From Bear to Bull…Marketing Matters

Today, most companies are cutting back on spending in order to weather the current economic storm. Not only are companies reducing employment costs (leaving a 10.3% unemployment rate in Georgia, and 9.4% nationally when this entry was written), but they are also raising costs of products, while decreasing the overall value (read: The Incredible Shrinking Cereal Box). While companies should be focusing on communicating their brands’ competitive advantage in order to boost sales in the marketplace, they are consistently slashing marketing budgets—the primary means of understanding and communicating with target consumers.

While marketing identifies needs and ways to suffice those needs in a market, advertising can best be described as the voice of a brand in the market. Advertising’s goal is to not only increase brand awareness, but cultivate brand loyalty through product differentiation and corporate reputation (consumer trust). Advertising inspires consumers to make (and ideally repeat) an informed purchase decision, and consequently increased sales for a company.

By silencing their advertising voice by cutting marketing budgets, companies are only realizing a short term savings, and forfeiting future potential sales. Companies should capitalize on the opportunity to overcome competitors who have reduced advertising spending, but should spend their marketing dollars wisely—in opportunities with measurable ROI that reach consumers in meaningful ways via relevant messaging. According to a McGraw-Hill study, companies that increased advertised during the economic downturn in the 1980’s had increased sales when the economy improved. “Specifically, companies that advertised aggressively during the recession had sales 256% higher than those that did not continue to advertise” (When the Going Gets Tough, the Tough Don't Skimp on Their Ad Budgets).

With the song “Somebody’s Watching Me” playing and the catch line “It’s the money you could be saving with Geico,” Geico Insurance is surely taking advantage of the current consumer sentiment and flooding the marketplace with its messaging. According to the BrandZ Top 100 Most Valuable Global Brands produced by Millward Brown, their strategy is working. Geico jumped from #11 to #5 in the insurance category from 2008 to 2009.

By speaking with consumers now, companies are building relationships and reinforcing their brand in the minds of consumers. This conversation allows consumers to know and keep a brand top of mind when making a purchase decision, thus increasing the success and longevity of a brand, regardless of the economic climate.

References:

http://www.dol.state.ga.us/
http://money.cnn.com/2008/09/09/pf/food_downsizing/index.htm
http://businessonmain.msn.com/knowledgeexchange/articles/expert.aspx?cp-documentid=20587273&source=officeonline
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2101
http://www.youtube.com/watch?v=RsHXMxoCXeU
http://www.millwardbrown.com/Sites/Optimor/Media/Pdfs/en/BrandZ/BrandZ-2009-Report.pdf

Dream Deal or PR Nightmare: Michael Vick

Unless you’ve been living under a rock for the past two plus years, you are well aware of what’s going on with Michael Vick—a NFL quarterback who served a 23 month stint in prison after being convicted on federal dog fighting charges. Although Vick was recently signed to the Philadelphia Eagles, most fans (and advertisers) are still way of his character and future in the NFL.

Charges aside, the Eagles did obtain Vick for a steal of a deal: $1.5 million for the first year of play, with the option for $5 million for the 2010 season (which is negligible considering that Vick had a $37 million signing bonus when playing for the Atlanta Falcons). However, in regards to marketing dollars—what will fans’ attitudes be towards Vick, and consequently, how will advertisers and sponsors respond to the sentiment? According to a poll on PhiladelphiaEagles.com, 81% of those surveyed were pleased with the team’s decision to sign Vick to their roster. Vick jerseys are even selling on NFL.com for $79.99. Vick might be marketable after all…but what sponsor is going to take that chance and be the first to sign an endorsement deal with him? It’s inevitable.

Let’s face it—the NFL is full of convicted felons who are making more money that you and I both make combined times ten. Vick is no exception to this rule, and is his crime any worse than a professional football player charged with manslaughter, spousal abuse, or another felony? Those players continue to play, and are not judged too harshly by the scrupulous public eye. I think that Vick’s future success is going to depend heavily on how well Vick plays in 2009. Consumers, excluding PETA members, have short term memories and if Vick plays well this season, I think football fans will be willing to forgive and forget…especially if he can lead the team to a Super Bowl title.

