The secret to growth in a recession

It seems that amongst foreclosures, unemployment and inflation, retail therapy hasn't lost its prominence. Sales figures are slightly up, and as far as the apparel industry is concerned, women are the pot of gold to keep numbers strong in a weak economy.

There are many different theories that claim to explain this phenomenon. Some attribute it to psychological consumer behaviour; that amongst the negative economic forecast they spend to feel better. Others claim it's simply due to the intense job market; the old idiom of "dress for success" may apply. It could also be attributable to the heavy discounting prevailing in retail. Irregardless of why women are spending; marketers are definitely starting to take notice.

The oldest misconception in marketing is that women can be marketed to the same way as men. Modern day media is smart enough to avoid this mistake.

Holt Renfrew; arguably Canada's largest high fashion retailer recently posted double digit increases in sales mostly attributable to womens' lines and footwear. Part of this trend is due to some or all of the factors above, but there's a new and emerging trend adding to the rise in women's sales; segmentation in old markets.

This is an important consideration for highly competitive industries. For example, Victoria Secret truly broke the mold of the distribution channels for lingerie and/or "sexy" undergarments. Before Victoria Secret's radical shift there weren't specific lingerie stores of its kind or scale, and lingerie as a line extension was a pipe dream for retailers such as Abercrombie or American Eagle. Victoria Secret's gone even a step further with their "pink" label; tailoring it to pre-teens and younger.

Another example of this trend is seen in a recent extension by Under Armour to attain a piece of the women's active-wear market. A historically testosterone-filled company, they got burned early on in the women's segment by utilizing the comically dubbed strategy of: "pink it and shrink it". Now ready for round 2, Mr. Plank their founder claims that eventually women will outpace men in sales for the company. Although the new set of ads to coincide with the launch only features women, Mr. Battista (VP of Brands) argues that women they target are not looking to be treated differently than men. This is an interesting division and a new segment perhaps otherwise overlooked by apparel companies that seem to favor the opposite at the moment.

Building on this trend is how a new segment can be reached not just from designing a new line of products, but by strategic licensing. Febreze recently became the "Official Air Freshener of the NFL" to many astounded parties. This poses a lot of questions, until it is explained that it isn't targeting men, but rather a growing group of women that are tuning in to the N.F.L. This has also led to changes in opening acts (think Taylor Swift and Olivia Manning) to promote the concept of "Being Game Day Ready". It's an incredible balancing act for Procter & Gamble; too feminine or too masculine in the message and the narrow segment will be missed. The sales numbers will be the true judge of success, although this ad seems to be akin to the last bowl of porridge; just right:

As marketers it is easy to throw our hands up in the air and flail them around while whining on how the recession has cut spending. While some decreases are expected, it's not as disastrous as some media may want to make us believe. I can guarantee you that many year-end marketing presentations will include a bullet point such as:

> Recession hindered otherwise positive levels of growth

or

> Current economic environment led to decreased consumer spending on goods

This isn't good enough. Top brands and CPG companies are proving that there's still success to be had (potentially that is; numbers are a different story) by keeping a close eye on consumers to re-segment the marketplace. Hundreds of books will (and have) been written on the topic of the "post recessionary" consumer. It may however be too late for marketers by the time their ink dries.

Is Vintage the New Vintage?

Some of my favorite quotes of all time have originated from Carl Carlson, the under-rated social narcissist on the simpsons:

"I am so sick of Oldies Stations-- hey geniuses, how 'bout some NEW oldies?!" --Carl Carlson, The Simpsons

Carl: I don't get it. What's so "great" about this depression?
Lenny: I like how everything is sepia tone. Makes me all nostalgic.

I guess Americans these days are seeing a fair amount of sepia.

It isn't surprising that a vast amount of advertising last year focused around value. Major brands were forced into price wars; most prominent in low-switching cost industries such as CPG or restaurants. With the media continually bombarding us with messages of high unemployment, high national debt and foreclosures, it was almost a no-brainer that people tightened their purse-strings to save a dollar or two. An induced effect of this bombardment is a consumer behaviour phenomenon called cocooning/anchoring. It suggests that as the prospect of a prosperous future is uncertain to bleak, consumers inherently fall back on brands they know and trust. This makes for a powerful basis for marketing communications. So welcome to the hallmark trend of advertising in 2010; Vintage/Nostalgia.

