Marketing

One of The Bizzy Life’s favorite lawyers, Jeff Merrick, has a contribution today that has nothing to do with legal issues, but instead discusses concerts, online marketing, Keb Mo, and your favorite Los Lonely Boy’s song.

Los Lonely Boys & Keb’ Mo’ Teachings on Customer-Centered Business

by Jeff Merrick

Customer testimonials online sway buying decisions, and those “billboards” last for years. That’s why, in this age of Web 2.0, it is more important than ever to put your customers first if you want additional customers in the future. Los Lonely Boys and Keb’ Mo’ reinforced this message to me with their contrasting approaches to concerts performed months apart at the Aladdin Theater in Portland, Oregon.

Keb’ Mo’ is a blues musician with a strong fan base. He started his concert promptly at 8:00 p.m. with one of his most popular songs. His band played with professional precision, accurately recreating the recordings that brought people out on a work night. Sound quality was excellent. Keb’ displayed some of his good personality between songs. Enough so the fans felt like we were appreciated, but not so much to distract from the music.

Following the concert, TicketMaster E-mailed requests for reviews. People raved. Personally, I would see Keb’ Mo again in an instant. Additionally, people posted to their networks on Facebook and MySpace.

On a work night last week, we attended a concert by Los Lonely Boys. The group is best known for a song called, “Heaven,” a melodic ballad with a good beat that displays a lovely harmony from three brothers singing together. Two lesser-known acts delayed the start time from 8:00 p.m. to about 9:40 p.m.

The brothers played with a lack of precision: it seemed like they were a ½-beat apart on everything. Sound quality was tinny. When they alluded to getting munchies after being with Willie Nelson in times past, I wondered if they had smoked away the last the 1 hour and 40 minutes. When they played kazoos — before getting to any recognizable hit—Los Lonely Boys had lost the audience, despite the fact that they seemed to be enjoying themselves.

I was itching to leave 25 minutes before the people in front of us left. We left a couple of songs later.

Los Lonely Boys is unlikely to build a following with that performance and the negative buzz that followed. One thread read as follows:

J: Last night, in Portland, Los Lonely Boys concert was not very good.

K: Really? I’m sorry. Is that because they only have one song?

J: Yes, and I thought we were going to die before they ever got to “Heaven.”

That “billboard” is out there. It was seen by many people, and may be seen for a long time.

So, the lesson taught by the tale of two bands: treat every customer like a broadcast journalist, because, these days, we all are.

About the Author – Jeff Merrick is an attorney practicing in Lake Oswego, Oregon. Having worked at big-time firms, he now practices on his own, helping people who need to sue insurance companies and others who are trying to screw them.

After wiping out most of their retail competitors, Walmart has been steadily moving towards controlling the brands they sell. Last week they eliminated the Glad and Hefty brands from their food storage shelves, consolidating to their fast-growing private label brand, Great Value, and the Ziplock brand.

Many anticipate that this will be a sign of things to come across many product catagories, with Walmart consolidating to fewer brands and really promoting their own more profitable private label brands.

Walmart is such a Goliath that these kind of moves could have tremendous consequences for many manufacturers.  This could mean the decline of many major American companies, but you can’t really blame Walmart for the move.  Consumers probably don’t need  – or want to choose from dozens of plastic bag options. Slimming SKUs in favor of more profitable and desireable products seems to make sense in many product catagories for retailers.

But this also points to the need for manufacturers to come up with design and marketing efforts that allow them to control their own destinies, as opposed to just being a low-cost house manufacturer for major retailers. Walmart’s mantra of the lowest price certainly resonates with a huge group of consumers, but a manufacturer that sells on price alone remains continually vunerable.  They also need to sell innovation – features and benefits that imbed their product in consumers’ minds and make them a destination brand, with advertising and marketing that reflects this differentiation.

If you are in the advertising business – or many other industries dominated by large clients – there is nothing worse than having your account put up for review – especially if you were under the impression your relationship was solid and wonderful.

I’ve taken the liberty of reprinting an excerpt from today’s AdAge.com, written by James P. Othmer, and taken from his book Adland, that I think adequately describes the emotion of the review:

Excerpt from Adland

Being put up for review is akin to having your spouse announce in front of everyone you know that he or she no longer loves you and for the next several months he or she will be seeing other people — dozens of smarter, younger, cooler people, many of whom, by the way, you know quite well — and then having all sorts of kinky, experimental sex with the most interesting and promising of them, probably no more than six, often doing many of the things that you may have once suggested but were never allowed to.

