Marketing Newsletter
May 2008
Industry Insights
Copernican Exploration  
Discovery of the Month
What We're Reading Now
Coming Attractions
Industry Insights

For Social Media and the Marketers Who Love Them:
How to Get Beyond Clicks and Sales


Two years ago, when Advertising Age proclaimed “Social Networking will change how companies advertise,” it didn’t put a time-line on when exactly that was going to happen.  Good thing.  True, spending on social networking sites like MySpace and Facebook continues to soar.  According to eMarketer, in 2008 US advertisers are expected to spend nearly $1.6 billion, up almost 70% from the estimated $920 million spent the previous year. 

But has anyone—either the social networking sites or the marketers who love them—really figured out what this great, meaningful change in advertising will be?

“I don’t think we have the killer, best way to advertise and monetize social networks yet,” noted Google’s co-founder Sergey Brin after disclosing Google’s ads on MySpace aren’t performing very well.  A pretty remarkable statement for him to make since Google guaranteed $900 million in ad revenue to MySpace.

According to a recent BusinessWeek article, social networks have some of the lowest response rates on the web—as few as four in 10,000 people who see ads on social networking sites click on them compared to a web average of 20 in 10,000.  To cast an even darker shadow, the magazine ominously notes these numbers—which do not show a strong return in terms of sales to begin with—are on the decline as the 200 million plus users on MySpace, Facebook, and others become even more unresponsive, and in many cases violently opposed to ads.

“It seems unlikely that this situation will get much better, unless social networks really do come up with a different form of advertising,” warns Techdirt, a group of high-tech analysts.  The clock is ticking.  Internet information provider ComScore reports that while the number of visitors to most of the sites continues to grow, the amount of time spent on social networking sites—what it refers to as “engagement”—is flat or down across the board.  On the two biggies—MySpace and Facebook—the amount of time is down 10.4% and up just 1% year-over-year respectively. With this kind of evidence throwing their main value proposition—a burgeoning number of consumers who spend a whole lot of time on the site—into question, social networking sites will be even more under the gun to demonstrate their advertising programs deliver results.  Seems like a pretty tall order given the click rates above, but let’s not sound the death knell yet. 

Recall why marketers flocked to new media to begin with: they had a sense that old, traditional media such as TV and print weren’t all that effective anymore.  At the end of the year, they’d tally up what they spent on TV, print, radio, etc., and wonder what, if the tracking research told them 57% of people were aware of the campaign but our sales are flat, are we getting for our money?  Why is the advertising not contributing to sales? 

The going assumptions were that you’re not getting much and the “why” is the media channel—there’s just something about traditional media as communication vehicles that’s bringing the campaign down.  Not surprisingly, new media—because it’s “hot” with target buyers, novel, less cluttered, pretty much everything old media isn’t —started to look pretty good.  Everyone jumped on the bandwagon, but the same questions still loomed in the background. 

Now marketers are back where they started, with no clear idea what they are getting or why the advertising isn’t working.  Is it the medium, the message, the budget, or something else? 

Just for a change, before moving on willy-nilly to the next new media, let’s try to answer these lingering questions at least for social networking sites.  If declining click rates are all these sites have to offer as far as ROI metrics, let’s start by thinking about what else might make for a compelling reason to advertise aside from direct sales.  Just take it as a given that, as ad executive Adam Hanft told NPR’s Marketplace, “the reason that people go to Facebook is not the same reason that people go to Google or Yahoo, where there’s more of a commerce intention or a research intention.....people just want to chat with their friends.”  Perhaps, as Hollis Thomases, a reporter for ClickZ, suggests, “campaigns that focus on building relationships rather than driving immediate actions,” hold promise.  Just because someone didn’t click on an ad and buy something immediately, doesn’t mean he or she didn’t see it, didn’t become aware of the brand or brand’s message, didn’t start to form attitudes or change current attitudes, etc.  Social networks and marketers could be seriously underestimating the longer-term impact of advertising in this medium if they only focus on immediate clicks and sales! 

