The Delicate Nature of Trust and Brands

If you look at what is going on in our global financial markets and many large business sectors (airlines and auto manufacturers in particular) the disease they are suffering from is a lack of trust among consumers.

The financial markets have witnessed wholesale capitulation by retail investors who understand that the market is functioning not on the basis of fundamental business strength and weakness, but at the mercy of large fund traders who are capable of moving any large stock 10% up or down on any given day irrespective of what the circumstances surrounding that business are. The retail investor sees these bear raids and bull runs are for what they are, insider dominated trading.

Volatility increases as the number of participants in a market decreases. Retail investors are sitting this out and the SEC and Congress are not helping, on one side is the SEC which has done little to create level playing fields in markets and Congress has distorted the markets with trillions of dollars of your money being committed to companies and industries that should not be getting free money. Insiders have polluted and corrupted every one of the bills that deal with economic stabilization, the latest outrage being provisions inserted into the auto failout bill that would provide a pay raise to federal judges and a provision that would let transit agencies off the hook for illegal SILO tax shelter tansactions.

On the business side, industries like American auto manufactures and airlines have done everything within their reach to tarnish their brands over the last 20 years and irrespective of whatever financial propping up they receive from Congress, the fact remains that their biggest obstacle to success over the long run are not credit markets or labor costs, it’s a lack of trust among consumers.

American cars and trucks are without a doubt competitive on quality benchmarks, every customer satisfaction and quality survey reveals this fact. Having had a wide range of these vehicles myself, I have no complaints about GM and Ford quality, in fact the GMC Denali that we owned at one point did not have a single issue that required service, beyond regular maintenance, and it was one of the best equipped and most comfortable vehicles we have ever owned.

If you look at the model lineup GM and Ford in particular you will see a strong portfolio of high mileage vehicles. Chevrolet offers 88 models (yeah that’s somewhat of a problem in itself) with an average fuel economy across the entire portfolio of 23mpg, while Toyota’s 55 models comes in at 21mpg. GM’s efforts on Flex-fuel (E85) have led the industry, 6% of their volume is now Flex-fuel vehicles (hybrids are 2% of Toyota’s shipments). GM alone has invested $750 million in development of the Volt, advancing state of the art not only in powertrain technology but also in battery technology.

What are the two biggest complaints that critics throw up on GM and Ford? They make crappy cars and the have not invested in fuel efficient cars and low emissions technology.

Even if GM survives (Ford is not in as bad a crisis and Chrysler simply won’t survive) the bigger challenge they face is that consumers don’t value their brand anymore. The same applies to the big airlines, while Southwest and JetBlue were cultivating their respective brands, UAL and Delta were doing just the opposite. Running new advertising, remaking the corporate logo, and self-flagellation among executives won’t change any of this.

Congress is in no better condition either, the public not only gives this Congress historically low approval ratings, they also have little confidence that Congress will be a constructive player in our current economic downturn.

Why Aren’t More Advertisers Using Widgets?

Let’s see… why aren’t advertisers using widgets more often? Hmmm, maybe because advertisers are still largely defined by a display ad mentality that hinges on their ability to get consumers to click on a banner in response to cute creative or simply tricking them.

Until they go digital. Branded widgets are the refrigerator magnets of the Brave New World. These compact, portable little software apps — from video players to countdown clocks to makeup simulators — are inexpensive to distribute, free to the user and (often enough) distinctly useful. At a minimum, they carry an ad message wherever they go.

[From Garfield: Why Aren't More Advertisers Using Widgets? - Advertising Age - News]

Widgets do offer a substantial upping of the ante for advertisers but a few things are lacking. First and foremost, while widgets use script blocks to deliver the hosted widget, there are still far too many inconsistencies with the way that the 40+ destination sites handle widgets.

HTML widgets offer far simpler authoring and more reliable playback, but many social networks only want Flash widgets. Google, on the other hand, would prefer to have as little Flash as possible. Then there is the size issue and the fact that widgets that are not well behaved will cause a number of browser issues on page load.

The ability to track and report on widget traffic is quite erratic from one network to another and instrumentation of widgets can impose network and service overhead that causes problems all it’s own.