Sometimes during this process your spouse will describe his or her ongoing antics in excruciating detail for you. Sometimes you’ll simply read a steamy, anonymous, insider’s account of it in the press. And then, after up to six months of this, six months of holding your tongue and continuing to do all of the dishes and dirty laundry and seeing to the upkeep of the home you once shared, the children that mean so much to you, you will finally get your chance to say — after I’ve given you every ounce of my energy and passion for the last xx years, after trying to rekindle better times with romantic weekends and couple’s counseling, after he or she has slept or flirted with just about every one of your friends and neighbors, not to mention several total strangers — “Here’s how I’ve changed, sweetheart, here’s why and the extent to which I’m willing to publicly humiliate myself to win you back.”
At that point, if you were the client (or spouse) would you want to take you back?

I was a little slow to make the transistion to a smart phone (a web enabled touch screen cell phone), but since I bought my iPhone just over a year ago it has become the most useful and essential piece of technology I own.  And I am certainly not alone. The statistics on Smart Phone adoption are staggering:

• In one year Smart Phone ownership has tripled!  24 million Americans now own one.
• By the end of 2010 it is estimated that over 50% of the population will have shifted to a Smart Phone – over 150 million users.

This is impressive when compared to almost any technological advancement in history.  And it will certainly signal a major shift in advertising.  For the first time in history people will carry a device with them at almost all times that knows the following:

•  Where they are.
• What they like to buy, watch, eat, drink – all their buying habits.
• What they are looking for.
• Who they like to hang out with.
• What the weather is like at their current location.

In fact, the amount of info your phone potentially knows about you could be frightening and poses huge privacy risks.  But the upside if it can be managed is tremendous user convenience.  And for the advertising industry, it will be monumental – bigger than the invention of television and radio combined.

One of the common questions I am asked is “how much did that commercial I saw last night cost?” Though the price of media fluctuates wildly, and time is always subject to heavy negotiation, here is a snapshot of some fairly recent pricing for media in big name time slots (based on numbers from Ad Age) -

• Spot on Sunday Night Football – $339,700 (the most expensive slot on television)
• Spot on Grey’s Anatomy – $240,462
• Spot on Desperate Housewives – $228,851
• Spot on Two And A Half Men – $226,635
• Spot on The Family Guy – $214,740

The most expensive slot for a new show goes to ABC’s Flash Forward (one of my favorites of the new season), which goes for $175,724.  Perhaps the biggest bust of the new season is The Leno Show.  NBC was banking on the fact that they would come out dollars ahead by discontinuing the production of expensive dramas, and instead put the cheap to produce Leno show in the 10 pm slot.   However, the loss of advertising revenue will probably cancel out any savings given its dismal performance.  A slot in Leno now goes for anywhere from $48,000 to $65,ooo – significantly less than the nighttime dramas generate.  Leno is also causing major issues for NBC affiliates.  As viewership in the 10 pm slot has dropped, so has the viewership for local news programs that follow Leno, which really hurts affiliate profits.

The above numbers don’t include the cost of creative and production for the commercials.  The average production budget for a nationally-broadcast commercial is somewhere in the $400,000 range, but depending on the creative can easily run into the millions of dollars.  And those numbers don’t include the cost of talent, which can add several hundred of thousands to several million dollars a year.

I published an article this week in Advertising Age on the lessons traditional advertisers can learn from television pitchman Billy Mays’ career.  http://adage.com/columns/article?article_id=138590

Imagine you develop a product, and within a couple years 75% of all the hotels in the world endorse it.  In fact, they not only endorse it, they put attachments for it in all their rooms and market those attachments as a selling point.  My very unscientific survey of four and five star hotels indicates that most of them now equip the rooms with a clock radio, stereo dock, or iPod compatible charging systems.  What a huge testament to the power of that product and its popularity and iconic status!  It also speaks to the hotel’s belief about the long-term viability of the brand.  Spending $50 to as much as $300 for Bose Sound docks per room is a huge financial committment for a hotel chain that would not be taken lightly.

More input from the recent New York advertising conference (see last blog entry for Part One)…

The most interesting panel I observed at the BMO Thought Leaders Conference was titled “The Agency of the Future”.  CEO’s from large agencies around the country – many of them divisions of the big public agencies – layed out their vision of how advertising agencies will begin to look in the very near future.  A few bullet points from the discussion:

• Accountability in advertising will continue to be the mantra.
• To this end, there will be an increased push towards “media-led creative”, allowing actual response rates to dictate creative approach as opposed to the much more difficult to measure “brand hunch”.  (Actually, they didn’t say “brand hunch”, it is a cute term I just made up, but you get the idea.)
• This will neccessitate a change in the typical creative structure, that now usually includes a creative and art director and perhaps a writer, to include an analyst that will interpret advertising results to be implemented into creative.
• Tracking technologies will increase (see next point).