A perfect example of this nostalgia (albeit for new brands) from Moma Sao Paulo (I love how some of the most unique work come from South America)

Everywhere we go today there's bound to be some use of nostalgia marketing, whether it be billboards, clothing designs or store buildouts. When tastefully done, it can actually be quite effective. Coca Cola for example has always been excellent at this balancing act of new versus old. In comparison, Pepsi has taken the opportunity to fully re-invent themselves recently; a risky proposition when consumers are secretly seeking stability and familiarity. It seems to be effective though; I bought this box of Raisin Bran two months ago just because I liked the design of it. I don't even like the cereal.

The only thing riskier than completely re-inventing yourself is pretending to be old and authentic. Heritage is one of the most powerful tools for nostalgia marketing; and many companies and brands are quickly writing or grossly over-rating their ability to be vintage. Consumer backlash is bound to ensue.

I remember growing up with Super Soakers, but this ad means nothing to me. Do marketers really expect me to relate to an oil on canvas recreation loosely related to the American Civil War? Personally I think it's offensive to classical art of that time and earlier to represent it in such a way. And since my generation is likely the last to even know where a museum is located, I can't imagine that this is relating to current consumers of Super Soakers either.

Here's another example of misguiding consumers to a "vintage feel". Timothy's was founded in 1975; although the typography is more reminiscent of the 1950s and 1960s. The colours used in the typeface are also strikingly close to Dunkin' Donuts. Dunkin' Donuts has however been around since the 1950s.

The last risk of vintage marketing is the associations to cultural stigmas such as the sexist attitudes towards women that was prevalent during the mid 20th century. The above advertisement by BIC (founded around 1945) recently sent much of the social media world aflame. However, even more offensive than long legs with a revealing short dress are the odd new commercials by Mr. Sub; essentially dubbing over old B/W instructional videos:

When I first saw this commercial broad casted live my draw dropped in utter disbelief, climaxing when the secretary is awarded the role of: Vice President of Lunch Selection. To elaborate, the video's title is dubbed "subcretary". I presume it was meant in a humorous tone, but I feel it failed in a galactic fashion. If you disagree let me know in the comments.

This entire trend has been wrongly associated with the wild popularity of HBO's Mad Men; a drama revolving around a (fictional) 1960s Madison Avenue advertising agency. This only aids in re-enforcing the interesting moral fibers of the time, including drinking/sleeping at work, disrespecting women and the "safety" of cigarettes. It stands as a relatively accurate representation of the era, although as is usually the case, consumers take it too literally. This is especially true when marcom is utilizing nostalgia as portrayed in the television show.

As it always does, general trust in advertising is based on two components; responsible and ethical companies and educated consumers. On the latter, consumers must make their own judgement as to what is appropriate and inappropriate. Ads reflecting on cultures and standards of decades past does not make them instantly acceptable and forgivable. For example, imagine if the Mr. Sub commercial was shot in a 21st century style with real actors' dialog. It's not so funny anymore, although it shouldn't have been the first time.

Companies also need to be responsible in line with cultural beliefs of the time, and be honest to their true heritage. In other words; be socially conscious and don't elude to a long history which does not exist. The Journal of Brand Management described it best:

"The key value that has moved to the front and centre of brand image in this time of uncertainty is authenticity, consumers seek the comfort of the real, something they can trust and count on. Authenticity has two meanings: the original and the substantive, things that are honest and are what they say they are." - Ronnie Ballantyne, Anne Warren, Karinna Nobbs. Journal of Brand Management. London: Apr-Jun 2006. Vol. 13, Iss. 4/5; pg. 339

Vintage can however be applied as a style. There's nothing wrong with producing items that reflect that style, as seen in the Fossil store:

Personally I'm not crazy about the whole vintage style. Isn't it about time we get some new vintage?

Apple's Biggest Branding Mistake

By the looks of the malls these days, it is hard to believe that we're still in the midst of recovering from a global recession.

This was the view of Yorkdale Mall today, which as I mentioned in my last posting has become the environment for some of the most interesting consumer behaviour I have ever witnessed. Here's some evidence of this strange phenomenon:

So why is this line-up of willing iPhone 4 buyers an immense branding mistake? The first problem is the control of their brand. I would suggest that Apple has lost control of what it truly means.

