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Why the iAd Model Faces an Uphill Battle

Tuesday, May 4th, 2010

(Kudos to Fast Company for this image)

Steve Jobs has a well-earned reputation for willing Apple to success in markets with innovative products that consumers fall in love with. He’s done it with computers, music players, mobile phones, and tablets. Now he is turning attention to a market that is desperately in need of his genius: advertising. Jobs recently announced that his company is creating a mobile advertising service called iAd, which will arrive with the next operating system upgrade in June. With iAd, app developers will have the chance to embed their games and tools with advertising brokered by Apple and receive 60% of ad revenue. Sounds like a great deal for the millions of entrepreneurs around the world who are dreaming up better games and tools for Apple products. But there are five six reasons that I believe iAd will fail to meet the lofty expectations for a world-changing ad model:

1. The cost per engagement model is not variable.

Apple has been known for simplifying pricing in every market it enters. It chose to set music prices at $.99 for a song, and $9.99 for a movie download. Although the music and movie companies fought for more variable pricing, Apple stuck to its guns because it felt consumers wanted a simplified model. With iAd, the company has announced that it will charge one penny per advertisement exposure, and $2 per person who clicks on (or otherwise chooses to engage with) each ad.

I think marketers will accept the penny-per-exposure pricing.  That translates to a $10 CPM, which is high compared to Web banners but below most TV buys. On the other hand, a $2 per interaction comes with a big problem: It is an arbitrary number that is set with no knowledge of the end value. After more than a decade of Web marketing, brands still have little ability to measure what a website visit or banner click-through is worth. I’m surprised that Apple did not implement a bidding system like Google Adwords, where brands compete for space and pricing ends up rising or falling to what the market will best bear.

2. There is no scale opportunity.

At the end of the day, no matter how much excitement Apple’s products generate, iAd will be just another of the dozens of new and old places where marketers can run advertising. There are 85 million iPhones, iPad Touches, and iPads out there worldwide today, on which users spend 30 minutes a day with apps. But not all of these apps will have advertising. Meanwhile, there are 300 million people in the U.S. alone who watch television an average of 2.8 hours per day. There will be many, many more people who read newspapers, buy magazines, or ride subways than own iAd devices.

The big brands that Apple is targeting desire to create an advertisement once and spray it across as many of these media options as possible. But in its efforts to improve the advertising market by controlling it, Apple is making it a hell of a lot harder for marketers to include it in an ad buy. The service will not allow Flash programming–making most banner ad creative units obsolete–and it will have other rules and processes that are still being sorted out. Apple will also use its own measurement system instead of tying into other services that allow comparisons across media choices.

3. The cost to play is too high.

Reports are trickling out that Apple will only allow advertising by companies that agree to spend up to $10 million on the iAd platform. This compares to similar deals in the $100,000 range for other mobile ad networks, which I would guess is often cast aside anyway. Again, even the big brands that Apple covets and that are used to paying for media in the millions of dollars will be loathe to bet so many bucks on a relatively small, unknown, and untested advertising model.

Big marketers want the chance to test and play with a new medium before going in guns-a-blazing. What they like best in new media is a self-serve advertising model that even allows them to place a few ads with a few thousand dollars to see what happens. Google Adwords and Facebook Ads, for example, both allow brands to learn with limited expense. No matter how cool it might seem to place your brand on the most discussed ad network ever, it takes a big personal risk to move so many dollars so early.

4. Better creativity cannot be forced.

Apple showed off its iAd platform by mocking up what ads for Nike basketball shoes might look like. Of course they look cool–like just about anything Nike does. Jobs has spoken often of how poor the world of banner ads is, and he believes that marketers will do a much better job with the tools that Apple is creating with iAd. But not every brand is Nike….

In fact, most advertising is for stuff that people likely won’t want to click on, no matter how cool the iAd platform can be. Will people want to engage as much with day-to-day companies such as banks and toilet paper? Nope. And while Jobs thinks most banner advertising is crap, that’s not because there aren’t enough tools to spiff them up. Flash and rich media banners allow a great deal of creativity and engagement already. You can play games, request samples, get geo-targeting, and watch cool video from a banner today.  Sorry, Steve, but most banners suck because the companies that buy the space don’t believe that the extra cost of creative development and rich media buys are worth it. Why would these same advertisers Jobs wants suddenly believe that iAd is now the answer?

5. Apple will have a hard time building a sales competency (NEW).

I added this after my original post after reading a great Twitter comment from David Rubinstein. If Apple really wants to get into the ad game, then it needs to play by the rules. And Rule #1 is that you need a sales force that can start wining and dining the clients. This has got to be a pretty foreign concept for Apple. It is the coolest kid on the block, and more used to companies coming to its campus in Cupertino for help and advice versus begging for a 30-minute meeting in Manhattan. But that’s not how it works in the advertising world. While some clients will be enamored enough with the company to write a big check right away, most trust their media planning and buying agencies to do the hard work of deciding where ad dollars go. So the Starcoms and GroupMs of the world are the ones with the power. Apple will have to put the hard sell on these tough negotiators in order to build up an ad business.  They will have to play the game of relationship building and create a true sales organization. This is not easy. Just ask Google, which built its billions on a self-service and self-selling ad platform, and is only now, slowly, getting its arms around selling to big, billion-dollar brands. It’s been tough for the Google engineering-driven culture to figure out how media planners and mass marketers think, despite hiring many folks from the traditional ad-selling side.

