tell us? Simply that TV and Magazine advertising are overrated, while newspaper and internet advertising are waaaaay underrated. (At least for auto manufacturers.)

The post I ripped this from also contains a link to a great article published recently in strategy-business.com entitled “The Future Of Advertising Is Now.” (Subscription required.) Here’s a taste:

“After a decade of denial, both mainstream media companies and major marketers are now accepting the facts: The methods by which consumers absorb information and entertainment — and the ways they perceive, retain, and engage with brands and brand messages — have changed irrevocably. As marketers take notice, their decisions are reshaping the media environment. Magazines are losing advertising to the Web (with total ad revenues declining about 2 percent per year since 1998); radio broadcasters are losing listeners, talent, and revenues to satellite upstarts and iPod playlists. Television networks also see the writing on the wall, as the penetration of digital television heralds the rise of video-on-demand, video downloads, interactive game networks, Internet TV, and other broadcast- and cable-busting enterprises. Broadcast advertising revenues declined in the upfront markets of both 2004 and 2005, according to the Jack Myers Media Business Report — the first-ever decrease in two consecutive years. In spring 2006, pundits predicted a third straight year of upfront price reductions. And the broadcasting CEO who seemed so confident about being the “only game in town”? He no longer has that job.

“Does that mean gloom and doom for the rest of us? Hardly. These can be glorious times for media companies and marketers that are capable of change. And they know it. Interviews with more than 50 senior marketers and media executives, ongoing research conducted by Booz Allen Hamilton and the Association of National Advertisers (ANA); and analysis of data from a score of research services — all gathered from 2005 through early 2006 — support the observation that the prevailing attitudes among marketers have shifted. Most have come to accept the signal lesson of what is coming to be called the “nonlinear and engagement-focused” media environment: Marketing communications must be reborn as a consumer-centered craft.”

Christopher Vollmer (vollmer_christopher@bah.com) is a vice president of Booz Allen Hamilton based in New York. He focuses on strategy development, consumer marketing, and advertising sales in media, entertainment, and consumer products.

John Frelinghuysen (frelinghuysen_john@bah.com) is a vice president of Booz Allen Hamilton based in New York. He specializes in strategy development and implementation for clients in media, entertainment, and consumer products.

Randall Rothenberg (rothenberg_randall@bah.com) is the senior director of intellectual capital at Booz Allen Hamilton, a media and marketing columnist for Advertising Age magazine, and the author of Where the Suckers Moon: An Advertising Story (Alfred A. Knopf, 1994).

Read the entire thing here. (It’s ten e-pages long, but it’s worth the three minutes. …and yes, I am a speed-reader.)

Tip: If you don’t feel like taking the time to subscribe, try this sneaky little time-saver.

Here are a few more interesting tables from the piece:



Poor Exhibit 4. Does it actually say “lock in customer loyalty?” Oh man. See, Deepu? This is why I have to keep repeating myself. ;)


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Ooops… forgot two more impressive entries from the i-nnovation contest we looked at earlier today: i-Toast, and airPod.


Technorati update:

Ah, Technorati… I may never understand you. But today, I broke past the 15,000 mark for the first time, so I’m kind of happy with your flawed metrics. And I’m back in the Top 25 Branding blogs (21, actually), which is a nice little surprise.

To my ever growing group of core readers, thank you. You guys rock. :)

(And to the guys who hacked Technorati to make it happen, the check’s in the mail.)


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I don’t always remember to visit Forbes’ Business Innovation Insider blog, and that’s too bad because it’s one of my favorite sources of info on… well, innovation. (And since Deepu wants a break from the whole WOM thing, I thought we could talk about something else, for once.)

So here we go. Today’s post was about a very cool contest put together by Apple-Discounts.com, in which regular people could create imaginary Apple products. The results were stellar (as you can see from some of the entries posted on this page).

Put simply, the contest was set up as follows:


The Apple Imagination (with a touch of photoshop)

The Apple rumor mill is abuzz with talk of iPhones, iTablets, wireless iPods, “ultra-portable” computers and more. Given the devout Mac fans that we are, we’re just drooling for the next innovation – the next big thing, that “insanely” great idea.

So what’s it going to be?!? We want YOU to tell us!

That’s all it took. I won’t say anything about how maybe word-of-mouth was instrumental in spreading the word about this contest – in what Evan would probably call Apple-cult circles. I won’t say anything about how evangelism might have had something to do with the time and effort it took for so many users of Apple products to come up with these killer designs. I also won’t say anything about how huge co-creation could be, based on the success of this simple little contest. And , no, I won’t say anything about the need to incentivize customers to enter contests like this one either. (The prizes weren’t a new iMac or iPod. They were very, very, very small amounts of cash – some nowhere near the cost of an iPod.)