Apple is one of the few technology companies that has transitioned from a supplier of cool gadgets to status items. Not to stir up any controversy, but the new iPhone 4 isn't the most technologically advanced phone on the market (although Apple may want you to think differently). It's this status allure that has fueled international demand for the product, which has led to the sub-culture of grey-market distributors.

And where are all these iPhones going? From what I know personally; South America, East Europe and Southeast Asia. These are all markets which currently do not sell iPhone 4s (with the exception of Hong Kong). The grey market phones are trodden around by the wealthy and privileged; making a nice profit for importers and exporters alike.

So where does that leave Apple? In a position very similar to a luxury apparel brand. Their new product releases are scheduled like clockwork; slightly offset from Spring/Summer and Fall/Winter releases. Everything about the device is "beautiful", but not necessarily advanced. It would also appear that design is favored over functionality in Cupertino; haute couture anyone?

But why is this a problem? The profits in the electronics business is no longer in hardware; but media. iTunes's return on investment is miles ahead of the 100% direct cost margin on most hardware. Apple would be lucky to break even on their hardware when it comes to all the indirect retailing costs associated with a direct retailer. Selling music, magazines, books, applications and anything else software-based has been the sustainable source of revenue and profit for Apple since it launched iTunes.

Apple used to be the cool "Mac" guy. They used to be the counter-electronics culture; focusing on being different and unique, and definitely niche. And as they fail to reach this consumer and are by-passed by distributors who they allow to line up hours before the store even opens; they're alienating their most profitable customers.

It would appear that as time goes on, people aren't thinking as differently when it comes to Apple.

The second brand failure is leveraging the line-up. For those companies who are fortunate (and smart) enough to justify people lining up, it's baffling why they don't make better use of those whom are brand disciples or could potentially be one.

Line-goers typically left to their own device will entertain themselves only for as long as their iPad's battery will last. Apart from books, sleeping and arguing over what's the best feature of the new iPhone, there really isn't much to do for 10 hours while in line (from my experience). And yet marketers tremble at the notion of soaring TV commercial prices with ever decreasing audiences. Does anyone else see a gap here?

Why don't companies like Apple entertain these bored yet fanatic consumers while in line? Why does it even have to be considered a line? Why can't it be an experience? I can imagine there being free concerts (broadcasted to TV monitors around the world outside of stores), food, giveaways, webcams between cities and live discussion? If well-executed you could probably sell tickets. This is how Apple can start to shift its brand perception back to being cool and niche to sell profitable media in the long-run as opposed to fashion in the short-run.

But then again, the way people were lining up today for the launch of Victoria Secret today, you'd think everyone was walking around in the nude. They even needed bouncers at the front doors.

Apple's Biggest Branding Mistake - Preface

I feel that it's appropriate that this blog posting is actually being written from the Apple Store line-up at 4am in the morning. The last three weeks have proven to be one of the most interesting consumer behavior experiences I have ever witnessed.

On July 30th Apple released their highly anticipated iPhone 4. The first person in line that day arrived at 9pm the night before. I arrived around midnight; a full 10 hours before anything would be sold; the line was already about 60 people strong. The crowd is a real mix characters, but all fit within three very distinct categories:

1. Die-hard fans: these are the people who actually use the stickers that come with iPods. They will have numerous Apple devices, defend his Majesty Jobs to the bitter end, and who's emergency contact is their local store manager. They're easily spotted listening to iPhone 3Gs and reading Winnie the Pooh and 1984 on their iPads.

A little background: this is where things get interesting. For those unfamiliar with the iPhone 4, they are currently available in numerous countries, however very few are fully unlocked, making Canadian iPhones very valuable to countries where they are not yet sold or are sold unlocked. To avoid dealers, the Apple Store limits purchases to 2 per customer. This has necessitated a breed of placeholders.

2. Placeholders: people paid to stand in line to fill quotas of iPhones for international grey markets.

3. Cash Men: these are the ringleaders of the operation when it comes to placeholders. Typically there are 2-3 of these per store. They each manage a varying number of placeholders; 4 up to 10. They're easily spotted nervously pacing around on their cell phones carrying messenger bags full of at least $10,000-$20,000 in cash in neatly folded piles.

