Monthly Archives: July 2012

The death of demographics? Does it matter?

English: A typical "As seen on TV" l...

(Photo credit: Wikipedia)

A new study by Catalina Marketing appears to cast significant doubt over a veritable pillar of media marketing. Demographic targeting, it seems, often falls wide of the mark. Catalina researchers looked at 10 brands targeted at households headed by women ages 25 to 54. They found that, on average, just 15 percent of the ads playing in those households reach the people that account for 80 percent of sales.

Wow. On the face of it, that’s some shortfall.

The clear take-out seems to be that demographics, in a media planning sense, may not be an accurate indicator of purchasing behaviours. According to the study, 53% of a brand’s sales volume, on average, came from outside its demographic target, with the remaining 47% of sales volume coming from people that the brand was actively targeting. Of the products studied, yoghurt was split 50:50 between targeted and untargeted; mayonnaise was 60:40 in favour of being bought by those outside the demographic target. The average brand in the study delivered 30 percent of exposures to households that were inactive in the category, meaning they never bought in the category or had bought just one time throughout the 12-month study period.

So what should we make of this? Well, for a start, no-one should be surprised. After all, it was John Wanamaker who, famously pointed out, that “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” Here perhaps is the proof that he was surprisingly accurate.

And yet, for all its inaccuracies, advertising, particularly TV advertising, has a powerful role to play for brands.

Why? If it doesn’t just reach who it’s meant to reach a lot of the time, how can anyone justify the expenditure?

The real answer, I would suggest, is the inverse of what the numbers might suggest. There is no doubt in my mind that media-based TV advertising delivers far more than presence to a specific audience. Done properly, it generates presence in a market, and that presence I would suggest is far more powerful and persuasive precisely because it reaches beyond a specific age-defined audience.

(Anyway, the demographics that get bandied about are stupid. How can anyone bracket a 25 year old and a 54 year old in the same group and call it a “target audience”? There’s nothing focused about it.)

Television is a broadcast media for a reason. It works not just because of who it targets, but because of who it reaches. And by that, I mean it achieves awareness (and generates conversation) far beyond who it is purely intended for. The very point that Catalina have identified as a weakness is also TV advertising’s greatest strength. Strong advertising generates talking points beyond its immediate buying audience – and that’s a good thing. That “leakage” gives strong advertising presence, familiarity and, most critically of all, the potential for interactivity. The wish to share is part of how iconic ideas become part of the culture, part of the social exchange.

A marketer these days, I would suggest, should not even be trying to hit a static buyer at a set time through a set medium with a set message. Their greatest challenge is not even who they reach – but what they reach people with, and how intensely that motivates viewers to reach out and share what they have seen with others through the plethora of media now available to all consumers.

Sadly, looking at TV breaks today, one would have to ask where have so many of the true marketers gone? Where are the people with the intrinsic understanding of the ideas that buyers want to excitedly share with non-buyers? Bring more of them back please. Give them the budget to do what they do, please. Make them the perfectionists that push their agencies to get the very best out of their advertising please.

Those people are certainly not commissioning most of the advertising I’m seeing. They’ve been largely replaced it seems by sponsors of fairground barking who have transformed media-based advertising for the most part into 15 minutes of unrestrained shouting per hour.

That may take place on TV, but that’s not advertising. That’s narrowcast barracking.

More reading

Other perspectives

The contradictions of eyelashes and data

We're drawn to brands that know how to make us smile. Data doesn't teach you that.Christine sends me this image of a VW with eyelashes attached to its front headlights. And all I can think is “There’s just no way on God’s good earth that big data can predict this.”

It’s flirty. It’s girly. It’s extraordinarily popular. And I don’t get it. Thing is – I don’t have to. It’s not for me.

I’m the first to admit I’d probably never have thought of this. But clearly someone else did – and they made it fly (probably with every man in the vicinity snorting in disbelief).

Read eyelashes on a car in a number of ways. The power of the woman consumer in the car market for starters. The wish by consumers to distinctualise a brand by adding a form of self expression. The opportunity to build a short-term brand on the success of another brand.

What you can’t read into it is this. There is no way that a spreadsheet could have predicted this would take hold. In much the same way as no-one would have foretold that putting a plastic flower in the Golf originally would send sales through the roof.

It’s categorically impossible to foretell the success of such whimsy on the basis of numbers alone. In fact, its unpredictability is exactly what makes it such a fascinating idea for some – and a complete mystery to others.