So… enjoy these fantastic examples of how brands can inspire their customers to participate not only in the discussion, but in the direction of their product development strategies. These are all solid concepts with solid design elements and impressive curbside appeal.

My favorite: The turntable… but does it also come in white?

Scroll down to see some of my favorite entries, and click here to see them all.

Ooooooh…
Ahhhhhh…
(A men’s version could be pretty hot.)


Mac would have to finally get into the gaming… game for this to work.

A plug-and-play wireless projector for parties and presentations? Yesssss!!!

And this one can even double as a fly swatter! No visible latch though, so I’m not sure it would stay closed.


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Remember this post? And this one? This is a follow-up.

We’ve already talked about the difference between advertising-generated WOM and user-generated WOM.

We’ve also talked about how WOM and peer-to-peer recommendations drive purchases, while advertising doesn’t (or at least, not much).

And we’ve talked about how the combination of great products and great marketing can create amazing results for most companies.

So far so good. This post is sort of a clarifying recap of all of these topics, more specifically as they relate to the three principal stages of customer “acquistion”. (Ugh… the ugly word!!! Yuck. I only use it because I can’t think of a better one just this second.) Please feel free to suggest a better term.

Okay. Here’s the nickel overview:

Discovery: PR, Advertising, etc.
In most cases, Advertising, PR, and other “agency” WOM initiatives are still the best drivers of Discovery and Brand Contextualization. You want to get the public’s attention? You have a story to tell? You need to carefully position your brand or product? Call your agency or professional services firm…

Beware, though: There is mounting evidence that they don’t have much to do with purchasing decisions, so don’t expect exposure and buzz around events and promotions to drive sales for very long, if at all.

Purchase: Peer to peer recommendations and WOM.
Peer-to-peer recommendations drive purchases. Period. If you don’t believe me, start looking at some of the data being aggregated by WOMMA and its partners. We base our purchases on what other people do. (Even if they’re complete strangers – albeit famous or well-respected strangers… which you might call “influentials”.) If our favorite celebrity wears Ray Ban aviators, guess what? We soon will be too. If our best friend recommends a restaurant, guess where we’ll be having dinner this weekend? If our colleagues sing the praises of a new PDA? Guess what we’ll be adding to our panoply of e-gadgets? We go see movies based on the recommendations of peers. We buy music, electronics, cars, clothes, shoes, food, and video games based on peer recommendations. Their influence on our purchasing habits is a whole lot more powerful than advertising and positioning.

Period.

It’s just in our nature to recommend great stuff to people we interact with. Offline, that’s friends, family members, neighbors, co-workers, peers, etc. Online, it’s everyone who reads your blog, drops by your Myspace page(s), reads your posts on message boards, or reads your emails. Depending on who you are and what you have to say, you could influence the purchasing decisions of anywhere from 1 to 120,000 people per day.

And as a bonus, our peers also play a huge role in the “discovery” process as well.

Evangelism: User delight starts with exceptional design and execution.
User Delight breeds Evangelism. It’s that simple. Blow our socks off with great products and services, with great design, with great ideas, with great execution, with great ease of use, by just doing everything right (and then some), and everyone who touches your products will become an evangelist.

Ironically, although this is the third stage in our little progression, its roots are firmly anchored long before #1 is even a spark in your creative department’s hive-mind. Every successful brand starts and ends with great products. There’s no way around it. Without great products, without something to actually create exceptional user/customer experiences, this whole thing – including the creative – is just a house of cards in a windstorm.

Great products and experiences are the foundation for all of this. The trick is… You don’t always get to find out just how great your creation is until it’s in the customers’ hands.

So: Three stages = three toolsets = three distinctive ecosystems. At its most basic core, that’s it.

Any questions?

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Okay, here’s roughly how you create WOM out of thin air:

Step 1: Create or do something great. Not good. GREAT. (Seth Godin would call it remarkable. My kids would call it awesome. Some of my triathlon buddies would call it sick. Fred would call it rad… but he’s… well, Fred. Or Barney. Or something.)

It could be a widget. It could be a dish. It could be a work of art. It could be an act of rebellion or courage… or both. It could be a book or a song or a speech. It could be the way your customer service reps answer the phone, or how quickly your technicians can fix a problem for your customers. It could be new packaging for ketchup or a new all-natural zero-calorie sweetener. It could be a smart and edgy TV show. It could be a completely selfless act. It could be nothing more than a simple, subtle, five second memorable experience at a drivethrough or at the checkout or when you walk into a public restroom. It could be a new flavor, or an old, forgotten one. It could be a social program. It could be that extra smile or one percent effort. It could be anything… as long as it is remarkable. Awesome. Sick. Rad.