Unfortunately, social networks offer up click-through rates and word-of-mouth effects following a purchase as supporting reasons for buying space on their sites.  For their part, marketers talk a lot about “experiments” when they invest in new media such as social networks, but they tend to use a loose definition of this word.  Mostly they’re spending money without putting much behind tracking what they are getting for what they are spending.  This isn’t necessarily a terrible thing—if a CEO says get us on Facebook, I just read an article about it or asks you why he hasn’t seen the brand on MySpace, it might not even matter what the actual ROI is—you’re just trying to get the guy in the corner office off your back and maybe it’s not that big an investment of dollars anyways.  But eventually marketers run into the problem we talked about before—they don’t know what they are getting or why the advertising isn’t working.  So let’s consider what either social networks, marketers, or both could do to gets beyond the clicks and answers these questions. 

What’s typically done to gauge the effectiveness of a particular media is what marketing researchers call a “controlled market study”—in this case, some people on MySpace, Facebook, etc., would be exposed to a test campaign and others would not.  The next step is to compare the differences between the two groups.  Web-based new media have some natural advantages over old media for doing this kind of research.  With old media such as TV and print, it’s very difficult to do this kind of research—it’s hard to control and know who watched a TV show or read a newspaper and who didn’t after the fact.  It’s hard to know if someone really flipped through the pages and saw an ad.  On the flip side, with the social networks and other web-based media, it’s much easier to capture the folks who were REALLY on a website, a webpage with a banner or text ad, a brand profile page, and so on.  It’s also much easier to test different versions of an ad—different messages, different prices, different executions—or even different types of ads—we’re not exactly sure what this would be, but aside from banner and text ads, what can be done that might work better?  This is the billion dollar question (see Google guy’s comment that “I don’t think we have the killer, best way to advertise”) and this kind of research can get us closer to an answer.

By all appearances, social networks and their advertisers have run these kind of studies, but they just look at clicks and sales.  They need to go further.  Ask about awareness of a test campaign.  Ask about awareness of the brand advertised in the test campaign.  Ask about awareness of the brand’s message.  Ask about the impact—positive or negative—on feelings toward the brand.  Ask about measures of brand equity—perceptions of quality, value, superiority, etc.  Ask about purchase intentions and brand preference.  Ask about whether they talked to somebody about the test campaign or told a friend about the brand.  The goal here is not only to quantify if and what impact an ad on a social network has, but also what is and isn’t working and, most importantly, why.  As an example, let’s say most people exposed to the test campaign say they were aware of it and they are aware of the brand.  Yet when it comes to the brand’s message, they aren’t so sure and their preference for the brand and purchase intentions didn’t change after seeing the ad on Facebook.  A marketer would have a good indication of where the communications breakdown is—in this case, the brand’s message didn't come through.  The marketer would have a better understanding of why an ad isn’t generating sales and what to focus time and energy on fixing.

With the buzz about social networks starting to turn sour, it’d be pretty easy at this point to conclude that “what you have with social networks is the most overhyped scenario in online advertising,” as Tim Vanderhook, CEO of SpecificMedia, a web ad placement firm, told BusinessWeek.  But hey, we can be open-minded and clearly—as the spending rates attest—there are still plenty of believers.  Maybe social networks won’t “change how companies advertise,” but it doesn’t necessarily mean they won’t work to build brands and their equity either.  We say to social networks and marketers don’t just guess at what ads are or aren’t doing for brands—go out and collect some evidence.  It’s not inconceivable that advertising on social networks has an impact; it might actually prove to be a good value—given the low cost of advertising relative, at least, to traditional advertising—and an effective investment.

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Copernican Exploration
 

Marketing Advice You Can Believe In:
Why Barack Obama Needs to Consider a Brand Extension


Barack Obama, now here’s a guy that seemed to be bringing change to the political marketing world....at least until recently. 

Nearly a year before the first presidential primary, Hillary Clinton was way out in front with a 20-percentage point lead.  She was heralded as the front-runner, riding the momentum, making it look near impossible that her much less well-known challengers even had a shot. 

Things didn’t start to look up for Obama until October of last year when he launched ads containing the campaign slogan: “Change we can believe in.” As positioning guru Al Ries raved: “Obama was brilliant.  He focused on the word ‘change,’ a concept that matched the mood of the majority of the American public, yearning for change after seven years of Republican rule.”  His people nailed the messaging strategy with the slogan, capturing all the stirring emotional and aspirational attributes ascribed to the candidate, as well as the key word—“change”—itself.  With the seal of approval from the doyenne of positive change herself Oprah Winfrey, Obama started buying TV advertising like crazy and never looked back.