6. Apps are more meaningful than ads.

Regular readers knew that this point was coming. I believe Apple does have an opportunity to make a few bucks by creating a slightly better option for interruptive advertising. But Apple has already done so much more for marketers by creating these killer platforms for value-added apps. In fact, I would wager that brands have already spent more on creating apps than they have in buying mobile banners like what iAd will sell. Examples such as the Kraft iFood, the REI Ski Report, and Charmin restroom finder apps all provide value to the consumer and create much more meaningful connections for life. These brands and a growing number of others would rather create apps that directly engage with the consumer, instead of buying ad space on someone else’s irrelevant game or utility. This is where the marketing world is going, and surely where marketers will play most on Apple’s platforms.

Steve Jobs is not afraid of taking on a large, old industry with inefficient practices by bringing the end consumer a better way of living. In music, for example, he created an iPod device and iTunes software that improved the music-listening experience so much that the music industry had to play ball.  With iAd, Jobs is challenging the advertising model built around cheap GRPs, poor creativity, and buggy software. But while this new platform might be marginally better, it is still an interruptive advertising model that is barely a fundamental improvement for the end consumer.

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Posted in Applications, Leapfrom Media, innovation, mobile | 3 Comments »

Gives and Takes from #AdtechSF

Thursday, April 22nd, 2010

Yesterday I returned from the first Ad:Tech event of the year in San Francisco. As usual, it was a great opportunity to reconnect with friends in the industry and pick up a few new nuggets of what’s new in digital marketing. I also had the chance to give back some knowledge to the event participants during a session that I joined Tuesday afternoon. Here in this post I will share what I shared, as well as some of the highlights from the Tuesday sessions.

A New World of Word of Mouth: Using Influence to Re-invent the Impression

This was the session that I had a chance to present in, along with three other brilliant digital marketers: Tim Schigel, CEO of ShareThis, Jim Price, President of Empower MediaMarketing, and Joel Lunenfeld, CEO of Moxie Interactive.

I moderated the session and kicked things off with a marketer’s perspective on what’s new in digital marketing—and I promptly shocked (shocked!) the crowd by declaring that marketers have lost their perspective on what makes digital marketing great. I launched into the slides above, in which I attempted to make the point that if we dumb down digital marketing to being measured by the same, basic “impression” that traditional media has used forever we will kill the innovation that makes new media great. I love starting with a provocative note and I think the audience reacted very well according to the smiles, nods, and Twitter feedback I saw during my short segment.

Following me, Tim shared some excellent research on how people share content, and why we need to remember the right “word” in word of mouth. Jim shared a case study on how his firm used a killer new media model developed by ShareThis in which the Mederma scar creme was able to target advertisements to people who had shared relevant content with others. And Joel wrapped things up with a story about how marketers need to move toward looking at creating digital content that mirrors the video game industry—starting with the joystick that is the mobile phone. I will share their decks here when they are available.

Jamie Cohen Szulc—CMO of the Levi’s Brand

Jamie kicked off the Tuesday session with a keynote speech about how his brand has hit the recent button in recent months to become more meaningful to consumers’ lives. While only six months into his job, Jamie is pushing a revolution through this legendary brand that has fallen off the tracks in recent years. I could barely keep up with the gems that rolled off his tongue, but some of the quotes and insights he shared included:

  • “Marketers want more, global control at a time when the market is fragmenting more than ever.”
  • “The Internet taps into core human values.”
  • Levi’s has to become “original, real, and relevant to ME.”
  • The brief for the new campaign was simple: “Make people fall in love with Levi’s again.”
  • Although the new marketing work started with a TV commercial “to signify a new approach,” the brand is taking it to much more digital and meaningful work from here on out.
  • “We must move from Marketing ROI to creating Business Models.”
  • “Change must start from within—you’ve got to change the organizational culture first.”
  • Change is great and needed, but “you can’t disrupt a market in a day… it’s a long-term investment.”
But the highlight of his talk was a case study of how Levi’s created a T-shirt brand from scratch in South Africa. I can’t summarize it any better than the video below:

Overall, it was great to see a big brand CMO take the stage and talk openly and honestly about a meaningful marketing transformation in progress.

Chris Anderson Talks About the iPad

This was another treat—to see the Wired magazine leader and author of books such as The Long Tail and FREE give us his take on Apple’s latest game changer. While I think I would pay to see Chris talk about anything, it was particularly interesting to hear him share his thoughts on how he looks at the iPad from a magazine’s perspective.