Whatever happens with Vick’s return, I think people will be scrutinizing the Eagles this season. Vick is now an infamous spectacle. Accepted or shunned—people will either be rooting him on or waiting for him to receive his comeuppance. I hope it’s the latter.

References:

http://adage.com/article?article_id=138485
http://en.wikipedia.org/wiki/Michael_Vick
http://www.cnn.com/2007/US/law/09/25/vick/index.html
http://www.nfl.com/players/michaelvick/profile?id=VIC311467

Connecting to Everyone and Everything

I admit it. I’m addicted to Facebook…and it turns out, I’m not alone. Facebook has over 250 million members who spend at least twenty minutes on the site daily—uploading 850 million pictures and 8 million videos monthly. Facebook is unique because is users use their real names, real email addresses, and exhibit their real thoughts. In addition the site is one of the most popular website destinations and also of the largest traffic drivers to sites like Evite and Perez Hilton.

However, Facebook is proving to be quite problematic for Google. Not only is Facebook Google’s second largest competitor (following Bing) and is invested in by Microsoft, but Facebook’s content is unable to be indexed by Google (since Facebook uses peer recommendations as its main source of indexing information and not a scanning algorithm). Facebook also encourages its members to use Microsoft's search engine, Bing.

Unlike Google, Facebook is determined to keep online interactions relevant and personal—for example, with partner sites like Digg, users are able to see their friends’ news recommendations. Ads on Facebook are highly targeted as advertisers are able to target based on contextual, demographic, behavioral, and geographic information to increase relevancy and consequently demand. Users are able to give feedback with either a “thumbs up” or “thumbs down” to the ads so that they see, creating an even more targeted group of users viewing ads. However, with the availability of users’ personal information, advertisers walk a fine line between supplying ads that are targeted and relevant versus creepy and stalker-ish.

Brands have also capitalized on the connecting to users via Facebook. By creating “Fan Pages,” companies are able to supply “fans” with special/loyalty offers, contests, events, etc. to further reinforce the relationship that those connected users have with a product/company/brand as well as drive traffic to the brand’s website.

The more I learn about the way Facebook is reinventing the internet, the more impressed I become. While I’m still Google loyal for my search engine needs, I can’t help to notice the inventive and creative way that Facebook is connecting people to one another, brands, products, ideas, events, information, and causes in a personal way. Maybe Google has something to learn yet?

References:

http://www.wired.com/techbiz/it/magazine/17-07/ff_facebookwall
http://www.facebook.com/advertising/?src=pf

Survival of the Fittest

This past week, the Technology Giant, Microsoft, merged with Yahoo to hopefully create a better competitor for Google. The merger will allow both companies to focus on what they do best: Yahoo will be able to better focus on selling media, while Microsoft will be better able to focus on developing and improving its online technologies. Bing, Microsoft’s new “decision” engine, will become Yahoo’s default search engine (giving Bing approximately 30% search market share), while Yahoo will benefit by being able to expose more users to ads by having access to Bing’s search data.

This merger between Microsoft and Yahoo is a strategic move in the struggle for market share against Google, and most likely, between one another (as Bing would surely overtake Yahoo’s market share in the long run). I am interested in seeing and using the ‘new and improved’ Yahoo search functionality, but I seem to be more excited to see what improvements Google will make in response to the merger.

I was sent an interesting cartoon parodying the merger (see above). The cartoon, posted on Agency Spy, shows the little fish, Yahoo, being swallowed by a medium-sized fish, Microsoft, with the big fish, Google, in the background. Google is surely the big fish in the online market place, but I really don’t think that they have anything to worry about. With 60% of the market share (more than twice that of the Microsoft/Yahoo agreement), and loyal and satisfied users like me, I don’t think that this merger will produce their ideal predicted gain in market share—not that I don’t appreciate the attempt or imminent Google improvements.

It will be the survival of the fittest, and I think Google will remain the big fish in the online pond…for now at least.

References:

http://adage.com/digital/article?article_id=138177
http://adage.com/digital/article?article_id=138138
http://www.mediabistro.com/agencyspy/the_menu/today_on_the_menu_cartoonist_bob_eckstein_and_why_yahoomicrosoft_will_fail_122952.asp