This idea touches something that data can’t reach. It reaches past people’s disinterest, their preoccupations, the things that fill their heads … and it ignites a smile. In a world of predictive data and behavioural patterns, research groups, focus committees and mind-readers, every test result you are fed as a marketer is inferior to your understanding of one very, very basic question.

Who will smile – and then, how much will they buy?

More reading

Other perspectives

Brands look to personalisation in 2012 (www.fruktcomms.com)
The Brand Building Power of Personalization (www.brandingstrategyinsider.com)
Brands can have a personality too (www.damniwish.com)
Ads that entertain don’t sell and isn’t selling the goal of advertising ? (www.newmediaandmarketing.com)

Market leadership: why innovation needs to engage, not just impress

Blair points me in the direction of Booz & Company’s 2011 Global Innovation 1000 for some interesting insights as to why innovation works for some and not for others. (Thanks Blair.)

According to Booz & Co, innovation spending increased in 2011 to $1.15 trillion globally. The 1000 companies that Booz & Co surveyed represented almost half this spend and in the last year their innovation spend was up 9% on the previous year.

However, what interested me was the news that the companies that spent the most were not necessarily those that got the most out of their innovation investment. In fact, the top 10 innovators (Apple, Google, 3M, GE, Microsoft, IBM, Samsung, P&G, Toyota and Facebook) out-performed the top 10 spenders in three key metrics: revenue growth; EBITDA and market capitalisation.

So innovation can work but it doesn’t always work, and it doesn’t work the same for all. What really counts is the context in which innovation is applied. According to the report, 44 percent of companies who reported that their innovation strategies are clearly aligned with their business goals —and that their cultures strongly support those innovation goals — delivered 33 percent higher enterprise value growth and 17 percent higher profit growth on five-year measures than those lacking that alignment. (By contrast, over half of companies reported that their innovation programmes and their business strategies and culture were out of alignment, and 20% of companies didn’t even have an articulated innovation strategy.)

My own view is that the distinctions between innovation and improvement have been blurred in recent times, and the advantages of focus over finance have been overlooked. With so much hoopla about innovation in the business press, it’s tempting to believe that any change is innovation and any innovation will work.

But keeping up is not the same as forging ahead and brands need to be a lot more judicious in that regard in their identification of what they are developing. What may look like adjacent innovation at the outset can, at the pace at which markets move today, be little more than incremental improvement by release date. Incremental improvement is vital of course – but it’s not a gamechanger. It simply keeps you up to speed in the game you’re in.

More importantly, true market leadership is powered by exciting ideas not just impressive ideas. It seems to me that too many companies judge the success of their innovation programmes on technical shifts that wow colleagues and industry insiders. But the significance of these breakthroughs does not necessarily translate to marketability and therefore sales. And the changes themselves are not necessarily in line with where the company is heading, what the brand represents or where demand will rise.

There’s a significant difference between invention and innovation in a commercial context. Invention makes something new. Innovation contributes something new. It actually changes the company’s possibilities. That won’t happen if innovators don’t develop engaging innovation; innovation that doesn’t just solve a problem but actually meets a tangible and evolving need in fascinating ways.

Engaging innovations are the ideas that will power the business forward because they will gamechange the sector to your brand’s advantage, lift margins, meet future market needs, inspire customers to buy and directly contribute to the purpose you have set yourselves as a business.

Does your innovation programme do that?

If not, let me make two suggestions. First, change the innovation conversation so that it does.

Secondly, and even more importantly, change the participants in those conversations. If there’s not a senior marketer in the loop, changes are your circle’s either plain wrong or not wide enough.

More reading

The new role of marketing
The great customer vanishing act: what happens when you can’t track them?
The portfolio approach to strategy
The fall of the wall between customers and culture
The power of being purposeful

Other perspectives

Maintaining brand loyalty: 4 ways brands get it wrong

Most good marketers know how to gain top of mind. Good marketers are adept at widening the funnel at the top end. They’ve good at introducing new lines, new variants, new dimensions – in order to attract new customers. They know how to work with their agencies and their internal teams to fashion a story that intrigues to draw an audience. They know how to weight media flights and craft promotions that persuade consumers to call or to visit. They’ve learnt to charm. Competition’s taught them to do that well.

That used to be their biggest challenge.

Some would argue of course that’s never been more difficult, but, ironically, it’s not the biggest challenge marketers face anymore.

Now the biggest challenge facing marketers is gaining and retaining front of heart: sustaining the appeal for those who already believe in the face of ongoing enticement from determined competitors.

