Marketing and Sales

Kimberly-Clark Program Targets Momtrepreneurs

2010-05-05T11:03:00.000-07:00

In an effort that both taps moms for new ideas and ensures some goodwill, diaper giant Huggies has launched a program that provides venture capital funding to entrepreneurial moms.

The site, called HuggiesMomInspired.com, launched last week. An open submission process for new business ideas kicks off this month. The outreach is part of parent company Kimberly-Clark’s efforts to further strengthen its relationship with its core consumers, many of whom are business-minded, social media-savvy moms.

K-C launched the program to address a perceived need in the market: Female-run businesses grew at a rate of nearly 23 percent—two times faster than businesses as a whole—according to a 2008 research report from the National Association of Women Business Owners. But women have a harder time securing funding for their startups—only 3 percent of all venture capital funds go to women, said K-C, citing Babson College research.

Under the program, K-C is awarding grants, up to $15,000 for a total first-year total contribution of $250,000. The former amount is an average sum compiled from talking to different women and learning their startup monetary needs, said Stephen Paljieg, senior director of growth and innovation.

“One mom said, ‘I need $15,000 to secure an attorney and file a patent on this idea. But I work and I’m losing sleep at night because the only place I can get it is in the money I’ve been saving up for my kids’ college fund. How do I cobble together capital to get to the next step, to get this a little further?’” he said.

The effort may be a first in the packaged-goods world. Procter & Gamble, for instance, has a program called Connect + Develop, in which it collaborates with “individual innovators, small- and medium-sized business partners [and] universities,” and other entrepreneurial entities on new ideas. Clorox’s Pine-Sol, on the other hand, gives out grants and scholarships to women who are making “a powerful difference in their homes or communities.” None, however, provide business funding to women, as K-C’s program does.

Tony Palmer, CMO for K-C, said the program taps into one of marketing’s core lessons, which is that “great ideas on innovation tend to come from the consumer.”

Said Palmer: “What we’ve learned over the years is that by opening up your mind to where ideas come from and truly getting close to your consumer and listening to them is the best way to innovate and come up with new ideas.”

K-C is promoting the campaign via ads and links on its Huggies homepage, as well as partnering with influencers like Maria Bailey, owner of BSM Media, a player in the “marketing to moms” space. Bailey will blog and tweet to get the word out. K-C, too, is tapping social media for the launch.

The effort comes as the Federal Trade Commission has cracked down on bloggers who accept money from advertisers without disclosing the relationship. Last month, for instance, the agency announced that it had investigated clothing retailer Ann Taylor for offering gift card prizes of between $50 to $500 to bloggers who attended its summer fashion preview event. (The FTC decided not to take action against the brand.) When asked if K-C’s program could be seen as a form of blog payola, Marti Barletta, founder of The TrendSight Group, a company that specializes in marketing to women, said there was nothing untoward about the company’s approach. “As far as this goes, companies have been incentivizing consumers for ages and ages and ages,” she said, adding that “this isn’t all that different from a sweepstakes or contest” offer except that it’s more impactful.

Nielsen: Facebook's Ads Work Pretty Well

2010-04-20T09:08:00.000-07:00

When Social Ads Collide With Stated Interests, Awareness Goes Up

It pays to have fans on Facebook if you want your ads to work there too, according to the first public study to come out of the collaboration of Nielsen Co. and Facebook.

Ads that included mentions of friends who were brand fans saw an increase in recall of 16%, and 30% when the ads coincided with a similar mention in users' news feeds.

The study of more than 800,000 Facebook users and ads from 14 brands in a variety of categories shows a marked increase in ad recall, awareness and purchase intent when home-page ads on the social network mention friends of users who've become fans of the brand in the ad.

The impact on awareness and recall is even more pronounced when a home-page ad coincides with what Facebook and Nielsen term "organic" social advocacy, i.e. an item in a user's news feed indicating a friend has become a fan of a brand.

In short, so-called earned media generated when people mention or advocate brands makes the paid media considerably more effective, according to the study. Nielsen and Facebook plan to discuss results of the study in a session at Ad:Tech in San Francisco on Tuesday.

Increased recall
Facebook-home-page ads on average generated a 10% increase in ad recall, a 4% increase in brand awareness and a 2% increase in purchase intent among users who saw them compared with a control group with similar demographics or characteristics who didn't.

But the increase in recall jumped to 16% when ads included mentions of friends who were brand fans, and 30% when the ads coincided with a similar mention in users' news feeds. Brand awareness saw similar bumps: up 2% from just a home-page ad, 8% with a "social ad" bearing mentions of friends who were brand fans and up 13% when a home-page ad appeared along with a mention of friends who were brand fans in the users' news feeds.

Purchase intent was 2% higher among viewers of home-page ads vs. nonviewers, but got a four-times-bigger bump, up 8% either from social ads or when ads appeared alongside organic mentions of the brand in the news feed.

Earned and paid media
One major takeaway from the research is that paid and earned media work together in ways that could have implications well beyond Facebook, said Jon Gibbs, VP-media analytics at Nielsen. "The market has been talking very much about how to buy paid media and earn earned media, but there's been very little attention to the types of hybrid impressions and hybrid experience that blends these two," Mr. Gibbs said.

While Facebook's social ads present a fairly unique way of blending the paid and earned impressions, Mr. Gibbs noted that it's not a totally isolated example. He cited rich-media vendors that allow for Twitter feeds, social commentary or other kinds of consumer input within their ads. But he said having specific friends linked to a brand, as Facebook does, appears to have more impact than just incorporating social commentary broadly.

The recall levels for home-page ads on Facebook appear "slightly higher than standard norms we've done on other projects," Mr. Gibbs said. "What we've seen in both social ads and organic [mentions] are much higher than we've seen in other campaigns along these lines."

Results 'unremarkable'
Rex Briggs, CEO of the analytics firm Marketing Evolution, which has conducted numerous online advertising effectiveness studies, called results for Facebook's regular home-page ads "unremarkable and in line with banner ads [generally]," but he added that the results for social ads and the impact of organic mentions make for "a really interesting story."

Nielsen appeared to employ a good methodology used since the first online ad effectiveness studies in the mid 1990s, Mr. Briggs said.

"It does what Facebook wanted to do, which is legitimize the advertising and business model of Facebook," he said. "What it doesn't do is give the cross-media understanding of how does this piece fit into overall marketing plans."

What Facebook also hasn't done, he said, is open its doors and data to a variety of research companies as others, such as Microsoft, Yahoo or AOL have done. That its internal data remain largely under wraps, and its template for creating fan pages remains relatively limited compared to what marketers can do with their own sites or other networks may also be limiting revenue for Facebook, he said.

Paid media cheaper
In all, Nielsen projects around 18 million Facebook users saw ads measured as part of the study, of which around a million also saw organic mentions of their friends in social ads. Roughly another million saw organic mentions of the brands featured in the study without seeing the ads.

Based on those numbers, it's still a lot easier -- if not necessarily cheaper -- to buy scale on Facebook than earn it by winning fans. It's also an indication to Mr. Gibbs that marketers need to focus on winning Facebook fans over the long haul if they want to improve their odds of success when advertising there.

Of the 18 million users exposed to the ads, only around 130,000, or less than 1%, "engaged" with them by clicking on them. But around 40,000, or around 4%, of users who saw organic mentions of their friends become brand fans clicked on those news items. The higher click-through on organic impressions is another indication of the power of earned media on Facebook, Mr. Gibbs said.

"I do think it requires a level of ongoing investment in social media," Mr. Gibbs said, as opposed to a series of short-term projects. He also said marketers who have large e-mail databases should probably be encouraging consumers in e-mail programs to join their Facebook pages.

Mr. Gibbs said he doesn't believe Facebook's plans to move from "become a fan" to the more click-prone "like" as a means of joining brand pages would have much impact on the numbers in the study. And he believes, though it wasn't part of the survey, that users by now have been exposed to enough of Facebook's social ads to realize that when they become fans of a brand, they may also become endorsers in that brand's Facebook ads.

The Nielsen BrandLift polls used to survey Facebook users was a "lightweight" poll, generally with only two questions, aimed at maximizing response rates.