Alongside these groups there is always one leader, usually a cash man who controls The List. It adds order to the line, recording who arrives and in what order. When you aggregate the market situations such as super-low supply, high international demand and a lots of globally-sourced cash, Apple has inadvertently created a new society.

This new "line society" has its own currency (ticket reservation stubs), its own market (the line itself), a leader (the line master), a god (Apple itself), a purpose (to attain iPhones) and inherent laws. The creation of this society was a completely unexpected and is uncontrolled. It will also prove to be Apple's greatest branding mistake of all.

Old Spice: Are men self-conscious?

Chances are that if you watch TV, have a Facebook account or browse YouTube, you've seen the new slew of Old Spice commercials. Not to be cliché, but Isaiah Mustafa has literally turned into an overnight phenomenon.

The man. The legend.

Or so it would appear. Old Spice has made some dramatic changes in its spokes people; as of late forgoing celebrities such as ex-NFL player Terry Crews and LL Cool J. The legend refers to his character more than Isaiah himself; a low-level movie star and ex-Euro NFL player (did anyone else even know there was a European division of the NFL?). Isaiah appears first in a washroom, then a boat, then a horse; a senseless scenario of the "perfect man".

Seems oddly similar to the new face of Dos Equis beer; "The Most Interesting Man in the World"

In a day and age where women are typically associated with being the targets of self-improvement ads for makeup, clothing and weight loss, are men now feeling the pressure? Apparently so, but are being targeted in a completely different way. Men aren't typically as self-aware as women are, which is why the type of delivery for personal improvement ads for men are drastically different in their approach.

I want to first demonstrate how self-improvement ads have targeted women. Whether it be skin care or hair care, before and after images are always a staple. Clogged pores, frizzy hair and that extra ten pounds. Where? Alone in their powder room, sitting at their desk or locked away in their room. All of a sudden brand xyz releases product abc and miraculously their day is saved, and typically has an ending shot of the previously distressed female laughing in the mall with girlfriends or out at the club. They have a very damsel in distress tone, and I presume that since it's been the status quo since the invention of the 3am infomercial that it's working. Their endorsers are also typically very popular female celebrities and idols.

Men are admittedly much harder to target; as showing a guy with frizzy hair all sad in black and white doesn't seem quite as effective. Men are however quite concerned about what others think of them in social situations and secretly seeks self-improvement. Men want to be the most interesting, the best smelling, and definitely don't want to be caught at a sporting event or DJing with yellow stains:

So is the secret to selling personal care products to men to attack their ego? Not exactly. As a marketer, you cannot attack their ego directly, but rather suggest what would happen in a social situation if you don't use a certain body wash, soap or drink a certain brand of beer. Typically if an ad demonstrates the "after" situation and its negative outcome without the product, men figure out the before themselves.

Measuring success with this strategy is however elusive. Commercials for Dos Equis' "The Most Interesting Man in the World" on YouTube struggle to surpass a million views, while the original video for Old Spice is nearing fourteen million in a shorter time span nonetheless. Does that mean that the former has been ineffective? No. Old Spice's ad targets what Malcolm Gladwell refers to as the shopping "mavens"; female significant others. The video spread virally between women rather than men. Men however may have been enticed by Dos Equis' offering, but would be embarrassed to discuss it or share it, suggesting that perhaps they're not extremely interesting or sociable themselves.

The most important take-away here as marketers is that with CPG/consumables which have low switching costs and are low-involvement purchases, to perform very strong market research to identify and target a single facet of men that they're secretly self-conscious of socially. We also have to be responsible that we're honest not to take advantage of it. It's not scrupulous because it can actually be very helpful for men seeking help, yet are embarrassed to discuss it (a trait not necessarily shared by females). Then again, men have been known to be susceptible to such minute things as bacon:

New MarCom Trends: 你身体好吗, how Apple is changing agencies and Lady Gaga

There's been a lot of recent news coverage in the last few weeks of labour standards in Asia. It started in Taiwan with Foxconn employees having a history of suicides, and continued to recent strikes at Honda car plants in mainland China. China's censorship of labour disputes and complications is typically very strong in an attempt to deter the spread of worker movements à la Walmart. However, with the recent string of successes in attaining higher pay and reduced working hours, someone's going to have to start paying the price. And that someone's going to be U.S.