For awhile, this emotional appeal worked—it resonated with a large block of voters who described him as the candidate of “hope” and “inspiration” and pledged their loyalty.  Unlike the typical candidate who shifts positionings like the wind, he stuck with “Change.”  As a result, Obama quickly made up the difference in national polls and started winning primary races.  Faster than a speeding bullet, he became the man to beat.  Yet despite way outspending Clinton in the advertising department since the start of the year, they’ve been more or less running neck-in-neck in national polls since February. 

Not only has he suffered some high profile losses recently, but he’s also not racking up the wins quite as easily as he used to. Folks in the party continue to question why he can’t seal the deal and wonder about his viability.  His team’s initial gut reaction: spend more on advertising and go negative.  It’s what the campaign handbook every other candidate operates from says to do.  Our suggestion: lose the handbook.

Spending is not the issue.  In Pennsylvania, for example, Obama outspent Hillary by a 5-to-1 margin.  He had the share of voice, i.e., the percentage of advertising one candidate purchases out of all the advertising purchased by all the candidates.  He had the reach and frequency.  It’s probably a safe assumption that awareness of his candidacy wasn’t the problem—it wasn’t as if people in Pennsylvania were going into the voting booth and seeing the name “Barack Obama” for the first time ever when they looked at the ballot.  It’s hard to believe people hadn’t heard the slogan, “Change we can believe in” at some point with that level of spending.  In other words, it’s probably not a problem with brand or message awareness.

As for going negative, most studies show negative ads do move undecided voters towards the candidate doing the advertising better than more “positive” ads.  That may be true, but what about the damage done to a candidate’s brand equity by going negative—particularly when the “brand” has been built on positive emotional appeals?  Where’s the research on that?  Going negative so goes against the grain of what Obama’s built his whole brand personality and image around.  We think he’d be making a better marketing decision if he took his ads off the air all together rather than slinging mud.  

How about trying to grow the brand by broadening its appeal beyond the core groups WITHOUT jeopardizing brand equity?  Of course, people have only one vote, so can’t exactly “increase volume” among a particular voter segment once you’ve hit your maximum share as it appears Obama has with his primary targets—for the sake of argument we’ll call them the “liberal elite” and “young voters.”  Though his “core customers” can’t give more votes, they can keep giving more money and volunteer time, so there are important reasons NOT to alienate these groups in order to woo prospects.  His emotional appeal—“Change we can believe in”—remains compelling to core supporters; it’s just reached its maximum point of effectiveness.

We just want to clarify here, however, what we DON’T mean by broadening the appeal.  We don’t mean be all things to all people—Mitt Romney’s ill-fated (and expensive) bid for the presidency is dangerous testament to these problems.  Nor do we mean simply go after the same target group as your competitor with the SAME message as your competitor.  As Hillary narrowed the gap North Carolina and Indiana races with the message she was “one of the people,” Obama did everything he could to demonstrate he was more “one of the people,” than she is. 

Obama’s Achilles heel remains white, working-class voters—the downtrodden that have rallied around Hillary to date.  They didn’t budge from her in either North Carolina, Indiana, or West Virginia.  The good news for Obama and his team is that there very likely is a good-sized group of voters currently in the Hillary camp who could be convinced to switch allegiances.  Brand switching can and does happen even in the most well-established categories when there’s a highly motivating reason driving it.  One of the most motivating things a brand can do is identify an area of dissatisfaction—a serious need or problem where neither competitor is currently offering an adequate solution.  Marketers call this “white space.”  Bring a solution to market that taps into this area of opportunity and a brand will see former customers of its competitors gravitate towards it.