As long as it is better than anything else that remotely comes close to its category – assuming there is one yet.

As long as anyone who gets to experience it is so amazed, pleasantly surprised, or otherwise affected by what it did for them that they’ll get excited about telling their friends all about it… and the cycle will repeat itself over and over and over again.

The more unique it is, the better. The more iconic, the better. The more revolutionary… um, okay. You get the idea.

People don’t get excited about boring and mundane and same-as-always.

Safe, good enough, okay and not bad don’t live in WOM’s zip code.


Step 2:
Oh… wait. That’s it. Never mind. There is no step 2.

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I should have taken better notes… Grrr… But as I recall, it was during a presentation given by Dave Dickey (Sprint), that WOMBAT 2 attendees were treated to a fascinating graphic that showed the top 20 purchasing drivers relevant to the wireless service industry. (Think Sprint, Verizon, Cingular, T-Mobile, etc.)

If memory serves right, #2 was word-of-mouth.

Where was advertising?

#19.

(Hey, but by all means, keep making those Catherine Zeta Jones commercials.)

When Dave and his fellow panelists were asked what percentage of their respective companies’ marketing budgets were dedicated to Advertising vs. WOM, the answers were… well, in short supply. (Which is okay. They really don’t need to be divulging all of their companies’ financial secrets.)

We did nonetheless manage to squeeze a halfhearted answer from the panel: Compared to advertising, WOM was virtually nonexistant in terms of funding and infrastructure. The most candid answer was something along the lines of “far less than 5% of our marketing budgets…” or efforts… I can’t recall exactly. For the purposes of this discussion, the two are interchangeable.

So… wow: WOM ranked #2. Advertising ranked #19. Logic would dictate that a hefty chunk of Marketing resources would start to be shifted to the development of broader peer-to-peer networks and away from advertising… but it isn’t happening. (Or, to be fair, isn’t happening very fast.) #19 on the list still gets all the love… and the cash… and the prestige, even though it clearly doesn’t get customers much beyond discovery, and #2, despite pretty telling statistics, is still marginalized and ignored by top execs.

Not that you can compare the relatively low cost of developing the kinds of channels that foster WOM against the very high cost of Advertising, but you get the idea: WOM is still the “whut?” line-item in CXO discussions.

How do you change a fifty-year-old marketing culture overnight?

Well… I guess you don’t.

Good thing that by the end of 2006, more solid numbers and statistics will be in. If they consistently indicate that WOM and peer-to-peer recommendations outweigh more traditional marketing methods, get ready for some pretty wide-sweeping changes in the way that products are brought to market in the coming years.

Tomorrow, we’ll look at the role that specific marketing tools play in getting customers from shopping to discovery, and from purchase to evangelism. (Yep, there’s a cycle, and each step has its own tools.)

Have a great Tuesday, everyone. :)


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Photos from the session:




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There is a HUGE difference between these two questions:

1) Are Advertising and Word-of-Mouth diametrically opposed marketing tools?

2) Are Advertising and Word-of-Mouth mutually exclusive as marketing tools?

The answer to (1) is yes: Advertising is the epitome of the top-down model. It’s a monologue. It’s a sell. The advertiser has a story to tell, and the ad tells it. This is not where dialogue lives. Advertising is a billboard on the side of the road, on the side of a building, on the back cover of a magazine, during 30-second spots in the middle of your favorite show, between songs on the radio, on T-shirts, on the backs of programs, at the top of maps, and just about everywhere customers live.

Word-of-mouth, on the other hand, is a lateral model. It is the lifeblood of peer-to-peer networks. Word-of-mouth is about dialogue. It’s about trust. It’s about truth. There’s no selling here. No ulterior motive. Just users recommending great products to other users out of sheer excitement and empathy.

But are they mutually exclusive? No way: Black and white. Yin and Yang. Heads and Tails. Laurel and Hardy. Beef and Strogonoff. The two can exist alone… but shouldn’t.

Think about Apple products. Absolut. BMW. VW. World of Warcraft. Publix supermarkets. Nintendogs. Jaguar, even. All spend a whole lot of money on advertising and promotion. All also benefit from strong WOM chatter. These are examples of brands that have managed to merge both the produced monologue and the open dialogue beautifully. So yes, both can co-exist… but there’s WOM, and then there’s WOM, and then there’s WOM. (I’ll try to clarify that in a minute, but first, let me backtrack a little.)

