Archive for the ‘innovation’ Category

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 »

Promoted Tweets Might Unlock Marketer Engagement

Tuesday, April 20th, 2010

So the biggest non-surprise of the social-media business occurred last week when Twitter finally introduced its advertising model, Promoted Tweets. We all knew that the company had to show some significant revenue model in 2010, and we all knew that it would work to “monetize its traffic” by, we guessed it, placing advertising in front of people’s searches and tweet stream. Now it’s time to address the unanswered question that our clients are already asking us: “Should I jump into Promoted Tweets?” My simple answer, “Yes, and…”

Promoted Tweets basically applies the Google AdWords model to Twitter. Brands buy keywords based on what Twitter users are saying and searching for in hopes of getting a positive brand impression, click to website, or retweet of the ad to friends and followers. A very basic example is the one above: Search for “Red Bull” (full disclosure: a Bridge Worldwide client) and the first result is a Promoted Tweet that the brand created. Twitter is slowly and cautiously rolling out the service—starting with a handful of A-list brands such as Starbucks and Best Buy, and only using it on search pages. But the company promises to add this to the regular stream of tweets users receive, both on Twitter.com and the many third-party applications that use the Twitter API.

So what is a marketer to do? Especially one that is still not sure what to do on Twitter to begin with? This is the question that kept me up all Friday night as I pondered this blog post and a Digital Alert that we will send to our clients next week. There is a simple answer and a complex answer.

The simple answer is that marketers should definitely experiment with Promoted Tweets. Once it opens up to more than the first handful of brands, Promoted Tweets will likely be very easy to set up by anyone on the brand team. Like Google or Facebook, a very small amount of money can be used to start testing results. (I’m talking about even a few hundred dollars.) For brands that are already buying Google or Facebook ads this is an opportunity to divert a tiny amount of that existing budget to send traffic to the same places and gauge click-through rates and cost-per-click among these three options. Easy enough, right?

But the complexity comes when a brand manager opens a Promoted Tweets account—as this simple step can open up a can worms. First, you have to start thinking about people who like your ads and want to follow your Twitter feed. Uh, oh—you don’t have a Twitter feed. And if you start one, who is going to monitor it? After all, people expect brands on Twitter to be there for them and truly interact. This is what makes Twitter a “social media” after all. So when they complain about your service or rave about your new product, what do you do? Suddenly your work got a lot harder, legal wants to review your tweets, and your customer service and PR people are coming to your desk. Maybe it’s not worth the effort after all…

Don’t panic.

The lesson here is that it is time for your brand to start playing with Twitter and engaging with consumers through this new but high-growth service. The real first step is to create a Twitter account on your own and spend a few minutes per day playing with the service. Then read Advertising Age or Brandweek and see how a handful of marketers are using the service in new ways. By personally diving into the space you will quickly have the smarts to deal with the right approach to engaging with consumers as well as your organizational hurdles.

You will discover as a new Twitter user and already-smart marketer that the interruptive advertising model represented by Promoted Tweets is interesting, but by far the least meaningful to your consumers. Promoted Tweets will work best if you are already “out there” with added value. Red Bull, for example, bought its brand name on Twitter so that it can highlight its killer content and existing high-quality Twitter account.

But there are many more meaningful ways to use Twitter to create marketing that people choose to engage with, and advertising that adds value to people’s lives. For example, here at Bridge Worldwide, we recently gave Healthy Choice coupon downloaders the chance to share a product review on Twitter. Subway is giving people a chance to win gift cards by tweeting about their favorite celebrity. Dell sold more than $6.5 million in product through its Dell Outlet Twitter feed. And Southwest Airlines uses its Twitter account to live and breathe the fun that its equity represents. The possibilities can vary widely based on your business goals, customer insight, and the creativity of your team. And although you will have to put in some work to understand this new medium and get your organization comfortable with it, Twitter is an incredibly cheap and potentially powerful tool.

Just as Twitter is evolving as a company by experimenting with an ad model, your company should be evolving its marketing by experimenting with Twitter.

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Posted in Social Networking, innovation | No Comments »

How Meaningful Marketing Can Help a Non-innovative Brand

Thursday, January 7th, 2010

dove_logo

Over the holiday break I got a very interesting email question from Al Samuelian, VP Group Media Director at media agency MPG. He was in the middle of reading my book and paused to ask, in summary: “Can you implement a Marketing with Meaning strategy if your product or service stinks?” I thought it was a great question—and one of the reasons that I love opening up this entire concept to public discussion—so I choose to share our back-and-forth thinking here.