Two large need-state segments in this election are people concerned about the economy and people concerned about Iraq.  Obviously there’s at least some overlap in the demographics and voting behaviors of these groups with Obama and Clinton’s current target groups, but think of it as just a different way to segment the market—they’ve got this sort of psychographic/demographic segmentation going on right now, let’s divvy up the voting population based on the policy issue of primary concern to them.   We’d bet if Obama did a bit of research, he’d find there are many proclaimed Hillary voters in her downtrodden group who are not very happy with her past track record or policy position on Iraq, for instance, and would be open to jumping ship to Obama if he appealed to them with a “solution.”  He could approach it as a brand line extension, keeping his original emotional positioning and extending it to a specific issue.  How about “Iraq: Change We Can Believe In”?  He stays uplifting; he’s invoking the “change” positioning that’s been so powerful; but he’s focused on THE issue on which a big group is going to make a decision.  Our two cents is Iraq’s the issue to go with—it’s been more or less ignored recently, he was against it from the start, and most people, even Obama supporters, think Hillary would do a better job managing the economy so why fight that battle?

So, Obama, if you want to win this thing, don’t mess around with political marketing as usual. Stay true to your positioning strategy, extend your brand in a way that motivates switching, and whatever you do, don’t go negative (though we’re sure it’s tempting).  That’s some marketing advice you can believe in.

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Discovery of the Month
 

How To Take the Pain Out of Finding New Brand News


It’s a yearly task every brand manager, especially those in low-growth categories, absolutely dreads: coming up with new brand news, a.k.a. the little somethin’ somethin’ that’ll give buyers a reason to buy more or maybe even switch brands.  Throw in the added challenge of doing it with the same or, as is often the case, less of a budget to work with than the year before and you have your basic brand management nightmare.

With heavy hearts, brand managers often pull from the standard stable of tactical tools—price promotions, retail promotions, contests, maybe some sort of packaging change, or new flavor or feature often positioned as a “line extension.”   Take the case of Kraft, the world’s #2 food company that counts the likes of Oreo, Jell-O, Cool-Whip and Kraft Mac N’ Cheese amongst the storied brands in its portfolio.  The company found itself struggling after introducing a few too many line extensions of its biggest brands which failed to resonate with consumers.   Said Kraft’s current senior vice president of new products Bob Becker, “A line extension is usually a new flavor or size that may create some news but it doesn’t grow the business.”  

Instead of line extensions, this time around Kraft is looking to boost sales across the many well-established categories in which it operates by increasing marketing spending; reformulating products including Oscar Meyer wieners with no artificial flavors, colors or fillers; and by making existing products more convenient and portable with new formats—an aerosol can of Cool-Whip instead of the tub, for example—and shelf space—Cool-Whip will be in the refrigerator aisle instead of just the freezer section.  Great that Kraft wants to spend more money on marketing, but we wonder if these incremental changes will really do much for their brands from a big picture perspective. 

The downside with the well-worn tactics is that everyone else uses them, including competitors. So where’s the new?

Maybe they work in the short term—sales increase—but it makes marketers’ jobs very hard in the long-term—the tactics aren’t helping to boost loyalty or solidify a position in the marketplace for the brand.

May we suggest these three tips that will help you develop “new” brand news that builds your bottom-line and just as importantly, your brand equity at the same time.

#1.  Get Creative with Research.  Instead of expending all your creative energies on a big-ticket giveaway promotion, outta-left-field contests, or some sort of buy-one-get-two pricing scheme, get the juices flowing about marketing research.  Consider research that will enhance your creative thinking about your brand.  For instance, what are the “white space” opportunities—the areas where there’s a big gap between what people want and what they are getting in the category—for your brand?  What are new positioning and messaging opportunities? 

Virtually every brand—even really well-established brands in the most commoditized categories—has a wealth of positioning opportunities, a.k.a., characteristics to which consumers will respond.  There’s target market characteristics—“the brand for would-be athletes,” for example, “for working moms”, etc.—occasions or situations, social responsibility that could all be potential positioning opportunities.  Use research to investigate and explore these things and find out what motivates buyers.  We know that “creativity” and “research” rarely appear in the same sentence, but that needs to change. 

#2.  Join the Club.  One of the hottest concepts in marketing today is the idea of a “brand fan,” the folks who are open/responsive to, supportive of, and maybe even impassioned by your brand.  There’s a spectrum of fandom, of course, among your current and prospective customers.  If they’re not using your brand already, fan-types are at least willing to consider it. They’re willing to try it.  If they’re already using it, they will try a line extension.  Big fans might even tell other people about your brand and recruit other people to join the fan club.  Meanwhile, disinterested spectators or detractors are not worth your time to try to win over—they wouldn’t take a free sample if you handed it to them on the street. So get to know the members of your fan club—they are the most likely to respond to new news that’s relevant, meaningful, and targeted to their needs, desires, interests, etc. 