Nielsen didn't incorporate actual purchases, as opposed to purchase intent, "because this is the first generation of this research," Mr. Gibbs said. "We wanted to stick to branding because it's language the market is very comfortable with. In next generations, I would assume we will start incorporating offline purchase and other transactional data as part of the analysis."

P&G Pushes Design in Brand-Building Strategy

2010-04-13T14:34:00.000-07:00

Greater Emphasis on Creative-Packaging Initiatives Follows Growing Importance of in-Store Marketing

As in-store marketing grows in importance and marketers focus more at winning over consumers at the shelf, one discipline is seeing its star rise: design.

No less a giant than Procter & Gamble Co. has incorporated design into its comprehensive brand-building function under the group headed by Global Brand-Building Officer Marc Pritchard. After initially carving design shops out of its new "Brand Agency Leader" model for managing and paying marketing-services shops, P&G now increasingly includes them in the system, in which lead creative agencies essentially function as general contractors over other marketing services shops.

A FRESH APPROACH: P&G Global Design Officer Phil Duncan sees the Febreze Home Collection (above) and Pantene's new line of products as an example of the sorts of design-intensive initiatives that are growing business.

The growing importance of the store has been central to Mr. Pritchard's "store back" concept, in which all marketing ideas need to prove their mettle by whether they work at the shelf. And bringing design into the brand-building organization is a key part of implementing that strategy.

A study last year by Nielsen Co.'s Bases unit found in-store marketing clearly beats TV as the leading medium creating awareness of new package goods in the U.S. and five other key developed markets. About half of consumers in Bases' survey cited in-store as their source of awareness of new products, vs. only a third citing TV. Peel the onion further, and it turns out of that half of consumers who became aware of products for the first time in store, 71% became aware simply by seeing them on the shelf. And what drives that shelf awareness is the package.

"We now are brand-building from the eyes of the consumer toward us," P&G Global Design Officer Phil Duncan said in an interview at the company's Cincinnati offices. "We've always believed the consumer should be boss, but we had an organization that was a little function-specific. ... By coming together as a real multifunctional team, I think we're already seeing bigger and better ideas."

Early gains
It's been less than a year since P&G incorporated design into the global brand-building organization, so the initiatives it's started to develop under the new system haven't hit stores yet.

But Mr. Duncan sees the Febreze Home Collection as an example of the sorts of design-intensive initiatives, with product, packaging and marketing seamlessly aligned, that the new order can help bring. Designers spent time in consumers' homes and boutiques, segmenting consumers by home-decor preferences and developing fragrance and decorative ranges for each segment that include battery-powered flameless luminaries with changeable scented shades, along with reed diffusers, scented candles and room spays. The initiative has helped P&G add two share points in air fresheners since launching last year.

Bigger ideas are critical, because designers at P&G and other package-goods companies are staring at two huge dilemmas these days.

First, even as in-store marketing becomes more important, big retailers have been putting more restrictions on it as they adopt or toughen "clean store" policies that restrict use of displays and point-of-purchase advertising. That makes the role of the package that much more important, but the second dilemma is that under the banner of sustainability, retailers and consumers are also pressuring marketers to make their packages smaller.

"It's a constant challenge," Mr. Duncan said, "but one that makes design so critical."

Big ideas
His solution to the problems is far more easily said than done: Come up with better ideas. When retailers see big ideas, they tend to give them more space, he said, so the challenge is coming up with big ideas that work in the store. "We're really asking our communications agencies," he said, "to vet [their] idea first in store, because that often can be the most challenging environment for us to communicate that idea."

The clean-store movement is one Mr. Duncan supports, because he believes "the pendulum had swung too far to everyone trying to break through, which meant nothing breaks through." Less-cluttered stores also mean the payoff for a big design idea that gets a green light from retailers can be all that much bigger, because shoppers see fewer competing marketing programs in the store.

Having more design impact with less space, less cost and less environmental impact is a classic "design thinking" challenge, Mr. Duncan said.

For Pantene, whose last restage didn't go over so well with consumers, a "design thinking" session was the start of the solution, Mr. Duncan said. Design thinking, which includes heavy doses of consumer co-creation and prototyping concepts, helped lead to a lineup hitting stores in June in the U.S. and early 2011 in Europe that will include 25% fewer items, considerably less packaging material and cost, and more prominently color-coded packages that delineate product ranges for different hair needs.

"We're paying attention, finally, to the things that matter to consumers, and stripping out the things that don't, as well as thinking about footprints across the franchise," Mr. Duncan said.

Herbal Essences
Five years ago, P&G began applying a similar "design thinking" approach to another hair-care brand in trouble: Herbal Essences. P&G took a team to its offsite Clay Street facility in Cincinnati's impoverished but architecturally rich Over-the-Rhine neighborhood for what Mr. Duncan calls "design thinking on steroids."

Pantene's new line of products

The result was the launch in 2006 of a dramatically different look and product lineup that ultimately made Herbal Essences a survivor in the battle with L'Oréal's Garnier Fructis and Unilever's then-upstart, now largely vanquished brand Sunsilk.

But design thinking isn't just about turning around hair-care brands. P&G is also applying it to a broad range of business issues. The decision to reorganize P&G's beauty care and grooming marketers along women's and men's lines rather than product category lines, for example, also culminated from a design-thinking session, Mr. Duncan said.

For just about any problem, design thinking now can be a solution at P&G, he said. So Mr. Duncan spends a lot of time in meetings looking for problems, specifically ones he believes a design-thinking session could help solve.

Mr. Duncan is perhaps the highest-level outsider that traditionally promote-from-within P&G has recruited, though he wasn't entirely an outsider. He started his career with P&G with four years in brand management before becoming a design executive for 13 years, ultimately with P&G shop Landor Associates, including a stint heading the Cincinnati office and the P&G account.

For design, he sees a lot of potential both for improving efficiency and breaking new ground in marketing.

So he's in the process of helping P&G winnow a large palette of package colors built up from years of product launches by 30% to 40%. And he sees opportunities for electronic inks and other digital and packaging technologies to create breakthroughs in in-store marketing, like displays where each package becomes a component in a big-screen presentation not unlike an electronic billboard.

"You always have to be looking at frontiers of innovation for ideas," he said. "It's kind of like haute-couture fashion. It's eventually going to come in. You may not recognize it in the same form, but it's going to be there."

Five ways P&G is using design

The traditional way: Package design remains the key to winning consumers at the shelf, what P&G calls "the first moment of truth."

CREATING NEW FRANCHISES AMONG BRANDS: To leverage its scale in countries where both Crest and Oral-B are established brands, notably the U.S., P&G is using design to forge a franchise linking products from both brands for beauty-focused consumers with the 3-D White line of products in toothpaste, toothbrushes, mouthwash and whitening strips. It has a similar Pro-Health franchise linking toothpaste, mouthwash and brushes for more health-focused consumers.

TO EXPAND BRANDS AND BUSINESS MODELS: Besides expanding the brands into service and retail, Mr. Clean Car Washes and Tide Dry Cleaners are also a design exercise, adding another dimension of retail space and experience to the brands.

TO TURN AROUND BRANDS: Design-thinking exercises -- and design revamps -- have been key to saving Herbal Essences from the brink of extinction at the retail shelf and, P&G hopes, will reverse share losses in recent years for its hair-care category leader Pantene, a $3 billion global brand.

TO SOLVE BUSINESS PROBLEMS: P&G has used "design thinking" exercises, which include lots of co-creation with consumers or other affected parties, to try solving a number of other business problems, including how to organize its beauty and grooming marketers. The result: P&G moved to reorganize along men's and women's lines as opposed to traditional category lines.

Pepsi Starts 'I Count' Hispanic Initiative

2010-03-30T08:51:00.000-07:00

NEW YORK (AdAge.com) -- PepsiCo is taking advantage of the 2010 Census with an initiative called "Yo Sumo" (Spanish for "I count") that encourages Hispanics to go beyond just being counted numerically and to share their experiences that have helped shape the American landscape. Working with Pepsi, actress Eva Longoria Parker will make a documentary based on the stories posted to the pepsiyosumo.com website set up by Pepsi.