Carrying a silver iPad onto the stage (I kept worrying that he would drop it), Chris started off by claiming, yes, this is the next big computing platform after the PC and mobile phone. He claimed that despite misses on tablet computing in the past, the time was ripe today because of three things:

  • The success of the iPhone showed the power of a rich media application platform.
  • The success of the Kindle showed how a flexible, convenient media and distribution channel brings a better experience.
  • The rise of cloud computing means tablets need a less powerful chip, less bloatware, and less hard drive space—which frees up companies such as Apple to build a lovely device.

Chris tied together magazine insider insights with topics that he explored in his books. His main point was that he was excited that the iPad will offer a much better experience for Wired readers. He and his team have been working on the platform for a while already, and they promise to launch a magazine that will combine the best of print and digital. Chris talked about how the killer platform of the iPad might allow for scarcity again, and create a better business model. His point is that “scarcity power” for print magazines was based on the cost-of-entry barriers of printing and distributing physical magazines. But the free information of the Internet is destroying these entry barriers, making scarcity a thing of the past, and killing the magazines’ business model.

He thinks that it will take high-end designers to make the most of the iPad’s platform—meaning that Joe Blogger won’t be able to offer a free experience that matches what Wired is working on. So quality of the experience could be a barrier to entry and driver of scarcity that leads to new profits. While I’m doubtful that this will happen, it would be a “good” kind of scarcity that is based on reader enjoyment rather than means of production.

Chris lost me completely, however, when he delved into the case for how advertising could be revolutionized on the iPad. He talked about how it could allow for engagement, move beyond measuring CPM, and be more creative. But everything he said is already possible today with Web-based marketing. A relative handful of people using iPads will not cause a revolution. Rather, organizations have to take the first step to embrace these features and possibilities that already exist on the Web. He also was in awe that people would now have to page through full-page ads again with the new iPad magazine experience. This, to me, is a step backward in the consumer experience. It just seemed like a lot of wishful thinking for a business that just cannot survive without the mass marketing model.

So thanks to my friends at Ad:Tech (especially Brad Berens) for inviting me to speak at and learn from this great conference once again. I hope to see you in the next events in Chicago or New York!

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Posted in Applications, Conferences, Uncategorized | 1 Comment »

Why Foursquare Ruled #SXSW

Thursday, March 18th, 2010

foursquare sxsw

Late Sunday night I got back from my first-ever trip to the much-discussed South by Southwest (SXSW) conference for Film, Music, and Interactive in Austin, Texas. After seeing many friends and other folks in the business rave and tweet about this event for a few years, I felt compelled to add yet another conference badge to my collection. Overall I found it to be one of the best conferences for digital marketing that I have attended in some time. That means something, because I think I’ve been to more than a dozen different digital shows in the past 24 months alone. Over the course of the next few blog posts I plan to share some of my biggest takeaways and examples of Marketing with Meaning.

First up is an example of a start-up digital service that used meaningful marketing to make the conference better for nearly everyone involved: Foursquare. For those who haven’t heard, Foursquare is a mobile tool that allows you to “check in” at locations where you physically appear—essentially a way of broadcasting to friends that you are, say, having a coffee at Starbucks, or waiting in line at the DMV. This is the leading brand in a new category of “geo-location” services. You might call it “Geo-Twitter”—in fact, you can update your Twitter and Facebook accounts with Foursquare when you check in around town.

SXSW is a very big event for the folks at Foursquare for many reasons. It is the place where partners and customers gather to see what’s new. Investors are lurking everywhere to spy the next hot winner. And some of the earliest early adopters and trendsetters (including a few celebrities) share their latest findings with their friends at SXSW.

So it is a clear business objective to own this event in every way possible. For most companies, this means paying sponsorship dollars to put your name everywhere, employing booth babes to walk around with branded snacks, and maybe hosting a giant beer-for-all for everyone at the event. But not Foursquare. Instead, Foursquare stuck with what makes its service special, and spent most of its time and money making it more so.

Foursquare is already a killer app for conferences. It is most effective when a large group of people who know each other and want to get together are located in a pretty close environment. This is exactly what conferences are all about. So instead of calling or texting to find out where your friends and contacts are, you simply see where they have recently checked in and walk over to the conference room, bar, or restaurant where they happen to be. This even makes it easy to “run into” people who you might unable to reach via email or telephone.

This is why Foursquare became so popular at SXSW in 2009. So the business decided to do more with this hyper-engaged, ultra-important audience in 2010. When we got off the plane in Austin and checked into the airport, we noticed that Foursquare had created special new features for SXSW participants. The main add was a set of special “badges” that you could unlock by performing various check-ins during the six-day event. Badges are a key element of the basic Foursquare service—providing you a fun way to show that you have, say, checked in at 50 different total places or from five airports or from a boat. They are fun for the user, and cleverly (and cheaply) train people to make Foursquare check-ins a habit. Some of the special SXSW badges include the “Austin Explorer” for hitting five locations in the city, and the “Hookup” for checking in at two different hotels. For me and our team, we found that these badges turned Foursquare into a living game that made some of the boring moments between sessions and meetings much more tolerable.