I recently returned from Hong Kong and China, and if anything is immediately prevalent in the latter is that second and third tier cities are going to begin creating a real middle class. China has the environmental factors for growth and wealth that are reminiscent of a late 1940s United States of America. High levels of control over foreign debt, a large amount of foreign and domestic manufacturing and a population ready to prosper after long periods of arduous work. In the next decade China will become the new battleground for global brands to woo the middle class citizens. Those daring enough to engage this new market must now start learning mandarin (or hiring people who can speak it), find suitable local partners and begin learning the unique nature of impacting a communist-led society with a 21st century consumerist mentality. Wo hen mang.

Brand New China offers invaluable lessons in how ad agencies were baptized in doing business in China; a great read.

Apple's World Wide Developer's Conference (WWDC) 2010 started this week, and in true Steve Jobs fashion, the newest member of the "i" family; the iPhone 4 was just "officially" leaked. Jobs poked fun at the early prototype of the iPhone 4 that was leaked in Vietnam a month earlier, a true test of PR resilience on their part. Keeping in mind that it's a developer's conference first and a technology announcement second, the keynote was all business. The key is to keep developers adding to the current library of 225,000 or so apps to the tens of millions of Apple users with registered credit cards. The real star of the show was the new "iAd Network" interface.

If Apple's creativity wasn't innovative enough, they've essentially introduced a new advertising platform to the mix (expected to do $250 million in 2010). It introduces a new revenue source for free or cheap aps, and most importantly offers a new medium that consumers are excited to interact with due to its novelty. Interactivity has been a hallmark of portable technology for the last few years, however it's new ground for incorporating marcom into mobile phones. As smartphones rapidly become the de facto choice for people to get on the internet, it's not a surprise that intrusive banner ads (that disrupt the mobile experience with a pop-up web browser) were quickly replaced.

The iPhone 4: it really does look fantastic.

The new challenge for marketers and especially innovative ad agencies with bold targets to engage consumers in new ways is to properly use the medium. As the iAd Network becomes more popular the novelty will quickly decrease, requiring more advanced usage of the platform. to keep garnering attention. This problem has been encountered and conquered before in other mediums, but never before has this challenged required the heavy use of software development. Photographers, videographers and graphic designers are all standard tools of the trade. It wouldn't surprise me at all if software developers and UI designers quickly become demanded of the top agencies with entire departments emerging overnight.

And lastly, Fast Company in their most recent June 2010 edition named their 100 most creative people in business for this year. Few people may make it number 100 Andrey Ternovskiy, the 17 year old student from Moscow who invented the wildly popular (and controversial) Chatroulette. Most will simply glance to who got the top seat. This year's winner is Lady Gaga, who may only be considered slightly less controversial than Chatroulette.

Her business acumens are incredible, and are widely praised by top execs from DDB, HP and Polaroid, proving the music superstars can be more than just stereotypical celebrities. Lady Gaga falls into a small class of musicians turned business people that include Jay-Z and Kanye West whose close interaction and success in attracting the young generation's attention has proven useful in selling clothing, electronics and cosmetics. They are some of today's best brand builders not because of what their name represents, but rather because they live, breathe and interact with their target consumers every single day. Celebrities are now cashing in on more than just endorsing deals, but taking to the marketplace themselves and reaping the rewards.

The beats by dr. dre have become a huge hit in the personal audio segment; one that is typically devoid of strong celebrity branding.

Hiatus, New Beginnings and AMEX Dissapoints?

I apologize for the delay in posts. It's been an exciting time to be a part of B!G, after a great year there's some exciting new changes coming within the next few months. Stay tuned!

A little off-topic, but American Express, commonly seen as the purple elephant in the credit card world to consumers seems to have fallen into a little bit of a marketing snafu. If there are two areas that companies are truly falling short with respect to direct marketing methods, they're social media and live event/direct response. Consequently, both areas fall short in the same areas: they fail to deliver a positive response and high interaction with potential consumers.

American Express had the idea of giving away 30 pairs of complimentary tickets to anyone who showed up at the corner of King St. W and Simcoe St. at either 12:30pm or 4:30pm (15 pairs for each time slot).