You CAN capture “fandom” in a variety of ways—loyalty, engagement, responsiveness, and more—so you needn’t rely on gut instinct to identify and try to reach this group.  Take a variety of demos, attitudes, needs, etc.,—in other words, variables you use in your garden-variety segmentation exercise—and test them to see which are related to these measures.  You’ll have a really good indication of which buyer group is predisposed to your new brand news and what kind of news they’d like to hear.

#3. Uncover the Emerging Need.  Anyone can WATCH trends, but not everyone can TRANSLATE them into relevant and unique new news for your brand.  Take a group of customers that holds good future business opportunities for your business and ask them, what are your needs, wants, and dreams?

Next consider how the greater social trends at large will heighten and support these needs and wants—what’s on the horizon that might impact the target in terms of how they are thinking and feeling, what they are looking for, the emphasis they place on different attributes and benefits a brand offers?  Now ask target buyers how they perceive your brand and competitors in terms of solving the emerging needs.  Identify an up-and-coming, ahead-of-the-curve opportunity that is woefully lacking at the moment and you have yourself some really compelling and—get this—SUSTAINABLE new news about your brand.

Our main message here: take a step back from the tactics and think about how to make your brand stronger.  New news that works for the brand comes from good solid insights into buyers, not best guesses about promotions and packaging changes.

For more insightful marketing discoveries, visit http://www.copernicusmarketing.com/discover/index.htm

Have a hot discovery for our next release? Contact us at ami.bowen@copernicusmarketing.com

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What We're Reading Now
 

At the Top of Our Reading List....


Your Gut Is Still Not Smarter Than Your Head
By Kevin Clancy and Peter Krieg (Wiley, April 2007)


Your Gut Is Still Not Smarter Than Your Head paves the way for anyone in business—Fortune 500 CMO, mid-cap company CEO, or small business owner alike—to make better, more profitable marketing decisions. Intuition and creativity certainly have their place in marketing—as they do in any other business decision area. But programs that return 20% or more on investment come from a careful balance of intuition and fact.

Look for more on Your Gut Is Still Not Smarter Than Your Head on www.useyourheadnow.com or visit Amazon.com, barnesandnoble.com, 800CEORead.com for order information.

Made to Stick: Why Some Ideas Survive and Others Die
By Chip Heath and Dan Heath (Jossey-Bass October 19, 2007)

made_to_stick

The brothers Heath try to tackle the always puzzling question of why some ideas catch on and spread like wildfire while others quickly fade.  In their treatment of this popular subject, they come at it from a business and communications perspective.  Their mix of business and non-business, success and failure stories offers good illustrations of their prescriptive steps for making it easier for companies to get their message to resonate.  The book come highly recommended and was 800-CEO-Read’s Book of the Year.


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Coming Attractions  
 

Brand ManageCamp 2008—Fresh Thinking Starts Here


Now in its sixth year, the elite conference on branding is back with a completely new roster of fresh topics and speakers including Copernicus’ own Peter Krieg!  Brand ManageCamp has become THE place to be to generate the FRESH ideas your brands need to survive and thrive—especially in these turbulent times.

This year, at the Wynn in Las Vegas, you can experience the best and brightest minds in branding delivering the actionable insights and tools you need to do more with less, find your brand’s next big idea, enhance the customer experience, and tap your brand’s true potential.

As a special to our Mzine readers, we can offer you a discount of 20% when you register using promotional code bmc08coper8412.

Visit brandmanagecamp.com for registration and other conference information.

This is one occasion where what happens in Vegas will definitely not stay in Vegas.  Brand ManageCamp 2008—fresh thinking starts here. 

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Copernicus-Marketing Consulting and Research  
 

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Copernicus is in the business of transforming companies. We offer state-of-the-science consulting, research, and modeling tools to help clients develop, plan, and implement the kind of marketing strategies that change brand trajectories, career paths, even entire companies and industries. For more about Copernicus, visit our award-winning website, www.copernicusmarketing.com.