Foursquare did more than virtual badges, though. The firm partnered with specific locations such as the Pepsi Refresh Cafe and SXSW Web Awards to give people temporary tattoos to match their unlocked badges. And it partnered with PayPal to donate $.25 for every check-in to Haitian relief efforts. Foursquare even reported a running total of how much you had earned for Haiti. (I believe I hit more than $8.)

Only the folks at Foursquare know how much this modest expense in programming time delivered for its business at this big event. One key data point reported on its site shows that there were more than 15,000 badges awarded, including 6,025 versions of the Austin Explorer. That means that roughly 50% of the 12,000 people who went to the Interactive conference tried Foursquare.  According to this article, there were 300,000 check-ins in Austin during the event, and Foursquare added 100,000 users overall – “likely as a result of check-ins being broadcast to Twitter and Facebook.” This might have even helped the nascent company establish a business model; TechCrunch made the case that Foursquare could create a business around building similar special apps for other conferences.

So many thanks to Foursquare for helping me get a more out of my company’s significant time and money investment in sending me to SXSW. I will certainly repay the favor by giving this new service major attention in the months ahead.

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Posted in Agency Marketing, Applications, Conferences, mobile | 2 Comments »

FedEx Adds Value on Facebook

Wednesday, August 5th, 2009

My good friend and our Chief Technology Officer, Mike Wilson, is one of the smartest people I know. One of the comments he made at a presentation last year is that FedEx should have gotten into the email business long before Yahoo! or Hotmail. His belief is that FedEx should have followed its higher-level purpose—to transfer information with speed and security. Instead of allowing a few guys in a garage to build ad-supported email with all of its limitations and spam, FedEx could have done it right, earlier. At best it might have created a powerful new revenue model, and at worst created a meaningful marketing tool for millions of people. Alas, FedEx thought it was in the physical package delivery business, and now it must pay other people to put banner ads on the websites of Yahoo! Mail. But I recently discovered one way that FedEx is attempting to make up for this miss.

I was recently reading a great paper by one of my favorite bloggers, advergirl (aka Leigh Householder), and William Faust from the Design Management Review. The article, “Get Real and Prosper: Why Social Media Demands Authentic Brands,” is an outstanding read. In fact, there are several case studies that show Marketing with Meaning in action. One in particular that I discovered was that of a FedEx Facebook app that was launched in May 2008. Called “Launch a Package,” this was a value-added way for the brand to engage with the large social-media platform. From their article:

One of the limitations of Facebook is that you can’t attach a document or image to a message the way you can in email. So FedEx built an application called Launch a Package that met that need and fit its core brand perfectly. Members who download the application can add an attachment to any Facebook message in one click.

The results were immediate: 100,000 installs in 48 hours and more than 50 percent of users returning more than 10 times after install. The tool became the first branded app to hit #1 on Facebook’s Most Active page.”

An Adweek article on the tool went on to show that two weeks after launch the app had been installed by 258,000 members and was actively used by 15,000. Steve Pacheco, director for advertising at FedEx, seemed to recognize the need for the brand to think bigger about delivering on its brand purpose through digital communication: “We want to own virtual delivery. It’s the next logical step for FedEx.”

Alas, what could have been a great launching pad for more meaningful marketing seems to have fallen apart for FedEx. According to the app’s page, only a little over a year after its launch there are now only 723 active users of the Launch a Package app. There are only 28 reviews, and the average review is 2.6 out of 5.0 stars.

What happened? I don’t know for sure but can guess a few things. First, it’s not the greatest user experience as a tool. The priority of design seemed to be on marketing experience, with Flash actions, virtual gifts, and a form to fill out that looks like a package. While cool, these bells and whistles distract from the core utility of the tool. I also disliked the limit on file size and inability to send .zip files. So likely many people tried the app a few times, had a so-so experience, and moved on.

The second limit I see is that this seems to have gotten little focus from the core FedEx business. It’s a fun tool from the marketing department and advertising agency, rather than a real “product” of FedEx—and certainly not something that is “owning virtual delivery” today. I’d bet it would be much better if the entire company got behind using digital tools to better transfer important communication.

I hope that this experiment has led FedEx to do more thinking and strategizing around social media, digital services, and meaningful marketing. My fear is that the rapid decline in usage of the Facebook app frightened the company away from doing more. Either way, this makes a great case study for those of us trying to figure out how to make marketing meaningful in the social-media space.

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Posted in Applications, Needs Improvement, Uncategorized, purpose | 1 Comment »

MasterCard App Begins to Deliver on ‘Priceless’

Friday, July 31st, 2009

For as long as I can remember, credit-card marketing has been stuck an endless cycle of equity advertising. It’s a story we see in categories as diverse as automobiles, beer, and life insurance: When there is little innovation and lack of differentiation among major brands in a category, their advertising agencies are called on to gin up something remarkable.