That’s because, between initial purchase and continued purchase, a vital change takes place. What consumers need at first is awareness, authenticity, excitement and a sense of gain. The sales funnel works well to get them through the obstacles to first buy.

But after that comes the need for affirmed faith. Once consumers are passionate about a brand, they need different things. They certainly don’t need to be sold to anymore – at least not like they were sold to at first. Now they need to be reminded that they’re making the right choice every time they buy, and they need to feel rewarded for the decision to lock in.

Problem is, for so many brands there’s no real sense of that reward. They either ignore loyal consumers. Or smother them. They group them as stats. Or they don’t segment them at all.

These to my mind are four of the biggest mistakes that marketers make that lead to a loss of loyalty:

1. They can’t make the transition from sell to story – some brands put product targets ahead of relationship targets in the mistaken belief that if they sell more, they will earn greater loyalty. They keep using the same sales model with people who are already loyal to them in the belief that they have to keep convincing consumers to buy again and again and again. But, once a strong relationship is established, revenue is one of the outcomes of that relationship, not the qualifier, and that’s where more brands need to focus their attention. No loyal buyer wants to feel that they are only as important as what they last paid for. And no-one wants to feel taken for granted. Brands need to become much more adept at telling stories that keep loyal customers intrigued and wanting to become more involved. After the initial challenge of conversion comes the deeper challenge of immersion.

2. They’re afraid of conversation – many brands are afraid of debate and honest discussion. Conversation concerns them. It feels like a distraction from the real issues of getting out there, competing and making money. I’m always intrigued by how readily marketers agree that word-of-mouth is the most powerful way of winning business, and yet how so few seem to act on the logical extension of that thought – that WOM must be the most powerful way of keeping business. Question: what are you doing to keep your loyal customers talking?

3. They think a community is a high-maintenance relationship – so many brands say they welcome feedback when in fact they don’t. They listen to it. They probably record it. But that’s as far as it goes. Actually, they think of their front line as a defensive line and their frontline staff as a resource that is there to limit damage, absorb or deflect criticism, and basically function as a human answer machine service with scripts and carefully cured responses. But if you don’t give your people the permissions and the tools to genuinely interact, to ask questions and to feed back what they hear into the organisation, you are paying a lot of people a lot of money to frustrate everyone by the book. It may look right operationally. It may function correctly by the numbers. But its greatest efficiency, in reality, is the streamlined manner in which a regimented contact centre destroys the desire for interaction. In time, people switch off.

4. They stick with what they know and they tell themselves it’s what people want – the last thing any brand should do is treat its loyal fans as a static constituency, and yet so many do. The more they get to know their consumers the more they look to categorise them in ways that feel familiar. Problem. People are just not that simple. If you fail to test the boundaries with consumers who love the brand, all you continue to offer them is more of the same. That’s not exciting. The challenge for any brand is to bring its loyal customers with it as it evolves, so that they feel involved and included based on what they know, at the same time as they feel stimulated and intrigued by the new things that are presented to them.

Brand loyalty is basically about keeping people interested. It’s about elevating your loyal customers’ heartbeat over a sustained period of time. That’s harder than it sounds in a world teeming with distractions.

More reading

The great customer vanishing act: what happens when you can’t track them?
Not a problem: success pivots on what you solve, not just what you know
Brand dynamics: the shapeshifting of brand likeability
Twinkle, twinkle, twinkle …
The business of cloning
Always be branding
You can’t lead as a brand if you follow another brand
Great brands unearth
Is your brand ready for the experience war?
Brands at the speed of life

Other perspectives

Market adjacency – have you asked the two key questions?

The model for achieving ambitious growth is well documented: a combination of organic and inorganic growth that sees companies looking to gain market share at the expense of their competitors in markets they already occupy, as well as looking for inorganic growth through an adjacent market strategy and/or prospecting for high-return greenfields markets beyond that.

Organic growth often stems from increasing brand likeability within the industry that your consumers already associate you with. In today’s economy, in most sectors, it’s a zero-gain scenario. In order for you to win market share, someone else has to forfeit.

There are at least two other options for organic growth that we should discuss. You can look to specialise within a market – selecting niches and tapping them for profit. It’s not always the easiest way to find above-market margin, but it’s certainly an option in sectors where specific skill adds value and the field is swamped with middle-market generalists. Or you can execute the classic ‘Schlieffen plan’ strategy and look to pincer your middle market competitors by having offerings on either side of them – below them, to compete on price, and, above them, to compete on prestige, with an “upgrade” strategy between those two stations to pull consumers through from high volume to high profit. In most cases, the zero-gain dynamics still apply, at least for now. To win, you need to take market share off an incumbent, and keep it away from them.