When Your Product Is Poor

My first response was fairly short and simple: No, you cannot win if your base product or service is sub-par. Brilliant marketing can never overcome a product that fails to live up to customers’ expectations. You can look to the movie industry for many examples of big ad budget films that petered out once the pixels hit the screen. And with digital and social media, negative word of mouth travels so many times faster and farther.

Al Samuelian replied with a great story about when a car marketer visited Google recently and asked, “What should I do when I get negative online reviews or social-media chatter about service at my dealerships?” The simple reply by the panel of Google experts: “You should improve service at the dealerships.”

This point is also a good reminder for all marketers that our jobs are not just to make advertising (meaningful or otherwise), but to start with guiding the features and functions of the ultimate product that you have to sell. Marketers should have a say—preferably the final say—when it comes to product benefits, features, retail placement, pricing, customer service, and any other decision that is relevant to how it is presented to the end customer. Al suggested that it might be time for us to redefine the classic “4Ps” for the new world of digital, social, and extreme word of mouth. Not a bad idea!

But I know from my own experience that organizational structures are the biggest barrier to marketing making a difference. I remember my own meeting with a major car company when I was marketing Mr. Clean Car Care at P&G. We wanted to do a joint promotion at the car manufacturer’s national chain of dealerships and repair centers, but the marketer from Big Car, Inc. admitted that she couldn’t even get them to run a national “Buy 3 Tires, Get 1 Free” promotion. The decentralized structure of the network prevented her from managing her business. Now this error, and many others, is part of the reason that the company is tanking.

When You Don’t Have Much Innovation

The other half of our discussion revolved around brands that do not have much innovation to stand on. Sure, it’s easy to do meaningful marketing when you have a breakthrough product such as Mr. Clean Magic Eraser or Nike+, but what about the 95% of brands we work on that do not have much word-of-mouth merit?

In thinking about this question I brought up the model presented by Laura and Al Ries in their book, The Fall of Advertising & the Rise of PR. The central hypothesis of the book is that brands are first built on innovation—they bring some new news to the marketplace of existing players—and the best way to win is by making the news as big as possible. Hence, the book’s belief on making PR the lead focus of early marketing efforts. Then, after years in market, the strategy becomes simply reminding people that you exist and what you stand for. This is where the authors find that advertising is more effective. For example, Coke and Pepsi haven’t changed their formulas in years, so the cola war is a battle to remind people through advertising.

My belief is that Marketing with Meaning can work well for non-innovative products and brands in two ways. First, the marketing can itself bring innovation and PR news to the brand in ways that the product itself cannot. Charmin creating a mobile app that helps you find public restrooms is an incredible new way to innovate, and has earned the brand more than 500 million free news media impressions. This idea of using marketing as a way to apply innovation could open up entirely new ways of thinking for brand managers who have struggled for years with doing something new with product development. Making changes to a product formula and assembly line can take millions of dollars and thousands of hours. But cranking out an iPhone app can be done by a small team in a matter of weeks.

The second way that Marketing with Meaning can help non-innovative brands is by serving as the “memory jogger” as described by Laura and Al Ries, but in a format that has a much higher chance of earning customer attention and loyalty. My favorite example is the story of Unilever’s Dove brand. You know by now that the brand was struggling to find a new positioning in the marketplace until it seized the high, unoccupied ground of standing for “Real Beauty.” What you might not have thought about was how this happened with virtually no product news or innovation. By using its marketing to create a cause, Dove reminded people that it existed in a meaningful way.

This second point is where I believe many, many companies should be moving their marketing dollars quickly. As I wrote in this Adweek article a few months ago, the old model of ordering up a new ad campaign is not enough, and as I wrote in this post a year ago, the brands that are able to be remembered and relevant are those that actually do something rather than just saying that they stand for something.

I recently read that Pepsi has chosen not to advertise in this year’s Super Bowl for the first time in 23 years. Instead, the brand is planning a $20 million marketing effort to “refresh” society in real ways. Not much is known yet, but this could be a big step in moving the marketing world away from interruptive reminders and further toward meaningful connections. Stay tuned for more…

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Posted in Organizational Behavior, customer service, innovation | 3 Comments »