In credit cards, the pattern has held firm for years, and the result is an endless loop of ads that celebrate how much life can be enjoyed because of the convenience and buying power of credit. Visa recently moved from its “Life Takes Visa” campaign to the current “Go” work, which includes millions of dollars in celebrity endorsements (Michael Phelps), celebrity voice-overs (Morgan Freeman), and licensed music (Moody Blues). American Express has had “My Life, My Card.” And MasterCard has stuck with its own version, “Priceless,” for more than 12 years. But a few weeks ago MasterCard took one small step out of the pack with an iPhone app that finally does something “real” through meaningful marketing to deliver on its promises.

The MasterCard Priceless Picks app, a free download from iTunes, is a clever tool that recognizes your location and presents a 3-D map of various “Priceless Picks” in your area. Its use of the touch screen interface is excellent, and within seconds I was able to explore the city around me. Unknown people or bots have populated the maps with restaurants, bars, museums, and popular items on sale. A little clicking offers more information, and the chance to send to a friend, flag as improper, or get more details. I actually discovered two interesting places across the river from my office, a coffee shop called the Bean Haus (“best place for a snug cup of coffee”) and an ice cream shop called Sweet Tooth, which apparently has great homemade chocolate chip. The video below from MasterCard shows a few user examples:

As a MasterCard customer, I really appreciate that the brand is trying to actually deliver on its “Priceless” brand promise, and the choice of an iPhone app works because it is a tool that is truly integrated with our daily lives. In fact, this is the second iPhone app from MasterCard. A few months ago it launched an ATM Hunter that allows users to find ATMs near their location, and sort by preferences such as drive-thru and no service charge.

As a Meaningful Marketer, I love that MasterCard is carving off at least a small piece of its mammoth budget and adding value to its customers’ lives through marketing itself. While Visa dumps hundreds of millions of dollars into beautiful TV “film” that is aimed at brainwashing viewers into pulling its card out more often, MasterCard has given us something worth talking about and playing with, and it just might help us discover something new and “priceless” in our hometowns or travel destinations. This kind of marketing (rather than a pretty new ad campaign) actually has a chance of helping the brand differentiate in the credit-card category.

I do admit there are some bugs and bumps in this app. I would expect a lot more than a handful of flagged locations in downtown Cincinnati, for example. And some of the picks are pretty lame, such as ”$13.99 Huggies or CVS/pharmacy infant formula.” In an Ad Age article about the app, marketing consultant Tom Anderson suggests that, “You only have one chance with an app like this. If users come to it and it smells like an ad, then it is an ad, and with no value added it will die quickly.”

I actually disagree that the MasterCard app has to be perfect out of the gate, as long as the company goes into the app with a plan to continually learn and improve. There is much to be learned from seeing thousands of actual users engaging with it and adding their own picks. Some features such as its partnership with ShopLocal (which likely supplied the questionable Huggies ad above) might just be temporary tools that help get a critical mass of content while people are just discovering the app. At worst, people who have a subpar experience will revisit the app sometime in the future when they are bored and give it another chance.

I’m rooting for MasterCard’s value-added app approach and plan to upload a few of my own Priceless Picks, while pulling out my own MasterCard more often.

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Posted in Applications | 1 Comment »

How the Starwood iPhone App Pressures Delta

Friday, July 17th, 2009

Over the weekend I somehow discovered that the Starwood Preferred Guest program was now offering a free iPhone app. In less than five minutes I had Googled it for a review, downloaded the app, input my membership number, and was checking out this cool new marketing service from one of my favorite hotel chains. My next thought: Why does my regular airline, Delta, not have an iPhone app yet? A great service by Starwood also made me feel worse about my airline, a company not even in the same business category! This reaction is an example of how great customer service and meaningful marketing in one category puts pressure on every business to improve.

My friend and colleague, Jonathan Richman, recently referenced this idea on his blog, Dose of Digital. It’s an idea that I share often with clients as we try to help them navigate the sea of digital choices and choose which services to offer and competitors to benchmark. This idea that customer-service expectations are rising across categories first sprung up in my mind when I read an Accenture survey from November 2008 of the customer-service attitudes of 4,000 respondents. It found that 31% said their customer-service expectations are higher than a year ago, and 52% said their expectations are up from five years ago. That’s an incredible increase in a short period of time, and it shows the path of the economy of today and tomorrow: As competition increases, service and value will increase, and people will expect these improvements to continue across every industry. The more we give them, the more they expect.