Like the last Census a decade ago, the 2010 poll is expected to give a big boost to Hispanic advertising, as marketers are expected to be impressed by the sheer number of Hispanic consumers and how fast that market is growing.

"We felt the Hispanic consumer needs to go beyond simply being counted, and count," said Martha Bermudez, Pepsi's senior marketing manager, multicultural marketing. "Pepsi partnered with Eva Longoria Parker, who will direct and produce [the documentary]. We want to bring the stories to life in a creative and compelling film."

Ms. Longoria Parker has worked with Pepsi before, appearing in a Hispanic spot for brand Pepsi a few years ago, Ms. Bermudez said.

The "Yo Sumo" effort is being announced today, but a soft launch using social media is already drawing about 100 fans a day to its Facebook page, said Melisa Quiñoy, CEO of Dieste, Pepsi's Hispanic agency. Many of the fans have started posting their stories on the pepsiyosumo.com site, in a mix of Spanish, English and Spanglish, about growing up Hispanic in America, or arriving as young immigrants.

Actress Eva Longoria Parker, seen here in a previous Hispanic spot for Pepsi, will direct and produce the documentary.

Pepsi and Dieste are working with Telemundo, the No. 2 Spanish-language TV network owned by NBC Universal, and Telemundo's youth-oriented cable channel Mun2 and Telemundo.com site. Dieste has done a commercial for "Yo Sumo" featuring quick cuts of young Hispanics talking about being counted, with both English and Spanish-language voiceovers.

Ms. Bermudez said Telemundo will also be broadcasting integrations to drive awareness of Pepsi "Yo Sumo" and the stories that are being collected. For instance, Patricia de Leon, an actress in Telemundo telenovela "Perro Amor," will do a two-minute segment on Telemundo's daily entertainment show "Aceso Total" telling her story and talking about why she supports the "Yo Sumo" effort.

Another partner is Edoardo Chavarin, who started trendy Mexican T-shirt business NaCo and designed the Pepsi "Yo Sumo" T-shirt that is turning up in a growing number of Facebook pictures.

Is organic better? Making sense of organic choices

2010-03-29T13:51:00.001-07:00

Is organically grown food safer or more nutritious? Consumers should weigh the cost vs. benefits

Some consumers are more than willing to pay higher prices for organically grown food. But are organic strawberries worth the extra dollar?

The health benefits of organic food are one of the most intensely debated issues in the food industry. By definition, organically grown foods are produced without most conventional pesticides, fertilizers made with synthetic ingredients or sewage sludge. Livestock aren’t given antibiotics and growth hormones. And organic farmers emphasize renewable resources and conservation of soil and water.

The U.S. Department of Agriculture, which runs the National Organic Program, says that organic is a “production philosophy” and an organic label should does not imply that a product is superior. Moreover, some say there’s no need to eat organic to be healthy: Simply choose less processed food and more fruits and vegetables.

The crux of the argument often comes down to the nutritional benefits of organic foods, something that’s hard to measure. To compare the nutrient density between organically and conventionally grown grapes, for example, researchers would have to have matched pairs of fields, including using the same soil, the same irrigation system, the same level of nitrogen fertilizer and the same stage of ripeness at harvest, said Charles Benbrook, chief scientist at The Organic Center, a pro-organics research institution.

Last summer, the debate came to a head after the American Journal of Clinical Nutrition published a comprehensive systemic review that concluded organic and conventional food had comparable nutrient levels.

The outraged organic community criticized the study for not addressing pesticide residues, a major reason people choose organic. The study also did not address the impact of farming practices on the environment and personal health.

Maria Rodale, a third-generation advocate for organic farming, urges consumers to look beyond nutrition to the chemicals going into our soil, our food and our bodies. “What we do to our environment, we are also doing to ourselves,” said Rodale, chairwoman and CEO of Rodale Inc., which publishes health and wellness content.

Some experts also suggest consumers focus on the producers rather than the product itself. For example, Vicki Westerhoff, 54, owner of Genesis Growers in St. Anne, Ill., uses organic procedures but calls her food “natural” and “chemical-free” because she hasn’t gone through the expensive certification process.

Here’s a closer look at some of the factors that may influence your decision whether to buy organic products.

Fruits and vegetables

Farmers using conventional practices treat crops with pesticides that protect them from mold, insects and disease but can leave residues. Organic fruits and vegetables have fewer pesticide residues and lower nitrate levels than do conventional fruits and vegetables, according to a 2006 scientific summary report by the Institute of Food Technologists.

The bottom line: Experts say pesticide residues pose only a small health risk. But fetuses and children are more vulnerable to the effects of the synthetic chemicals, which are toxic to the brain and nervous system, said Dr. Philip Landrigan, director of the Children's Environmental Health Center at the Mount Sinai School of Medicine in New York City. The Environmental Working Group recommends buying organically grown peaches, apples, bell peppers, celery, nectarines, strawberries, cherries, kale, lettuce, imported grapes and pears because they are the most heavily sprayed. Onions, avocado, sweet corn and pineapple have some of the lowest levels of pesticides, according to the EWG's Shopper's Guide to Pesticides.

As for nutrition, one French study found that, in some cases, organic plant products have more minerals such as iron and magnesium and more antioxidant polyphenols. But although mounting evidence suggests that soil rich in organic matter produces more nutritious food, “we are never going to be able to say organic is always more nutrient dense; that’s going beyond the science,” said Benbrook of The Organic Center.

Dairy and meat
Organic dairy and meat products come from animals not treated with antibiotics or genetically engineered bovine growth hormones, which are used to stop the spread of disease and to boost milk production. Past rules on “access to pasture” were vague and didn’t require that the animals actually venture into it. But a new regulation requires that animals graze for a minimum of 120 days. In addition, 30 percent of their dietary needs must come from pasture.

The bottom line: The dairy cow’s diet is key. Organic milk has more vitamins, antioxidants, omega-3 fatty acids and conjugated linoleic acid because the cows eat high levels of fresh grass, clover pasture and grass clover silage. Research published in the British Journal of Nutrition found organic milk can improve the quality of breast milk and may protect young children against asthma and eczema.

Though the FDA says milk from cows treated with bovine growth hormone is safe and indistinguishable from other milk, consumers are spooked. Dean Foods, the nation’s largest dairy producer, no longer sells milk from those cows, and Krogers, Wal-mart, Costco, Starbucks, Dannon, Yoplait and several other companies have pledged not to use it.

As with dairy, organic meat has higher levels of omega-3’s because of the higher forage content in their diet. It also has lower fat overall than animals fed a high-corn diet, said Benbrook. Eating organic dairy or meat also can help with another issue: The use of antibiotics on farms has contributed to an increase in antibiotic-resistant genes in bacteria.

“Pushing animals to grow really fast has a cascade of effects on the environment and the health of the animal,” said Benbrook. “We need to back off the accelerator and focus on the health of the plant, the health of the animal, as well as the nutrient composition of the food.”

Cosmetics, personal care
Chemicals in personal care products have been linked to both environmental pollution and human health concerns. Of particular concern are phthalates, which have been linked to endocrine disruption. Environmental concerns also are rising about the tiny nanoparticles now being added to cosmetics, sunscreens and other products. Notably, organic personal care products can be labeled “organic” but still contain synthetic ingredients.

The bottom line: Of the 3,000 chemicals used in high volume in personal care products, only half have been put through basic toxicity testing, according to Landrigan. You may be paying more for “organic” products that aren’t actually organic; the USDA regulates organic personal care products only if they’re made of agricultural ingredients. Look for the USDA logo rather than the word “organic” on the label.

Processed foods
Many processed foods — pasta, candy, cookies, crackers, baby food — now come in organic versions. Products made from at least 95 percent organic ingredients can carry the “USDA Organic” seal if the remaining ingredients are approved for use in organic products. Products with at least 70 percent organic ingredients may label those on the ingredient list.

The bottom line: Processed organic food hasn’t been shown to be any more nutritious than processed conventional food.In conventionally processed products such as baby food, pesticides aren’t commonly detected because the processing steps “are quite effective in breaking down trace residues of pesticides,” said food toxicologist Carl Winter, director of the FoodSafe Program at the University of California at Davis and co-author of the Institute of Food Technologists scientific summary.