At the other end of the growth opportunity spectrum, the high-risk, high-return innovation of green field industries takes capital, faith and patience, and lots of each.

But what of adjacency? As convergence brings us closer to what Charles Prabakar refers to as the “boundaryless industry structure” inherent in the social media/digital technology driven global business environments of today, what opportunities for growth exist there?

Adjacency is all about finding business beyond your core. It’s about identifying new markets that intersect with what you do well. It’s about new geographies, new audiences and redefining the value that customers receive based on what you know/can do. It’s the space between where you are and disruptive innovation. As such, it seems like the pragmatic middle ground, ripe with untapped revenue, ready for those looking to step beyond what they already do and looking to use brand extensions to maximise the return from their current brand equity.

Most companies, it seems to me, tend to judge “adjacent growth opportunities” on competitor strength, synergy of skills, market attractiveness, application of technology and availability of partners. Those are the technical requirements.

What they don’t necessarily factor in are the two questions that a strategic marketer would ask:

1. Are we fundamentally believable, and ultimately are we more desirable to consumers in that new space than our competitors?

2. Why? (In other words, what are we bringing to this new market from the market we know that the incumbents don’t have because they haven’t been there?)

If you’re not entering a market or even a different part of your current market to change it, you’re simply entering it to fill it. A market that’s untapped by you is not, by presumption, an untapped market overall. Most markets are full enough already with companies that have a home-ground advantage. And if indeed it is a totally empty market, then there’s probably a very good reason for that. No-one wants to buy.

You may see an alignment between your current brand positioning and another sector, but the fact is that the world doesn’t need another coffee brand, another shoe brand, another brand of beans. Unless of course you’re going to do things with coffee, shoes or beans that revolutionise what consumers experience or that noticeably add to what they already experience with your brand, what are you bringing to the market that’s extraordinary? And by extraordinary, I mean – more than what they get already.

If you can’t answer that, the “growth” you see is probably a mirage. It may look like expansive return, but really it’s just presence based on hope. Don’t go there.

More reading

Strategy: 11 ways to purposefully achieve growth
Market leadership – the –out and the –est
The business of cloning
Always be branding
You can’t lead as a brand if you follow another brand
Great brands unearth
Is your brand ready for the experience war?
Brands at the speed of life
Seen and not herd

Other perspectives
Great reading from one of my favourite authors in this area. Someone who definitely knows how to do it right. Christopher Zook: Beyond the Core (Choosing your Adjacencies)
Case study of Cisco’s work in this area: Cisco’s Commitment to Smart+Connected Communities: Transforming Cisco from an Internet Plumber into a Solutions Architect
Forbes article on The Rise of Radical Adjacency


Strategy: 11 ways to purposefully achieve growth

You can’t build a sustainably purposeful culture it seems to me without having a deliberately purposeful strategy. Part of the problem of course is that, traditionally, strategy and purpose have lived in different parts of the organisation. My suggestion is that they shouldn’t, and that instead of simply allocating purpose to culture and strategy to planning, the business, the strategy and the culture all need to stem from the company’s driving purpose – its absolute reason for being.

That in turn means that the purpose must be much more than a wish list or a broad hypothetical goal. It must be inspiring, engaging, profit-focused and it must work hard to stand the company apart from its competitors.

Here’s how I use purpose and beliefs to drive distinctive business direction.

1. What is our core purpose (rather than just what is our core business)? When people think of our brand, what is their blinkpoint (the first association that snaps into their heads)? Are they aligned?

2. Why do people buy from us? How have we made purchase an endorsement of the belief we all share? (What do they think buying from us achieves for them, and what matters to them, that buying from our competitors doesn’t?)

3. What are the core beliefs that we share with our customers, and why are they different from what our competitors believe? Are they evident in everything we do?

4. Is this purpose worth it? (Are we making a margin we can justify?)

5. Do our customers continue to value our beliefs? (as evidenced by revenue growth, profitability, reputation and sustained repeat business). If so, what can we do to capitalise on that? Should we intensify/radicalise the belief even more? If not, what do we need to change or re-express that brings people back?

6. Are our own people fully onboard with our purpose? If not, what conversations do we need to be having with them?

7. How far, geographically, does our purpose extend (and therefore where does it stop)?

8. What more could we be doing to fulfil our purpose in our current business (via new product lines, upgrades, new experiences)?