After this discussion, the next panel was called “The Race for The Digital Media Hub”, which in many ways was an extension to the “agency of the future” discussion.  Participants in this panel, many from digital agencies, discussed how the agency of the future will have a centralized tracking system that will be used to optimize all media channels.  As part of this process, and as mentioned in the earlier panel, this would involve greater interaction between creative and media, and really a fundamental shift in how agencies manage business.  The interactive-based crowd embraced this idea, but I suspect getting brand agencies to warmly greet the concept would be a little more difficult. The panelists also all agreed that performance-based media buying will become much more common, and is already common in almost every digital agency.

All this was facinating, but also a bit surreal, as the panel members seemed unaware that the agency structure and the “agency of the future” as they described already exists.  They are called Direct Response Agencies, and the good ones are media-centered and have sophisticated tracking systems to manage advertising based on performance.  Essentially everything the panelists thought would happen sometime in the future already happens right now, they just don’t seem to know it.

I felt like I worked for Toyota and was attending a conference called “the car of the future” in which participants described the “magical hybrid auto that someday will run on gas and electricity” while being totally oblivious to something called a Prius.

Ah, but I guess I should not take it personally.  Direct response agencies seldom gets the respect they deserve, but I have a feeling that is all turning around.  It feels good to be an “agency of the future” as opposed to one clinging to the past.

I’m going to digress from my usual whining about cell phones, politicians, banks, airlines, and assorted Weasels, and pass along some interesting information aimed at my friends in the advertising business.  If you have no interest in advertising, I suggest you peruse some back issues of the blog.  “How to Hire A Butler” is quite popular. If you are interested in advertising, read on….

Last week I was on a panel in New York at the BMO Capital Markets Thought Leaders conference on advertising.  There were many advertising big wigs much smarter than me pontificating on the future of the industry, and I thought I would pass along some of the more interesting thinking I heard.  First a few compelling statistics that came out:

• General Advertising is in the biggest decline since the Great Depression.
• Over the last three years advertising revenue has declined by $25 billion dollars.

Of course everyone in advertising is quite familiar with the fragmentation of media.  This business got a lot more complicated when three major networks and a few huge newspapers and magazines turned into hundreds of thousands of cable networks, streaming sites, blogs, online newsletters, and other media outlets.  But one speaker spoke of a media outlet I had not considered – the mega-retailer.  An interesting stat:

• In 1970 the most popular show on television was “All In The Family”, which drew 70% of household viewers.
• Last year the most popular show on television was “American Idol”, which drew 17%.
• Every week three time three times more people visit a WalMart store than watch American Idol.

So is the right strategy to drop advertising on American Idol and buy more space in WalMart?  Well, not necessarily, but this does speak to the transformative power of the mega retailer.  As media channels expanded at dizzying speeds, the retail market collapsed in many ways.  Hundreds of thousands of retailers were replaced huge “big boxers”, so the game was changing on multiple levels.

In-store marketing has taken a major role in the advertising world.  Consumer used to be “advertising driven” in their product choices, but now they often made decisions “in-store”.  Interesting switch.

In my next entry I will reveal the thought leaders vision on “the agency of the future”.  This was the most interesting part of the conference!

In a sign that karma does exist, a major business Weasel was sent to prison this week.  Steve Warshak, founder of Berkeley Premium Nutraceuticals (better known as Enzyte – the so-called hard penis people) was sentenced to 25 years in prison.  Warshak, his mother, and several others were accused of bilking customers out of millions of dollars via false advertising and bogus credit card transactions. In fact, they took so much money that they were also fined $500 million dollars in addition to the jail time! 

Viewers may remember the “Smilin Bob” Enzyte commercials that promised to turn every average Joe or Bob into a sexual powerhouse.  Warshak was indescriminate in his dishonesty.  In addition to stealing from customers, he would also refuse to pay his advertising agencies, claiming he was going bankrupt and tying them up for months in court in an attempt to delay and ultimately reduce payment.

It’s always good for the advertising business and consumers when these kind of scam artists get sent away, but although Warshak deserves it I was still a bit suprised at the severity of the sentence.  25 years!  He apparently underestimated how serious men are when it comes to their erections. ”Steve Warshak preyed on perceived sexual inadequacies of customers”, said the Judge when he handed down the sentence. 

One must wonder if there are any disgruntled customers where Steve is going. Perhaps the fact that Enzyte doesn’t work will make prison a less painful experience.