“Pesticides are rarely used on crops grown for baby foods since the ultimate appearance of the crop is less important due to the processing before the product is ultimately sold,” Winter said.

Some consumers may decide to choose organic because those products are not supposed to contain genetically modified organisms.

Cotton, coffee

Cotton and coffee are two of the most pesticide-intensive crops in the world. Pesticide residues have been detected in the cottonseed hull, a secondary crop sold as a food commodity. It’s estimated that as much as 65 percent of cotton production ends up in our food chain, whether directly through food or indirectly through the milk or meat of animals, according to a report by the Environmental Justice Foundation. Conventional coffee production also has contributed to the deforestation of the world’s rainforests.

The bottom line: Pesticide residues are generally removed during the processing but the chemicals can have a huge impact on the local land, biodiversity and the health of the workers involved. Though buying organic can help preserve environmental health and support farmers who use ecological methods, “it’s more important to focus on the circumstances of growers and farms versus the product itself,” said food writer Corby Kummer, the author of “The Joy of Coffee.”

U.S. drinks business seen perking up in 2010

2010-03-18T12:45:00.001-07:00

CHICAGO (Reuters) - The North American beverage sector has started to see some weak trends reverse, but pricey drinks are not likely to see the lofty growth that they had before the recession, an analyst said on Wednesday.

"Demand is getting less bad -- and what I mean by that is that the big categories are generally in decline, but rates of decline, particularly on the nonalcoholic side, are moderating," said Stifel Nicolaus analyst Mark Swartzberg during the Reuters Food and Agriculture Summit.

Higher-priced noncarbonated drinks, which were hit hard as the downturn pressured consumers, are now seeing some improvement, he said.

Snapple, for example, has returned to growth, Swartzberg said. Those iced tea and juice drinks made by Dr Pepper Snapple Group Inc (DPS.N) had suffered along with other drinks such as bottled water, as consumers sought out cheaper refreshment.

Energy drinks also returned to growth in late 2009, he said.

Still, Swartzberg said he does not expect to see rates of growth that such drinks experienced in 2006 through 2008.

Looking at potential deals, he said Molson Coors Brewing Co (TAP.N) would be "a great takeout candidate" and suggested it would be a natural fit for SABMiller PLC (SAB.L) to buy.

The U.S. beer category is poised to have a good second half of 2010, but much of that is due to its comparison with a weak second half of 2009. January shipments of higher-priced imported beers rose, suggesting there has been an inflection point in beers as well.

The biggest beneficiaries from a lift in imported beer sales would be Constellation Brands Inc (STZ.N) and Grupo Modelo (GMODELOC.MX), Swartzberg said.

Constellation and Modelo have a joint venture that distributes Modelo's Corona and other beers in the United States. Modelo sued Constellation in late 2009 over marketing at their venture.

Wendy's Floods Social Media Zones for NCAA Tourney

2010-03-16T15:05:00.001-07:00

Wendy's is attempting to insinuate itself into this year's NCAA Basketball Championships with a social media push designed to create real-life parties.

The fast feeder has worked with Kaplan Thaler Group for Facebook- and Twitter-based promos dangling gift cards for Boneless Wings to consumers who organize viewing parties over the social network. The Facebook effort, breaking today, gives 100 random $50 gift cards to such consumers.

On Twitter, the gift cards are awarded to those who have the funniest and quirkiest responses to various challenges. For instance, in the first week, Wendy's is asking consumers on Twitter to finish the statement "If taste buds could talk, they'd say: 'Boneless Wings (finish this from a quirky perspective)."

Wendy's is awarding three $50 gift certificates a day to the winners of the Twitter contest. Both promos conclude on April 4.

The effort will not receive any advertising support. Myles Kleeger, managing director of digital and experiential engagement at Kaplan Thaler, said he hopes the buzz will get around on its own. "We're really working hard to build up our community of users," he said.

Wendy's currently has about 321,000 fans on Facebook, and 2,818 followers on Twitter.

Starbucks Gets Its Business Brewing Again With Social Media

2010-02-23T11:04:00.000-08:00

CHICAGO (AdAge.com) -- Let's get this straight right away: Return on investment in social media is not measured in how many friends you have on Facebook or how many followers you have on Twitter. It's not calculated in trending topics or YouTube comments. It should, in fact, be held to the same criteria other marketing channels are: Did it move your business?

It's done just that at Starbucks, which is a digital marketer worth watching.

No one would have guessed at that turn of events during the chain's dark days of early 2008. Sales and traffic had begun to slip for the first time in its history as a public company. Founder Howard Schultz, returning to handle day-to-day management, even admitted that Starbucks had lost its soul. As part of Mr. Schultz's multifaceted turnaround plan, the chain launched MyStarbucksIdea.com in July 2008 as a forum for consumers to make suggestions, ask questions and, in some cases, vent their frustrations. The website now has 180,000 registered users. Some 80,000 ideas have been submitted, 50 of which have been implemented in-store.

Chris Bruzzo, Starbucks' VP-brand content and online, said amassing Starbucks' 5.7 million Facebook fans and 775,000 Twitter followers could be tougher for a dental-floss brand. "Maybe we have an unfair advantage because in so many ways Starbucks and the store experience is like the original social network," he said. Consumers "come in, hang out and talk to our store partners. They sort of got to know us as a brand in a very social way."

But he's quick to point out that Starbucks' advantage could easily have been squandered. "If we had approached it not from 'what you know and love about Starbucks' but as a marketing channel, we would have taken this down a path that would have been very different," he said. "This was not [built as a] marketing channel, but as a consumer relationship-building environment."

More important than the number of fans, however, is that the coffee chain is beginning to see sales lifts following social-media promotions.

Results
Starbucks posted its first U.S. same-store sales gain in two years for the last quarter during a time when the company relied on digital and social-media promotions instead of what had become an annual TV blitz. The chain partnered with Pandora to sponsor holiday playlists, staged a Facebook sing-a-long and leveraged its partnership with Project RED to drive traffic to a dedicated microsite -- and its stores, offering a free CD with a $15 purchase.

Mr. Bruzzo said that the company is benefitting from a trend "toward this intersection between digital and physical."

"We're seeing the beginning of that," he said. "The experiences you have online can translate to rich offline experiences."

The first time Mr. Bruzzo noticed this intersection was on Starbucks' "Free Pastry Day" last summer, when consumers could visit the company website or its Facebook page and download a voucher for a free pastry. Mr. Bruzzo, who visited multiple stores that day, said he was amazed at the number of people standing in line holding coupons they'd printed out. He said the impetus for free pastries was the volume of faithful online followers asking to be included on new products or other company news.

The secret to Starbucks' social-media success is, at least in part, the fact that it plays it cool. "It's not like we started our Facebook community, got to a million people and started pushing offers at them," he said. "We built up a community of people who enjoy engaging with our photo albums from our trip to Rwanda, who loved to have these shared moments around their favorite drinks." Then, fans started asking the company what was going on, and how they could be included.

'Straight scoop'
An added benefit of Starbucks' social-media progress has been the ability to quickly manage rumors that could have dogged the company for days. Last January, a story spread that Starbucks was donating its profits in Israel to fund the country's army -- even though Starbucks doesn't have any cafés in Israel. These days, Mr. Bruzzo said, when misinformation gets out, it's easier to nip it in the bud.

Chris Bruzzo, VP-brand content and online, Starbucks

Internally, it's called the "embassy strategy." Starbucks strives to make MyStarbucksIdea and its Facebook and Twitter pages places that "when you go there you know you're going to get the straight scoop," he said.

After ceding its usual first-to-market status to competitors, Starbucks launched two iPhone apps in September, one for general café purposes, with store locators, details about specific blends and nutrition information, and the other to support its loyalty card. Moving forward, Mr. Bruzzo said the company will be looking for ways that consumers can connect with each other from inside the apps.

In the meantime, Starbucks is testing functionality that allows loyalty-card holders to pay with their phones.

Starbucks' agencies are BBDO, PHD and Blast Radius.

Starbucks tweeter in chief

Unlike many marketers, Starbucks doesn't run its Twitter feed out of its PR department. The chain's voice on Twitter is Brad Nelson, 28, a former barista who rose through its IT ranks.