The scene at 12:29pm kind of looked like the above. Four corners; one to rule them all. Regrettably I was on the wrong corner and by the time I saw the commotion it was all over. 15 pairs of tickets gone in an instant. 200 others were regrettably left out, looking stupid on a street corner. Why? I have no idea. The only hurdle to getting tickets was you'd have to tell the street team:

"American Express lets me realize my concert potential."

Sure there's a little branding thrown in there and some free publicity with the event, but does that benefit alongside 30 happy ticket holders justify the 500 people or so left feeling disappointed? That's not to say that 500 people are all going to go home and cut up their AMEX credit cards, but shouldn't there be a little bit more thought or effort put into trying to gain favorable brand associations? I'm not quite sure how many people left that intersection with the thought of how great AMEX's customer services are.

So what could have been improved upon? There are some critical factors for live events that must be well thought out and implemented:

1. Find a meaningful "catch" for your brand. Sold-out concert tickets the day before a great show fits great with both the concierge services AMEX offers, as well as their Front of the Line program. Brand association win.

2. Find a meaningful venue. The random location was fairly downtown without causing too much chaos. There was some chaos which is good when you're trying to engage with consumers. Familiarity breeds boredom.

3. Milk your attention. DMB fans had been waiting for almost half an hour for 3 seconds of action. At least give them a chance for some interaction, even if the chance of getting tickets is quite small. Maybe a karaoke contest is in order?

4. Ensure the continuity and strength of your message from steps 1-3. Consumers should have a very simple thought process; from catch (1), to engagement (2) to brand message deliverance (3). AMEX really delivered 1 and 2, but fell short on 3. Failure in any of the steps can mean failure for the entire project.

I really expected more from an otherwise innovative company like American Express. Although maybe I'm just bitter about not getting tickets.

Divining the marketing future: PART TWO

Agencies will increasingly act as marketing communication strategy consultants as a premium complementary offering to their production and campaign development services.

Some contemporary agencies have even stripped out the tangible production aspects of their operations (such as the art studio) to concentrate on the development of a ‘big idea’ for creative execution. These agency forms utilize traditional resources including consumer research departments, account management teams, and creative developers, in addition to unconventional resources like artists, futurists, and cultural anthropologists.


These agencies recognize that in a new world where marketing communications must be far more relevant to consumers and impressions must not be squandered, the classical rules of planning, designing, and executing an advertising campaign must be challenged.


As these new capabilities are being internalized to qualitatively improve the effectiveness of marketing communications campaigns, agencies are also seeking to integrate customer relationship management practices to quantitatively improve the creative product. Customer learnings from CRM data, drawn from multiple online and offline communication channels, serve to develop active relationships between brands and their customers. Small, boutique marketing strategy firms, mid-sized agencies, and large networked global agencies have all significantly invested in developing these capabilities.

Historically, the advertising agencies industry was characterized by a few large global agencies (some affiliated through one of the five large holding companies) and by many small boutique agencies that operated locally.




Beginning in the 1990s, mid-size agencies have risen to challenge large global players for major accounts and the ability to define client marketing communication strategy. These mid-sized agencies, such as Wieden + Kennedy, 180, M&C Saatchi, Crispin Porter & Bogusky, and StrawberryFrog, position themselves as being better able to develop a strategic creative ‘big idea’ because their operations are more nimble and culturally oriented than large agencies like Young & Rubicam, BBDO, or JWT.

This industrial niche grew in importance because large agencies could not rapidly adapt to a changing consumer marketplace beginning in the 1990s and continued to exist as large-format multinational campaign production houses, giving their big ideas away for free.

Networks of agencies will continue to develop in the future, however the size and scope of these networks will likely not be based on the number of markets in which an agency can self-replicate and continue to amass global client billings, but rather based on the appropriateness of new markets which have a strong global influence.


Today, when mid-sized agencies go abroad, they locate to worldwide cultural centres where there is a wealth of diverse creative talent. Shanghai, Sao Paulo, Amsterdam, Los Angeles, and Mumbai are all rapidly growing locations for this new breed of marketing agency. Locating in cultural centres gives these mid-sized agencies and developing networks a strategic advantage at developing strong consumer insights which can have a global application.