9. What should we stop doing (in order to give us the time and the capital to do more of those things that are more important to us)?

10. What are the best ways to reach and motivate people who believe in what we believe in? (What motives, messages and channels have we not fully tapped yet?) What can we offer them that they will truly value, given what we jointly believe?

11. Who else should be more involved in helping us achieve our purpose? Are we as accessible as we need to be in order for that to happen? Who shares a similar worldview that we could partner with?

More reading

Other perspectives

The new role of marketing

The reason why companies have worked photocopy business plans for so long is because they never thought to work any other way. It just seemed too risky. The rise and rise of producer nations, in the words of Michael Porter, “rivetted attention on implementation”. Watching Japan, then China and India continue to progress, many companies fell further into the action trap. They believed that the only way to outrun their immediate competitors and their looming Asian rivals was to, somehow, out-do them.

But as Michael Porter has commented: “It’s incredibly arrogant for a company to believe that it can deliver the same sort of product that its rivals do and actually do better for very long … It’s extremely dangerous to bet on the incompetence of your competitors” – and that, he says, is what companies are doing when they rely on operational effectiveness for competitive advantage.

My sense is that operational effectiveness and efficiency currently account for about 50 – 70% of perceived competitive advantage, but that percentage is falling. It’s falling, because of course consumer expectations continue to rise – ironically as more and more best of breed thinking is installed – and consumer emotions continue to change – as more channels give consumers unprecedented access to brands and to each other.

As quality becomes ubiquitous, it’s harder and harder to gamble on incompetence.

And it becomes easier and easier for consumers to change brands for no reason whatsoever other than what they feel. Because the actual risk in doing so is getting smaller and smaller thanks to best-of-breed.

All this makes for an irrational economy. And the irrational economy plays by very different rules.

As Avi Dan points out in this article in Forbes, “Customers are now able find out much about the company they wish to engage with: where and how a company makes its products; how it treats its employees, retired workers, and suppliers; how much it pays its top executives; how seriously it takes its environmental responsibilities and the like.”

The criteria is no longer what they get. It’s just as much what they know – and therefore feel.

The role of CMOs in such a world, Dan goes on to say, is “to meld the internal and external faces of the enterprise”.

That’s a quite extraordinary mandate. It ratifies the points made by Tom French, Laura LaBerge and Paul Magill of McKinsey that not only are all organisations marketers now, but that, in an era where “marketing is the company”, marketers themselves must rethink and reassert their influence.

  • CMOs, they say, will increasingly be held accountable for performances beyond their direct report. Any action that involves a customer will become traceable back to marketing. That’s a whole new set of metrics.
  • Marketers will have greater influence over other areas traditionally outside their sphere of influence because of the converging roles these functions now play in helping the organisation connect with customers. While much has been made of the need for the CIO and CMO to work more closely together, the authors also point to relationships with distibutors, digital teams, physical networks and third-party partnerships. Any interaction that makes contact with a customer will include marketing. That’s a much more complex picture to understand.
  • Marketers will have more responsibility for generating rich customer insights, but, the authors say, expect to see a shift in marketing team skills from, say, researching to problem-solving and strategic-marketing designed to inform critical business result elements such as pricing, sales targeting, and product selection and development. Marketing will become an influential voice in strategic goal setting and not just an operational function to achieve what has been set. That’s a very different set of core skills.
  • Whilst I agree with the authors, to a degree, that marketing will become a more data rich and analytically intense activity, my reservations from my last post still stand. There will be more data to play with – but marketers themselves will stand or fall, in my view, on their ability to read the human factors in the numbers rather than just analysing the numbers themselves. Marketers will need to be able to activate consumers at an emotive level not just interpret how they have acted or will act based on patterns. Instinct will count as never before.

Increasingly, this suggests to me that CMOs will be called on to take responsibility for overseeing much more than marketing strategies. The 4Ps marketers have known for so long will give way not just to 5Ps or even 6Ps, but to an idea that supersets all that and more.

Marketers will in time oversee a brand’s entire market presence: to market, in market and beyond market. And their ability to represent and advocate for customer wants internally, market to buyers warmly and distinctly (directly and indirectly), and monitor and engage with prospects, influencers and analysts socially will help decide the brands consumers are drawn to, and who they choose to disregard.

More reading

The great customer vanishing act: what happens when you can’t track them?
The portfolio approach to strategy
The fall of the wall between customers and culture
The power of being purposeful

Other perspectives