When the company was looking for ideas to re-engage with its core customer in 2008, Mr. Nelson suggested that he begin a Twitter handle for the brand, and it now has 775,000 followers. The brand relies on the 28-year old to translate the Starbucks experience for the online community, search out confused or disgruntled consumers, chat about store offerings and even crack jokes.

Chris Bruzzo, VP-brand, content and online, said that Starbucks was beginning to institute its turnaround plan in early 2008 when Mr. Nelson announced he was ready for something new and wanted to get involved in the chain's online efforts.

"I sent him away and said 'Fine, sure,'" Mr. Bruzzo said. But about two weeks later, Mr. Nelson gave him a presentation about Twitter and the opportunity to communicate directly with consumers as questions arise. Mr. Nelson sweetened his pitch by adding, "It's a lot like being a barista on the internet." Mr. Bruzzo recalls greenlighting the project, and after a period of working with Mr. Nelson, let him loose on Twitter.

Mr. Bruzzo gives credit to Mr. Nelson and his "willingness to take smart risks," but shares some of the kudos for Starbucks. "I guess you have to have a brand like this and an environment that's open to innovation and someone like Brad with the passion and personality."

Now Starbucks is finding more ways to use Mr. Nelson. He took a week-long cross-country drive last fall with comedienne Erin Foley and an Edelman entourage to help launch Via. The group made stops for a web series along the way, passing out product samples.

Top Consumer Goods Spending Trends

2009-12-19T06:18:00.001-08:00

Gloom or Boom?

While consumers around the world are more confident about the year ahead, Americans still seem relatively unconvinced there will be drastic improvement. And they have good reason to be leery. The “jobless” recovery—like government bailouts—hasn’t yet touched consumers. Banks remain skittish about extending credit. Home foreclosures will likely hit hard in the first quarter of 2010 as banks work through an incredible backlog. And smaller community banks with exposure to commercial loans will be acquired should they not have the reserves to cover the losses. While economic indicators point to a technical recovery, a fair number of looming issues have yet to be addressed.

With these mixed messages, what will the American consumer do? Nielsen research reveals that consumers’ fundamental spending adjustments are likely to last in the next year. Either by choice or necessity, their new-found thriftiness will continue. Almost one-third of consumers (30%) say that they will use credit less even when conditions improve with 19% saying that they intend to save more money.

Discretionary spending cutbacks continue to change the way consumers shop. Consumers now use coupons with an enthusiasm not seen in many years—for the first three quarters of 2009, Inmar reported that manufacturer coupon redemptions were up 26%. Food departments outperformed non-food, health and beauty and general merchandise departments as Americans returned to cooking and eating at home—boosting grocery channel shopping trips in the process. Store brands grew becoming an acceptable alternative—or even preferred brand—for many. Meanwhile, consumers “traded down” across categories, preferring chicken, turkey and pork to beef and seafood. While value channels such as supercenters, club and dollar stores, as well as online retailers, drove shopping trips to their stores, discretionary retail channels (home improvement, office supply and pet stores) saw declines.

Top Five Consumer Goods Spending Trends in 2010:

1. Restraint remains the new normal.
Americans’ confidence has been slower to rebound compared to other parts of the world. The need to save money, unemployment and other economic issues continue to be top of mind, suggesting that any return to past behavior may take some time—if at all.
2. Value is a top priority.
With no signs of readiness to open wallets, a focus on low prices at the expense of all other variables threatens margins. Value messaging must also include some point of differentiation beyond pricing. Manufacturers and retailers that “drive the recession wave” and take an active role in innovation and ad spending are likely to be the big winners.
3. Store brand growth continues.
Even with year-end 2009 softness in store brand dollar share growth as retailers cut prices across the store to be more competitive, unit share growth continues and retailer focus has never been stronger.
4. Grocery consolidation intensifies.
Local and regional players, unable to drive profits in the soft economy, will become acquisition targets and some larger national and regional grocers will divest unprofitable formats and banners to strengthen investments behind their winning formats and banners.
5. Assortment wars escalate.
Retailer efforts to simplify the consumer shopping experience by eliminating aisle and shelf clutter will cause market share land grabs for small and medium-sized brands in pursuit of elusive revenue growth. Retailers may lose sales as they shift away from in-store merchandising that drove impulse buying and built shopper baskets. Look for brands caught in the trap of greater store brand focus and assortment optimization to forge alliances with key retailers, enter or step-up efforts as store brand suppliers, and/or explore direct-to-consumer sales.

Sweet Harmony for Brands, Musicians

2009-12-09T18:12:00.001-08:00

The potential synergies between consumer brands and the music industry have never been more important to explore. With total ad spending down 15 percent in the first half of 2009 compared with the first half of 2008 and ad spending on music down 16 percent in the same period, it makes sense that an increasing number of marketers and musicians are interested in essentially doubling their promotional weight, both on- and offline. (Related: "2009: Trends in Music Branding.")

Here, three campaigns whose clever creative strategies have boosted the profiles of both the brands and artists:

COCA-COLA

For Coca-Cola, happiness is a five-note branding mnemonic turned into a song heard around the world. The effort, a collaboration with Atlantic Records for the cola's "Open happiness" campaign from Wieden + Kennedy, stars a genre-bending mix of artists: Cee-Lo Green; Fall Out Boy's Patrick Stump; Panic at the Disco's Brendon Urie; Gym Class Heroes' Travis McCoy; and Janelle Monae.

Producer Butch Walker and Green co-wrote the nearly four-minute track released in March (the mnemonic was written by Human) via MySpace-where it's been streamed more than 700,000 times -- and iTunes, where it reached No. 27 on the Pop Chart in the U.S. The song was used in ads that aired in 31 markets, with spots including eight customized versions with local artists (such as Leehom Wang in China, whose version reached No. 1 on the Top 100 chart of search engine Baidu.com). In July, a music video -- as stylistically fanciful as the animated "Happiness Factory" spots -- premiered on MTV. And the song is keeping its buzz on: so far, it has inspired more than 100 user-generated versions on YouTube, and this winter it will be heard at various venues at the Olympics in Vancouver.

"One thing [that 'Open happiness'] has proven to us is that music has the power to connect," said Coke's global music marketing manager Umut Ozaydinli at an Adweek and Billboard Music and Advertising Conference earlier this year.

According to Atlantic's svp of brand marketing, Camille Hackney, the collaboration -- orchestrated by companies including Brand Asset Group and Crush Music Media Management -- is helping to keep the artists top of mind as they each prep upcoming releases.

BLACKBERRY

In an eyebrow-raising switch of brand partners, U2 is working with BlackBerry to help promote its latest album, No Line on the Horizon. (For its last album and tour, 2004's How to Dismantle an Atomic Bomb, U2 partnered with Apple and released a special edition iPod and an exclusive historical digital catalog, as well as starred in an iPod/iTunes commercial touting its "Vertigo" single.)

BlackBerry's campaign, which touts the message "BlackBerry loves U2," includes exclusive sponsorship of the band's 360˚ tour and a 60-second spot from Arc that launched in July. Timed to the album's release and the tour's kickoff, the commercial featured a live performance of the band in a shower of glittery sparks playing "I'll Go Crazy if I Don't Go Crazy Tonight." In the fall, the deal's most innovative element was introduced: a BlackBerry app that includes songs, videos, pictures, a link to the U2 mobile shop and a news feed that sends users updates every time a band member posts to the U2 blog. A yet-to-be activated social-networking feature will allow concertgoers to mark their seats on a map of each venue, and locate and communicate with other fans at the shows.

"We're reinventing the album experience for the digital age," said Jeff McDowell, vp, global alliances at BlackBerry maker Research In Motion, at the time of the app's release.

CRYSTAL LIGHT

Atlantic Records' artist Estelle had a very good night at the Grammy's back in February. Not only did a Crystal Light spot launch during the show with an upbeat song she wrote and sang -- one of two spots featuring the song in a campaign from Ogilvy & Mather -- but she later won her first Grammy for the song "American Boy." (You can bet Kraft Foods, owner of Crystal Light, was pleased, too.) In the spot, Estelle belted out the upbeat "Star," which she wrote for the powdered drink mix. The commercial included a URL where visitors could download free copies of a full-length version of the song.