The biggest problem for advertisers is that while widgets are free for users, they aren’t free for advertisers and publishers who have to pay directly and indirectly to support them. With the vast majority of widget traffic going into social networks the CPM is atrocious and advertising networks want little to do with them because they don’t like, despite their assertions to the contrary, the long tail. Advertisers want to know where their ads, or in this case widgets, are residing because they believe, rightly I would offer, that their brand integrity demands it.

Despite all that, I love widgets and believe that they offer many compelling advantages over display ads, we just have to get beyond an advertising culture issue to hit mainstream with them. It’s kind of like behavioral and micro-targeting, every advertiser and advertising network says these are definitely the future, but very few actually ever explore using these techniques.

The Brand Bubble

This is actually a really fascinating topic and an insightful article.

Click here to download the PDF.

“Today’s housing bubble and the tech stock bubble from the last decade reveal a widening gap between market speculation and how typical Americans value things.

If you thought those bubbles were bad, get ready for another, even bigger one on the horizon that represents over $4 trillion dollars in S&P market capitalization. That alone makes it twice the size of the sub-prime mortgage market. But, unlike other bubbles, the assets that are at risk cannot be traded away or hedged against uncertainty. Rather, they are the fundamental drivers of competitive advantage for most companies–their brands.” [From 52.01 - The Brand Bubble: How Business Speculation in the Consumer Marketplace Threatens Our Economy by John Gerzema]

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Twollow: Automatically Follow People on Twitter Based on Keywords

Applying analytics to twitter remains a challenge. I had breakfast with a senior executive from a fortune 50 (actually, a Dow 30) company today and this topic came up. There are a lot of point solutions that help you discover interesting things about what is happening on twitter, but none of these tools provides you with capabilities to measure anything but raw data. The bane of analytics solutions is when they operate as reporting tools… telling you what something is instead of what it means. This will remain an emergent area for companies pushing tools like Twollow but they will have little penetration into the corporate executive suite because they fail to function in an integrated fashion or integrate with other dashboard measurement systems that are already in use.

Twollow is new simple tool that automatically follows people based on keywords or phrases that those people mention. Think of it like Google Alerts but for twitter. It’s an interesting idea but sometimes people will mention keywords or topics that aren’t really representative of their industry. For example you can be in the technology industry and then one day you casually mention “cookies” in one of your tweets. It also doesn’t look like the system keeps track of who the new followers are.

[From Twollow: Automatically Follow People on Twitter Based on Keywords]

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Sony PS3, Just Call a Do-Over. Please.

I could make a career writing about how much suckage the Sony PS3 represents. Almost 2 years ago I wrote a detailed list of things that were wrong with the PS3 and it still applies today, except Sony was forced to accept market reality and drop the price from $600 originally and there are much better game titles available today.

It’s still tough rock for Sony to push, as console sales figures out today reveal, given that they haven’t changed the marketing focus and there is still no strong online offering. Even without the Wii, Sony is getting their ass kicked by Microsoft who is selling Xbox 360 consoles 2-to-1 against the PS3, despite having a serious quality issue that set them back recently and essentially the same game title library.

# Wii: 803,000 consoles
# Xbox 360: 370,000
# PS3: 190,000
# PS2: 136,000 (People are still buying PS2s?)

[From October Game Sales: Nintendo Wii Kicking PS3 Butt]

Compounding Sony’s problems are the PSP, which has not had a meaningful upgrade/redesign in far too long, is underpowered, doesn’t have the equivalent of an “app store”, and doesn’t have any new compelling game titles. So now Nintendo is parlaying their success with the Wii for further success in the handheld category where the DS is outselling the PSP 2.5:1.

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Facebook Tries to Woo Marketers

Like a lot of people I am skeptical of advertising potential in social networks, insofar as it being massively disruptive to traditional display ads. The reason for my skepticism is simple, Facebook and Myspace both have positioned their ability to target based on profile data and activity as far superior to dumb display ads but the data doesn’t suggest their ad systems are more effective than display ads.

Facebook has a lot to prove with the new ad format, which it began quietly testing in August and started making available to all advertisers this month. The company says 70 of the U.S.’s 100 largest advertisers have advertised on its site since 2007. But its share of total number of U.S. online display ad views was just 1.1%, according to market research firm comScore Inc., in its most recent report in June.

[From Facebook Tries to Woo Marketers - WSJ.com]

It may well be that the schism here is that the user experience is so fundamentally different than a content site, therefore any form of ad detracts from the user experience in such a way that repels users rather than just making them ad blind. We have seen countless examples of social network users rebelling at efforts to monetize their activity, proving once again that Facebook doesn’t own Facebook but rather the millions of people who use it own it.