I believe this idea manifests itself in several divergent categories. My favorite example comes from Domino’s Pizza. In January 2008 it launched an online Pizza Tracker that shows an estimate of the step-by-step process of making the pizza you order online. Some laughed at the idea, but Domino’s felt it was necessary because a significant number of people call back to ask how their orders are progressing (before the 30 minutes, mind you). While others laughed, Domino’s racked up its millionth user of the tool before six months. Why? Well, I believe that people have become used to viewing the progress of their online orders from services such as UPS and FedEx. These two companies have great package tracking systems that millions of people have used. So the consumer’s expectation is that if these orders can be tracked, why can’t my pizza?

Other examples abound. A few years ago Facebook and Twitter started allowing mobile updates on information as trivial as when a friend updated his status or uploaded a photo, but banks and airlines were much slower to provide mobile updates for important information such as low balances and canceled flights. Another example is the increase in self-checkout lanes at retail stores. I firmly believe that they have rapidly expanded because customers are used to self-checkout online at e-commerce stores, and expect similar freedom in the offline world.

Our agency has seen this recently with our work on the Vicks brand. Just weeks before we launched our first online cold-and-flu tracking tool, Google came out with its own flu-trends tool, which grabbed the media spotlight before we did. So now CPG brands are competing with Google? That’s a pretty huge challenge!

But that’s reality. And on my other personal blog, The Challenge Dividend, you can read many, many stories of how Challenge Drives Improvement. (Warning: It’s not been updated in a few months as I’m focused on this blog and book.)

I believe that the many increasing examples of Marketing with Meaning will start setting a very high bar for businesses across every industry. Consumers will gravitate quickly toward those brands that provide value through marketing, and increasingly punish the brands that continue to interrupt and annoy them.

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Posted in Applications, customer service | 3 Comments »

Widgets Show the Way

Friday, December 5th, 2008

On Monday, much of the advertising world literally woke up to the world of widgets, thanks to an Advertising Age article by Bob Garfield. He usually starts our week with a critique of a new 30-second spot. But this time, Garfield gushed about a growing Marketing with Meaning tactic that is slowly spreading across the industry.

Widgets are tools that offer some kind of added-value information to computer users. Google calls them “gadgets,” but the term “widget” seems to be sticking. (Besides, Google can’t have everything.) Widgets either can be software programs that sit on your computer, or code that sits on personalized websites such as a blog, Facebook account, or My Yahoo! page. Garfield’s article is a must-read for any marketer who is new to the concept. He suggests that they are “a great expression of the post-advertising age.”

When you can combine utility with the purpose of your brand, that’s the opposite of why people hate marketing. Instead of fooling them with the old brand-marketing song and dance, it’s not a promise; it’s a reality” —Peter Kim

The article specifically calls out Southwest Airlines, whose “DING!” widget is a powerful case study in the long-term success of this new-fangled tactic. DING! is a small program that runs continuously in the system tray (lower right corner) of your computer. Users direct DING! to inform them when certain flights hit certain price points. And when that threshold is hit, Southwest’s branded DING! sound alerts users that a fitting flight is available. This widget actually was first launched way back in February 2005, and it continues to grow in downloads and revenue generation for the company.

Southwest’s widget is a brilliant example of Marketing with Meaning. Customers who use the widget are interested in traveling, but only at a certain price. So they are very motivated to share this information with Southwest and be alerted in return. It’s smart for Southwest because the tool allows for direct marketing to frequent fliers. The company can use DING! to fill empty seats at the last minute. And they can build personal profiles, using different offers and different times to better predict the magic numbers that will motivate each individual to buy a ticket.

The results have been outstanding for Southwest. With little marketing of this tool, it achieved 2 million downloads in the first year, led to $150 million in sales in the second year, and drove 10 million visits in the third quarter of 2008 alone.

Widgets can be used to drive the business across many industries and objectives. Our agency has used them to allow people to remember to return daily for a chance to enter a contest, and one widget for a “branded personality quiz” drove 25 percent of the brand’s Web traffic. The basic formula for widget success is to provide something of value. Whether it is for entertainment or information, a widget keeps this value top-of-mind for the user, and can allow sharing with friends and family.

I forgot to mention that widgets are relatively cheap to build, spin off a ton of data, and can drive direct sales of your product. There are some negatives to understand as well. First, it is difficult to ramp up to millions of users like Southwest. Second, there is growing fear that people will encounter “widget fatigue” and ignore these tools or start pruning them aggressively.

The bottom line is that if your brand has value to provide, widgets can be a winning way to deliver it on your customers’ most valuable digital real estate.

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Initial Impressions Using Nike+ (and ongoing updates)

Friday, August 29th, 2008

There’s not a marketing guru on the planet who hasn’t pointed to the Nike+ system as an example of where all brands should be going.

I’ve been as guilty as all the other gurus, as I believed the system was a perfect fit with meaningful marketing. Back in my entries about our trip to the Cannes Advertising Festival, I fawned over the program. I’ve brought the Nike+ case study in front of a few clients and it will appear in our upcoming book. But whenever I have spoken or written about Nike+ I have felt a little embarrassed that I have never personally used it. Our President, Jay Woffington, is all over it and supplies me with insights, but that wasn’t enough. Recently, however, I’ve gotten myself back into the running habit big time, and I felt it was a perfect reason to get some first-hand experience with the “God Shoe.”