Within the first week on the Web site, said Doug Scott, president of Ogilvy Entertainment, it was downloaded 20,000 times. A month later, it was put up for sale on sites including iTunes and Amazon. Ten months after its debut, Atlantic said the brand-inspired song is being considered for inclusion on Estelle's next release, which is expected in mid-2010. The campaign, said Atlantic's Hackney, "was another platform to help build [Estelle] and her brand. We collaborated and got a fantastic song out of it. ... And you never know, we may make it into a single. We're still having those discussions.

P&G finds worldwide consumers share traits

2009-12-02T07:05:00.000-08:00

The Central American jungle country of Belize and the manicured neighborhoods of Loveland are thousands of miles and worlds apart, but not so different in at least one way.

"There's few universals, but cleanliness is one of them," says Andrew Manning, who has spent time in both jungles and kitchens as a cultural anthropologist working for Procter & Gamble, a company with a vested interest in cleanliness.

Manning, a Ph.D. in anthropology who has studied shaman rituals in Belize, now puts his insights into human behavior to use for P&G, figuring out why consumers do what they do. "The same skills I used in San Felipe, Belize, I've used in Loveland, Ohio, watching someone clean a floor," he says.

His anthropological learnings are used by P&G scientists, designers and marketers to make and sell products that consumers will buy. Manning recently summed up his job to a luncheon of the American Marketing Association's Cincinnati chapter: "I listen to consumers, and I use what they say to help create products."

Manning has wandered through the maze-like Hutong, winding, dense, urban neighborhoods in China, to figure out why Tide wasn't selling so well there. He learned that Tide's aggressive up-scale advertising needed a remake to play well in these neighborhoods, where a frugal lifestyle, slow pace and family-oriented social life dominate. The result: an about-face in P&G's Tide marketing in China and a bigger market share.

When P&G launched the Swiffer Wet Jet, the TV campaign featured a mom dancing her way through cleaning the floor with the new appliance and the tag- line, "Stop cleaning, start Swiffering." But when sales hit a plateau, Manning went to work in the kitchens of Madeira and Loveland analyzing housewives at work.

What he unearthed - "cleaning is serious business; we weren't conveying this," he says - led to a product redesign and a new campaign with the tagline, "Swiffer gives cleaning a whole new meaning."

The ad featured a comparison of how clean white socks fared on a mop-cleaned floor versus a Swiffered one. That touch was inspired by a Madeira housewife, who worried about the floor when her white sock-wearing mother came to visit.

"Every bit of that came from consumers," Manning says. "Right down to the socks."

What Does Black Friday Even Mean Anymore?

2009-11-26T07:33:00.000-08:00

"cyber monday" vs. "black friday" (Matching Twitter Posts per Day)

Key:

"cyber monday" (source: Matching Twitter Posts per Day)

"black friday" (source: Matching Twitter Posts per Day)

Dumenco's Trendrr Chart of the Week

As I was contemplating this edition of the Trendrr chart -- the weekly dose of social-media buzz-tracking that normally runs on Friday, but which we've moved up because of the Thanksgiving holiday -- I began to think about the very meaning of "Black Friday" circa 2009. It's always been a weird marketing construct -- as if consumers ever really cared that the day after Thanksgiving is a chance for retailers to clear the red ink from their ledgers and go into the black (though who knows how realistic that expectation is this year). And while the supposed joy of frenzied bargain-hunting still gets celebrated in the media (shots of bustling mall scenes will surely open local newscasts across the country Friday evening), the darker possibilities, like last year's gruesome Walmart stampede, remain an unsettling subtext.

Anyway, a few notes and observation about this week's chart:

This year, marketers have particularly diluted the meaning of Black Friday, given all the pre-Black Friday, and "better-than-Black-Friday" deals they've been plugging ad nauseam. "Black Friday" first started showing up as significant trending topic on Twitter last week, with 3,725 tweets on Thursday, Nov. 19.

On Monday of this week, there were 18,598 tweets mentioning "black friday." My informal review this morning of the 100 most recent "black friday" tweets showed a lot of consumers comparing rumors about deals, wondering how early they'd get up to go shopping, etc. But then there were also an annoying number of fly-by-night marketers plugging their own cheeseball "deals," and the occasional voice of dismay, like that of Twitterer Mark Downey (@macnamera): "Black Friday is for suckers and wild animals who are willing to body-check an old lady to the ground for a DVD player."
Twitter buzz about Cyber Monday hasn't even pushed past 2,000 tweets a day (as of yesterday), but guess who's doing really great right now in Twitter buzz? Yep, Amazon. I'm keeping an eye on Amazon, Walmart, Best Buy and other retailers getting frequent mentions on Twitter, and may follow up next week once all the dust settles to see if a direct correlation can be drawn between Twitter buzz and and reported sales.

In the meantime, Happy Thanksgiving!

Dumenco's Trendrr Chart of the Week is produced in collaboration with Wiredset, the New York digital agency behind Trendrr, a social- and digital-media tracking service. More background here. A basic Trendrr account is free; Trendrr Pro, which offers more robust tracking and reporting tools, comes in various paid flavors (get the details here).

Simon Dumenco is the "Media Guy" media columnist for Advertising Age. You can follow him on Twitter @simondumenco.

Domino's IT Staff Delivers Slick Site, Ordering System

2009-11-25T21:05:00.000-08:00

Pizza Chain Rolls Out Point-of-Sale System in U.S. Stores to Woo Customers, Streamline Online Orders

Steve Helmer doesn't order for pizza by phone anymore because, he says, "they're usually busy and not paying attention and they leave something out."

Instead, Mr. Helmer uses a build-your-own-pizza feature that Domino's Pizza Inc. last year rolled out on its Web site. Customers can watch a simulated photographic version of their pizza as they select a size, choose a sauce and add pepperoni, black olives and other toppings. The image changes as ingredients are added or removed.

The site also allows customers to track orders—with updates on when a pie enters the oven or leaves a store. Mr. Helmer, a sales representative for a telephone company in Beaver Dam, Wis., says he likes knowing the price before he's prompted to pay. "If I add something that's too expensive, I can just remove a topping," he says.

The pizza-building feature and order tracking are the flashiest parts of a complex new point-of-sale system installed at Domino's nearly 5,000 U.S. stores. The system also helps the company detect possible theft by matching orders better with cash deposited in store registers, maps delivery routes and makes employee scheduling more efficient.

The Ann Arbor, Mich., company says the new functions—which are designed to streamline both online and phone orders—have improved accuracy and increased repeat visits while boosting revenue and profit. Domino's says online orders now account for almost 20% of orders, up from less than 15% a year ago.

Domino's is locked in a market-share battle with competitors Pizza Hut and Papa John's International Inc. as they confront a pullback by consumers in dinner spending. Pizza Hut, a unit of Yum Brands Inc., and Papa John's also offer online ordering on their sites, but without the simulated pizza or tracking features Domino's offers.

Pizza Hut customers can use their iPhones and iPod touches to place orders, dragging and dropping toppings onto virtual pies. Papa John's customers can send text messages to order from their mobile devices.

Like any big technological shift, Domino's had to overcome early glitches and resistance from within. Some franchisees balked at paying $20,000 each to install the system, and they weren't happy when all the system's bells and whistles didn't work right initially.

"It became a real source of pushback," says Chris McGlothlin, Domino's chief information officer, who was hired in 2006 from Yum Brands to overhaul Domino's point-of-sale system. "We built a system by trying to do 1,000 things, but 500 of them didn't work. We had a real crisis of quality."

Among the early problems: One franchisee had organized delivery maps in a way that didn't work with other franchisees' maps. Another franchisee sorted his employee time sheets in a way that wasn't compatible with the rest of the system.

Mr. McGlothlin decided to pare back the system and focus on doing core tasks such as taking orders, scheduling workers and mapping delivery routes in a consistent fashion.

"We had to make sure the 20 basic things the system needed to do would work, so the first year all we focused on was getting those basic things working flawlessly," he says.

Tony Osani, who owns 16 Domino's restaurants in the Hunstville, Ala., area, had been using the same point-of-sale system for 10 years when the company mandated the switch. "It was hard for a lot of us to embrace," he says.