I was fortunate enough to find a free seat at WOMBAT 2’s session on Advertising and WOM, last Wednesday, when Jamie Tedford of Arnold Worldwide, Ryan Berger of Euro RSCG, and of John Bell, of Ogilvy Public Relations Worldwide spoke about making WOMM work for advertising agencies and PR firms. (You can read all about it here.)

To be frank, I was really curious about what was going to be said in that room. And you know what? I was pleasantly surprised… Though not in the way that I expected to be. I went in that room half expecting ad agencies to try and add WOM to their services: “Hey, you want WOM? Here’s what it’ll cost ya.” Nope. There was none of that. What I heard instead was a sober, smart and very agency-specific way of generating WOM:

Make a big splash.
Get people talking.
Use this momentum to bring people closer to the brand.
Make them want to interact with it.
Make them want to share their experience.

There is absolutely nothing wrong with that.

Actually, to help explain the angle of agency-driven WOM, here are a few telling words from Ryan Berger (Euro RSCG):

“Buzz is harnessing the energy between consumer life and pop life.”

“The power of an idea is now as much about how it is delivered as it is about the idea itself.”

“PR is about activating media. Buzz is about activating people.”

“When done right, buzz helps validate an advertising message.”

Valid statements, all. And absolutely 100% in tune with what agencies are there to do for their clients.

But I have to be honest: What struck me the most about all three presentations, including Ryan’s, was that none of these agencies seemed to be doing anything new. Other than the fact that buzzwords like “buzz marketing” and “word-of-mouth” were used a lot, agencies don’t seem to be doing anything they weren’t already doing five, or even ten years ago, back when WOMM wasn’t even a topic of discussion. What I heard about for 45 exciting and well-packed minutes were presentations on little more than simple promotion.

Case in point: Jaguar has a great new car and wants to make a big splash. Agency comes in and creates a phenomenon for them. A new image. A new story. A new culture. A whole new identity… and to give it all traction, to give it momentum and wings, it generates buzz: Cool new enigmatic ads, followed by stunning cinematic ones. High-end event sponsorships. Celebrity endorsements. A perfectly executed media blitz now known as “Gorgeous.”

As cool and effective as it all is, as WOM-worthy as it may be, it’s still just… promotion.

Verdict: The game hasn’t changed. The methods haven’t changed. We’ve just added a few new terms to our professional vocabulary to make it look like we’re ahead of the curve.

It’s clear to the best of the best in this business that word-of-mouth was always an essential component of any good campaign… But this isn’t exactly the kind of WOM that we have been talking about for the last year. (The 100% free, product-centric, user-driven kind.)

Luckily for Ogilvy, Euro RSCG and Arnold, their clients produce great, WOM-worthy products, and as firms/agencies, they continue to produce wonderful WOM-worthy campaigns for them. As long as that balance of excellence is maintained, this system will continue to work: Exciting products backed up by engaging marketing. The perfect combination.

But my question is this: When the money dries up, when the client turns off the tap, when the agency decides to move on… when that multi-million dollar budget-intensive marketing machine is taken out of the equation, what happens to the product? To the brand? To what people say to each other about either? What will be the WOM then?

Can advertising’s flashy brand of WOM truly be compared to true WOM? The kind that is generated by users, out here in the real world? The kind of WOM that drives universally positive reviews of great products… and turns them into purchases? The kind of WOM that took James Cameron’s flailing “Titanic” over the top and then some? (Advertising didn’t get people in the theaters. Word-of-mouth did.)

Ultimately, WOM comes down to a simple question: Is this product so cool, so great, so fun, so valuable, so exciting or so unique that people will want to tell everyone they know about it?

That’s WOM.

Don’t get me wrong: There are plenty of seats at the WOM table for ad agencies, PR firms, and other marketing companies. Their brand of WOM-involved promotion is absolutely vital to most brands (especially when superbly done)… but I would caution that there’s WOM, and then there’s WOM, and then there’s WOM. Not all being created equal. Agency-driven WOM is the visible part of the iceberg. Spontaneous, user-generated WOM is the hidden part of the iceberg. The huge part. The core.

(And no that was not an intentional “Titanic” reference.)

Tomorrow, we will look at the role that advertising plays on purchasing decisions… vs. the role that word-of-mouth plays on purchasing decisions. (I might even have a table or two to share with you, which will shine a whole new light on today’s discussion.) Which one do you think is most effective? Which one do you think costs the least?

Have a great Monday, everyone. :)

Note: All of the case studies presented by the three speakers were astonishing. From the revival of the Polaroid brand to the creation of Jaguar’s “Gorgeous” campaign, I was absolutely spellbound. Despite my somewhat lukewarm response to their WOM presentations this time around, these guys absolutely rocked and completely restored my faith in the value that big agencies that “get it” bring to the table.

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