Getting Started

It turns out that some running shoes I bought three years ago were Nike+ capable, so all I had to do was order the iPod+sensor kit. It came in the typical, beautiful Apple style of packaging. I had to commandeer my wife’s iPod Nano even though pink is not my color. Within minutes I was up and literally running on my basement treadmill.

Overall, the concept works as advertised. A woman’s voice calls out your mile or time splits and adds gentle encouragement. The sensor is very accurate (correct on average, but has random, incorrect splits once in a while), and the iTunes software has no problem receiving the data and uploading it to the Nike+ website. The overall experience met my pretty lofty expectations. Now for the analysis…

What I Love

True runners know that there is something special about tracking your runs and looking back on your progress. My Dad, for example, has a running journal that he has kept for decades. In each of my first three runs, I was still sweaty and out of breath as I synced my Nike+ and “got credit” for my workout. The site has nice touches, such as a graph of your speed and distance. I liked that a special message said, “Congrats on your first 11 miles; now make it 100.”

I haven’t played with all of the features, but a few things stand out for me. I absolutely love the “Human Race 10k” that is happening around the world this Sunday. I signed up right away, giving me a new challenge and the feeling of participating and uploading. A key focus of the program is the Challenges tool, where people have posted a variety of small and large contests. A few buddies have a one-on-one running competition that I might join soon. I also like what Nike is doing with its “Nike+ Mini” application. It’s an avatar that you design, and its running pace is a live reflection of how much you’ve been running lately (mine is above). I do think Nike is thinking small, though, with only a rudimentary Facebook application (where’s the widget for my desktop and this blog?). Finally, I really like features such as special music motivation soundtracks that you can buy on iTunes.

Improvements Needed

There are a few important areas that I think the Nike+ system, site, and community are missing. First, the site itself is extremely slow. You would think a giant video is loading every time you move from one feature to the next. I’ve actually lost patience a few times and decided not to explore something new because of the delay. My guess is that the Nike team and agency chose cool design over simplicity and speed, which speaks to my issue around prioritizing user experience in these programs.

Second, the data presentation is very, very basic. There is no way to truly analyze your performance over time, and there are no insights or suggestions from Nike based on your runs. It would be very easy for Nike+ to, say, calculate helpful information such as the number of calories burned (I later discovered this but had to go through the FAQ section). I would also like to see Nike’s sensor be able to judge elevation, which would add another dimension of measurement and challenges to the daily run log.

Third, the program is missing out on a lot of basics that other smaller brands with tiny budgets have embedded. An obvious miss is the lack of the ability to post blog or journal entries about your runs; another is the inability to create a network of friends within the site. I’m also really surprised that Nike+ hasn’t learned from video game marketers and included rankings of where you stand versus everyone else in the system. I can tell you how my high score ranks against all Guitar Hero players, for example; why not be able to see where I rank on speed and distance among everyone else who ran this week?  Finally, there’s no search bar for help or other info, which is very odd.

Conclusion: Nike+ almost completely lives up to the mega-hype, but it needs to constantly improve to attract and retain runners. I have definitely formed a digitally enabled relationship with Nike through this program, and the brand is providing a free service that is adding a lot of value to my life. I will be recommending this product to others, and as long as Nike+ keeps doing the job for me, I’ll buy Nike shoes and other products for life. I really can’t wait to go home and run with my Nike+ system after work today.

That said, I hope that Nike has enough focus on supporting this platform. Creating a value-added digital service is still a very new marketing and business model for Nike. The brand makes money off of shoes, not websites, which will continually put pressure on the program. I have seen this pressure often in relationship marketing programs that we have created for our clients. And I have no idea how many people are in Nike+, so it’s hard to calculate what an ROI might be for the program.

During my most recent Nike+ data upload I was asked to complete a survey about my experience with the program. This in itself suggests that the brand gets the need to keep improving on what seems to be working very well so far. I’ll keep running and sharing my personal experiences with this meaningful marketing program.

UPDATES from my experience:

  • (9/7/08) I’ve never seen Nike actually report how many people are using the system.  I think I’m pretty close to a good estimate, though: There is a page that lists the number of members that have recorded 100 miles, which I think is a pretty fair judge of ongoing use.  As of 9/7/08 there are 17,086 pages of members with 14 members per page.  That makes 239,204 people.  Overall, this is a smaller number than most would assume, given the hype around the product.  I’m not at all surprised, though, it takes time to build up a community like this (think Awareness, Trial…) and anything around technology like this takes time for people to be comfortable.  I’m looking forward to joining the 100 mile club – 52 down, 48 to go!
  • I made 100 miles – very cool to experience the achievement and get the following code to brag about it:

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Facebook Talks “Meaning”

Monday, August 25th, 2008

I’ve been pretty rough on Facebook in the past. A few months ago I shared my horrible experience with Facebook ads on my Challenge Dividend blog, in which a targeted ad got .02% click-through. My overall view is that Facebook itself is a very meaningful service, but the company is having problems figuring out how to make money by selling space to marketers. Unfortunately for Facebook and its advertisers, consumers usually don’t find interruptive ads meaningful.