He has come around. Under his old system, employees had to punch in certain codes when taking phone orders, but now they see a touch screen with simple buttons to push. Online ordering, Mr. Osani says, has boosted overall orders and increased the average amount of each transaction.

Domino's, founded in 1960, is known for tinkering with its process for making and delivering its pizzas. It claims innovations such as the 'spoodle,' a tool for saucing pizzas, and the corrugated pizza box.

For the new ordering system, the company developed the software in house and used hardware from International Business Machines Corp. Domino's describes the system as a "multi-million dollar investment" but declines to say exactly how much it cost, including ongoing improvements.

The system's database contains addresses, phone numbers, maps and menu preferences for millions of customers. The company mines that data to encourage customers to order more frequently or add items to their orders. "We can look at someone who always orders cheesy bread and ask if they'd like to order some" when they order online, Mr. McGlothlin says.

Orders are zapped via computer to a person on the pizza assembly line. After the crust is rolled and toppings are in place, the employee assembling the pie hits a button on a computer screen that updates the system for the customer.

Each pizza takes about six minutes in the oven, after which the customer gets another update. When the delivery driver logs out of the system and leaves the shop, the customer knows the pie is on its way.

Marketers Hop on Augmented Reality Bandwagon to Promote 'Avatar'

2009-11-20T20:05:00.000-08:00

OS ANGELES (AdAge.com) -- Is augmented reality ready for prime-time? Twentieth Century Fox and a quartet of brands are about to test the emerging technology's mettle as a marketing tool to promote the Dec. 18 release of "Avatar," the first live-action movie to be produced and released entirely in stereoscopic 3-D.

On AVTR.com, consumers can utilize AR-enabled packaging created by Coke Zero that expands the 'Avatar' storyline.

Augmented reality, or AR, is a hologram-like technology that allows consumers to interact with 3-D images displayed on any monitor. (Think Princess Leia in the first "Star Wars" -- "Help us Obi-Wan, you're our only hope" -- you you'll get the idea.) In recent months a host of brands ranging from Lego toys to Topps trading cards to Toyota have experimented with AR. Now McDonald's and Coke Zero are joining the fold through a pair of marketing partnerships with Fox in support of the James Cameron-directed movie.

Fans and skeptics
Augmented reality has garnered more than its share of enthusiasm from early adopters and tech geeks, but its marketing value is yet to be determined. Is it a passing fad or truly useful in creating richer digital-marketing experiences? The jury is still out. A majority of consumers still don't have webcams, which are needed to play with AR on the PC. And many feel PC-based AR is less compelling than the mobile AR-based utilities that have started to unfold, but consumers need smartphones for that, and smartphone penetration in the marketplace is still small but growing steadily.

"Augmented reality has become a unique way for consumers to interact with an IP, and for us it's a way to extend the experience with the movie," said Rita Drucker, senior VP-film promotions at Fox. "Given that consumers are interacting with the interactive space in a much more aggressive way, we're looking at unique ways to engage that digitally."

Because much of "Avatar" is seen through the eyes of Jake Sully, a paraplegic war veteran who undergoes an AR-inspired program, called Avatar, the movie's marketing partnerships will expand that storyline.

Coke Zero's expansive program includes a commercial, airing on TV and in cinema, as well as a significant digital presence with AVTR.com. While the site was created in collaboration with Twentieth Century Fox and Lightstorm Entertainment, Coke Zero is running and producing the site, with minimal branding, where consumers can go to utilize AR-enabled packaging created by Coke Zero. There are 140 million cans and more than 30 million fridge packs, as well as bags, bottles, popcorn bags and fountain drink cups flooding the market, beginning this month. All are emblazoned with Coke Zero logos and utilize AR. Worldwide, Coca-Cola ads will be found in 86% of cinemas.

"We wanted to step outside our comfort zone. In putting together the movie marketing program, we looked at a number of different technology elements," said Chip York, director-worldwide entertainment marketing director, noting the program is rolling out in more than 30 countries. "Augmented reality is something a lot of companies are playing around with right now, and we haven't."

A first for many
Mr. York also said the technology should resonate with and create buzz among Coke Zero's target customer, 18- to 24-year-old males. But the brand is focused on keeping it simple, as it will likely be the first time many consumers are using the technology. Once consumers have downloaded an application from AVTR.com, they can simply hold up the can or bag to a webcam to get a virtual ride in a Samson Helicopter from the movie that Sully flies in. In some countries, primarily Asia, lobby displays in theaters will allow consumers to explore AR in theaters. A Coke Zero TV spot for the movie also demonstrates how the technology works.

McDonald's will be employing a similar approach with its campaign, which will kick off during the movie's Dec. 18 opening weekend. The global partnership will span everything from a special Happy Meal that will take kids to an "Avatar"-branded site that will be part of the fast feeder's McWorld virtual world to a young-adult-oriented Big Mac tie-in that will redirect consumers to McDonalds.com/Avatar. McDonald's will support the promotion with two general-market TV spots as well ads for the Hispanic and Asian-American markets, general-market and African-American print and radio ads.

All the marketing muscle behind a still-nascent trend among gamers and other web-savvy consumers seems like it will do more to enhance AR's profile than the movie it's marketing. As Razorfish's Garrick Shmidt recently wrote in an Ad Age DigitalNext post, "After the 'gee whiz' factor is exhausted, there's not really much there to sustain any real engagement. Besides, there's a vague whiff of 'Dungeons & Dragons' around this stuff that will be hard for most to get over."

Avatar Coke Zero can

Coke Zero's Mr. York added, "We're all going to experiment now, but [eventually] we're going to want to see some results. ... There's a rich opportunity to customize content, promotions and marketing. And by customizing messages and providing different messages, we'll be able to tie it into actual business results."

"Avatar" also marks a continued investment on Coke's part in movie marketing. While the Coca-Cola Co. claims music and sports as its primary areas of cultural focus, Coke Zero's focus is entertainment, film and gaming, Mr. York said. 2008's James Bond flick "Quantum of Solace," which Coke Zero marketed in more than 50 countries last year, was the company's first global movie sponsorship in almost 10 years.

Other domestic "Avatar" marketing partners include Panasonic, the film's technology partner LG, which will launch an "Avatar"-themed campaign for its new Projector Phone Dec. 11, and Mattel, which rolled out an "Avatar" line of action figures earlier this year.

Yahoo Rebrands Its Right Media Exchange as Premium

2009-11-17T16:56:00.000-08:00

NEW YORK (AdAge.com) -- Yahoo's latest brand overhaul? Taking its ad exchange up market.

Today the online portal will start to reposition Right Media Exchange to agencies and ad networks as a "premium exchange" in the hope that major advertisers will feel safe buying inventory. At the same time, it will try to shed a reputation that the trading platform is full of ad networks that are just dealing inventory back and forth in an arbitrage model.

The move is meant to capitalize on the new big-agency dollars moving into exchanges and improve the inventory and transparency in a marketplace that critics say has been that it's overrun with no-name ad networks and pools of inventory that buyers don't know enough about.

To make its move, Yahoo will start luring online publishers, such as Ziff Davis, to the exchange and kicking off any ad networks that aren't adding value in the form of overlaying data or advanced targeting.

"It's us making a statement: We're the oldest, largest ad exchange and it's time for us to go through a maturation stage where we go up market," said Bill Wise, senior VP-platforms at Yahoo. He thinks Right Media -- and the ad-exchange space, generally -- will transition much in the same way one of the web's earlier, auction-based marketplaces did: At first eBay used to sell whatever was sitting unused in people's basements, but today it's increasingly being used to sell major goods, such as cars or Pottery Barn furniture.

But instead of brokering vintage blenders or wingback chairs, an ad exchange deals in ad impressions. On one end of the market, publishers, ad networks and portals plug in their available inventory and on the other end the buyers, who are increasingly agencies and marketers (vs. other ad networks looking for cheap inventory), plug in the targeting information -- demographic, psychographic or behavioral -- and the price. Like in the search marketplace, an auction takes place to determine the winner.