Having said that, the fact remains that Facebook in particular is generating some decent revenue and should continue to grow, even if that growth doesn’t come at a rate that Zuckerberg doesn’t find acceptable. Despite his pronouncements that revenue is not their focus, they seem to be expending a lot of energy over the last year in mechanisms that are solely focused on extracting dollars from advertisers.

The advertising market really does need something more effective than display ads and despite years of talk about behavioral targeting the fact remains that there hasn’t been a lot of that going on and contextual advertising continues to dominate the stage.

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The Long Tail: They are Both Right

Theories like The Long Tail regularly get taken to extremes in this business, often elevated to the stature of law on the basis of will power alone. What is happening now is a natural correction that pulls back the scope and reapplies the learnings for a better outcome.

I think we all intuitively know that there is a lot more value in niches as a result of the web, but at the same time we know that our behaviors only change incrementally as a result. We have new channels to take advantage of but our consumer behaviors are largely the same.

Whether Anderson intended it or not, the Long Tail is spot on in predicting that social behaviors would amplify as purchase determiners on the web. Having said that, socially enhanced shopping has not transformed retail into a mass market of niches and brand companies and retailers alike still spend proportionately about the same on customer acquisition costs as they historically have.

The other book that deserves scrutiny is Gladwell’s The Tipping Point, which as it has turned out is a phenomena a lot less predictable to replicate.

It’s all goodness and we should all consider ourselves fortunate to be in an environment where these concepts are being developed and established brands are willing to push aside the old rules to try new things.

Prof. Elberse looked at data for online video rentals and song purchases, and discovered that the patterns by which people shop online are essentially the same as the ones from offline. Not only do hits and blockbusters remain every bit as important online, but the evidence suggests that the Web is actually causing their role to grow, not shrink.

Mr. Anderson responded on his Long Tail blog, thelongtail.com, saying much of the difference between his analysis and hers involved how hits and non-hits, or “head” and “tail” in the book’s lingo, are measured. Aside from that, he was generous in praising the article, and said he welcomed the sort of rigorous scrutiny the theory was getting.

[From Portals - WSJ.com]

Marketing Triumphs

Toyota is brilliant, their success as branding themselves as the “clean and green” car company and leading people to dismiss General Motors as some wheezing dinosaur of the rust belt is just about as big a marketing success as getting people to buy tap water in a plastic bottle. Furthermore they have done this while running nonstop advertising for the Toyota Tundra that highlights how big and powerful the truck is…

According to the EPA, Toyota’s average fuel economy across their product lineup is 22.8 MPG vs GM’s 19.4 MPG average. Take out the Prius, which skews the numbers up for Toyota and their average fuel economy starts looking a lot more sober.

Speaking of the Prius, Toyota recently passed the 1 millionth delivery after 11 years on the market, which sounds impressive until you realize that Toyota sells 9.3 million vehicles every year so in terms of altering their fleet makeup I think they have a ways to go. Personally, I signed up to get a Chevy Volt if for no other reason than it actually looks good.

In a reversal of recent trends, Toyota trailed GM in June with a 21-percent sales decline, reflecting a 31-percent drop in sales of its trucks like the Tundra pickup.

[From U.S. auto sales hit 15-year low | Reuters]

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Google Ad Planner

Look out comScore, Nielsen, and Hitwise. Anytime a company like Google puts out a product that is functionally rich and does it for free, the companies that sell something similar are going to suffer. This happened when Google Analytics came out, it will happen here.

What will be interesting to watch is how companies that are offering ad spend analytics will adjust to accommodate Google. I am thinking Rubicon Project and AdMeld specifically. It may be that these companies are not affected because they are optimizing spend across a portfolio of ad networks, of which over 300 exist to chose from.

To make your life easier, we’re introducing Google Ad Planner, a research and media planning tool that connects advertisers and publishers. When using Google Ad Planner, simply enter demographics and sites associated with your target audience, and the tool will return information about sites (both on and off the Google content network) that your audience is likely to visit. You can drill down further to get more detail like demographics and related searches for a particular site, or you can get aggregate statistics for the sites you’ve added to your media plan.

[From Inside AdWords: Introducing Google Ad Planner]