But Facebook seems to get it and is doing some interesting things to improve. A few weeks ago I wrote here about a new system that allows members to rate and comment on the advertising that is served to them. While the ads people are served still might not be meaningful, there is a value for consumers in having a say. This is an idea that is gaining ground on a wider basis as well. For example, Avenue A/Razorfish has teamed with Pluck to create new standard ad units that allow consumer feedback.

Now the company is making a further move by promoting independent applications that are judged to be more valuable for Facebook members. Here’s what the New York Times said:

Facebook announced a series of new incentives for developers to write what it characterized as “meaningful” tools for the service. It said it would pick certain applications that meet a set of Facebook principles to be part of a new “Great Apps” program.”

First, I find it interesting that our use of the word “meaningful” is starting to spread. People are beginning to understand this very basic starting point of deciding how to approach consumer communication.

Second, for businesses this could help create a “market” in added-value applications. One of the biggest challenges we have seen with some early Facebook application work for our clients is the issue of driving awareness of our applications. By promoting the best tools, we have a better chance of breaking through the clutter. I expect Facebook will eventually charge marketers for this privilege (like iTunes does), but as long as members do find value it’s a win-win-win.

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A Tale of Three Ales: (3) Coors Light

Wednesday, July 9th, 2008

(This is part three of a three-part series on beer companies that are building meaningful connections with their target consumers.)

In the past two posts I focused on challenger brands Sam Adams and Speight’s, both of which were built on creating close connections with a focused niche of consumers. But can big mega-brands with millions of diverse beer drinkers get in on the meaningful marketing game as well? I think a recent Coors Light campaign shows it is possible – but they have work left to do.

Coors Light recently launched a pretty interesting beer innovation – a “cold activated label” in which the mountains on the label turn from white to blue when the beer gets cold enough to drink. It’s a neat idea in a category that doesn’t get much innovation, and I think the focus on “cold” fits with the Coors Light equity in an ownable way (compared to, say, wide-mouth cans). The brand is supporting the new label with – you guessed it – a giant TV campaign. If you’re a sports fan you’ve likely been exposed to this copy dozens of times already, but if not take a gander here:

At first blush, it’s another amusing beer ad that is not especially meaningful. However, a deeper look shows some progress. A recent article in the New York Times announced that Coors Light is leveraging this ad idea to create a Facebook application that friends can use to send a “Code Blue” alert to friends and coordinate a place and time to escape from work. Coors Light has created other interesting applications on its website and MySpace page. There is a Happy Hour Locater, links to local city events, and an “Excuse-o-ator” widget that will provide you with rationale for leaving work early. All are tools that pass the Marketing with Meaning test: (1) consumers must choose to engage with them; and (2) there is a benefit even without buying the product.

Despite its progress, Coors Light is missing on a few levels. I think the biggest problem is that the 30-second ad is not truly integrated into the meaningful marketing. The TV ad does not tie into or drive viewers to the meaningful tools. C’mon, guys – there’s not even a URL at the end of the ad! We’ve seen this dozens of times with interactive work; the lead agency creates a commercial, and the client asks us to “build a digital link” after the fact. Tellingly, in the NYT article, the creative director at Draft FCB, Bill Lindsey, says that, “In this new world we live in, it’s something we’re learning to live with.” He doesn’t exactly sound thrilled to be in this new world, does he? Frankly, it is a pain in the ass to coordinate with outside agencies, and it’s much more work than AORs are used to. But the new world is here. Get used to it, and create better work. Going forward, brands must ensure that all advertising works together in a connected ecosystem – despite the lead agency insisting that it will kill the creative or take too much time.

Another big problem comes in the execution of the meaningful pieces of the program. Coors Light really should have figured out a way to use mobile (SMS) – as it is the communication tool of choice for coordinating party-goers. The article says it was not technically feasible, but we beg to differ. The Facebook application, which got such powerful buzz in this article, is nowhere to be found. Coors has purchased no Google AdWords to support consumers who are looking for its tools. And the user experience of tools such as the Happy Hour Locater is pretty poor; it feels slapped together (see Adrants‘ review of a banner ad).

Unfortunately, it’s hard to find data on the program in order to measure meaning or marketing results. But I did see that Coors Light share was up over the Memorial Day weekend. Despite a mixed execution, I’m excited to see this mass beer brand recognize the need to do something more than amuse its consumers with witty 30-second ads – and it is forcing its agencies to work together to improve. I believe the people who choose to engage with these Coors Light tools will build stronger loyalty to the brand. And the social element of the tools helps drive word-of-mouth at a minimal cost.

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