New attention on exchanges
Agencies are focusing more attention on exchanges because they don't want to miss out on a burgeoning market, like when they initially missed out on search. It also allows marketers to be more precise in their targeting. Marketers for decades have used content as proxy for audiences -- soap operas, for example, represent 18- to 49-year-old women. "What an exchange does is let marketers go out and buy the exact audience they want," Mr. Wise said.

"Conceptually a lot of what we're doing is putting the techniques of search buying into the display world, with technology at the center and some sort of campaign and bid-management rules that directs transactions and optimizes the buys," said Matt Spiegel, CEO of Omnicom Media Group Digital. "To the extent an exchange can get me the stuff that people like me are likely to buy -- and provide service that helps me buy that -- great."

Yahoo wants some of that money and needs to assure the big buyers that its inventory is higher quality.

"Two years ago, [those buyers] didn't want to touch the exchange," Mr. Wise said. "And now they do. But if we don't evolve our exchange, then we'll lose that opportunity."

But Yahoo's move is also one of lead preservation. While the new world of display advertising looks a lot like search, there's one glaring exception: Google is the underdog and it's Yahoo's lead to lose.

Yahoo was the first big seller to get into exchanges, having bought Right Media, the oldest and largest ad exchange, in 2007. Not surprisingly, Yahoo's Right Media purchase was followed by an influx of VC money backing new exchanges, which are fast, efficient and trade in real time. More recently, Google introduced a revamped exchange that has access to all of its AdSense inventory as well as, potentially, DoubleClick clients. The DoubleClick AdExchange is a rebuild of DoubleClick's old exchange using Google's technology and the first big product launch out of the search giant's $3.1 billion acquisition of the company, completed in 2008.

"They're getting lapped a bit as everyone's moving to real-time bidding," said Mark Mannino, VP-supply and data at Media Math, which is a buying tool that has its own clients and is often licensed by agencies. "It's easier for these small companies to build anew -- that's the innovator's dilemma -- and Google's coming in with AdWords, which is theoretically huge in size and it's fully transparent, meaning I can pick each site I want to appear on."

To bring it up to par with its newer competitors, Right Media is beta testing real-time bidding, said Mr. Wise, and it's requiring all networks on the revamped exchange to share at least partial lists of which sites they work with.

Regardless of the changes, it's been hard to ignore Right Media because it offers so much Yahoo inventory. The portal is the exchange's biggest client and 100% of Yahoo's non-guaranteed business (inventory that's not pre-sold against a specific time and target to clients) is on the exchange, said Mr. Wise, who considers the Yahoo inventory to be a model of the "premium" impressions he's emphasizing on the exchange.

"At end of day, we want to work with more companies that look and feel like Yahoo," he said.

Could Microsoft Exit Media Business?

2009-11-09T18:03:00.001-08:00

NEW YORK (AdAge.com) -- Microsoft is, without a doubt, a giant in the world of online advertising, but lately it's been about assembling the platforms that power advertising -- both display and search -- rather than building the media properties that attract eyeballs in the first place.

Which begs the question: Does Microsoft need media anymore?

Last week the Redmond, Wash., giant pulled the wraps off a redesign of MSN, the first top-to-bottom remake in more than a decade. Like Yahoo five months earlier, MSN did away with the '90s-era clutter, adding white space and removing 50% of the links and all text ads. Also like Yahoo, MSN added Facebook, Twitter, Pandora and other social tools and services right into the home page. The hope here is that MSN can hang on to its slice of the market in a world increasingly owned by Facebook.

That won't be easy. In the past five years, Facebook has gone from nothing to dominating 11% of all time spent in the U.S. on the web, according to Nielsen. Meanwhile the big three portals -- MSN, Yahoo and AOL -- together account for just 17%, down from 25%. Though on a global basis, Microsoft sites -- including Microsoft.com, MSN and Bing.com -- account for 14.5% of all time spent on the internet, according to ComScore. That's quite a bit more than Google (9.3%), Yahoo (6.3%) or Facebook (5.1%).

Further, media itself continues to be a money-suck for Microsoft. The company doesn't break out MSN, but its online division, which includes MSN and Bing, lost $480 million in the last quarter on just $490 million revenue, marking 15 straight money-losing quarters. Chalk most of that up to investment in search, but online services is Microsoft's smallest division by a long shot, and accounted for just 4% of Microsoft's revenue.

So why do it? Well, CEO Steve Ballmer sees advertising -- search, display and the enabling technologies -- as an area of potential future growth, if it can beat back Google. But there's a more important reason: MSN has historically been a major distributor of Microsoft products and technologies, such as IE, Hotmail, Silverlight and Bing.

The importance of MSN
As the world moves to more cloud or web-based applications, a technology company must also be an audience company, making MSN even more important than when Microsoft was mostly selling shrink-wrapped boxes. MSN is key to building search and is Bing's second-biggest source of referrals (next to Internet Explorer).

"If you ask the people that work [at Microsoft] on operating systems and productivity suites, they will tell you they are a software development company moving into a web-based and cloud-based computing environment," said Joe Doran, former head of MSN and then all of Microsoft's advertising solutions. "The people at MSN and the portal think of themselves as a media company."

But that's not where the investment is going. Rather, it has gone to cobbling together systems buying aQuantive and with it ad server Atlas, ad network Drive PM and Avenue A/Razorfish. Separately, it bought ad exchange AdECN. It has spent billions on search, including the relaunch of Live Search as Bing.com earlier this year. Services like Hotmail and instant messaging, once branded MSN, are now Windows Live.

Just where does, then, that leave Microsoft's original vessels for advertising, its media properties? Former Microsoft ad chief Bill Shaughnessey, who left the company in March, said that while the emphasis has shifted, the importance of MSN to other Microsoft businesses hasn't.

"They have to maintain those assets to create bigger assets," he said. "MSN plays a very important role as an aggregator of traffic for our ability to monetize other assets like search, but no one is going to confuse Microsoft as world-beaters in content."

Others' content
Over the years, MSN was built from a confederation of websites and verticals, and investment in it has waxed and waned. Today, Microsoft has abandoned splashy content plays, and is taking a cheaper approach by distributing content from partners such as Delish, with Hearst, Fox Sports, MSNBC or Wonderwall, a celebrity news site produced by former Yahoo content chief Lloyd Braun.

Microsoft became as adept as anyone at playing a media company on TV; holding "upfronts" for advertisers, dazzling them with technology merging the PC and TV, and hiring a crack group of old-media veterans to sell the package in New York. Their current pitch is that they're a one-stop shop for web, mobile, video game and interactive TV advertising. In short, they're putting all the trimmings on a media play that isn't. But that doesn't mean they're not selling advertising.

"Microsoft has a fairly detailed and deep series of relationships with marketers and the companies that serve them," said Rob Norman, CEO of Group M Interaction.

Scott Moore, GM of MSN, said the company is in media to make it a business on its own, even if the endgame is to build other businesses. "We're not confused about profitability," he said. "On the search side of the business, there are only two companies investing, and one has 65% of the market. If you are in that kind of battle, you are not optimizing for short-term results, you are making a long-term play."

Changing definitions
For many, the definition of a "media company" has become "sells advertising." Increasingly, though, that inventory will be the free software and services that are ad-supported. In an ad-supported future, to be a technology company, in a sense, you have to be an advertising company. You also have to be an audience company to drive adoption of new services and technologies.

"The web is blurring and distorting all of these classical definitions; a company like Google is all about technology but 99% of its revenue comes from advertising," said Tim Cadogan, CEO of leading ad technology firm OpenX and the former senior VP-global advertising marketplaces at Yahoo.

Indeed, Microsoft.com is an enormous platform for the dissemination of Microsoft products and services, with more than twice the web traffic of Apple.com.

Microsoft also has a track record of investing in things for years, like gaming platform XBox, in hopes it will bear fruit. It is also more intertwined in the ad ecosystem than ever before. Want to buy an ad on Facebook? Microsoft is selling that. Doing business with Publicis? You'll probably get some Microsoft inventory, part of the $530 million sale of Razorfish to Publicis earlier this year.

So Microsoft still cares about media for now, Mr. Shaughnessy said. "But the underlying asset is based on building software at scale for the media industry -- that's the overriding approach."

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2009-11-09T17:40:00.001-08:00

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