They would be selling the only part of the business with a potential long term future. There may (or may not) be a future in retailing books, but there surely is not one in retailing CDs and DVDs. As planned purchasing migrates online (where its easier, cheaper and there's a bigger range in stock), then the remaining opportunity is for impulse purchases. I still buy books, for example, in railway stations and airports. But books have built-in functionality that HMV's products do not. There's an HMV at the airport, but what is the point of buying a CD when I've no way, while in transit, to get it onto my iPod; or a DVD, when my netbook doesn't have a DVD drive. Far easier to simply download something (and cheaper, too).
We may eventually do most of our reading on Kindles (who knows), but even if we do, we'll still be able to pick up a book out of convenience. No such future awaits the CD. It may make sense, in the short term, to sell Waterstones - given Waterstones poor performance and HMV's losses. But you wouldn't want to be left with a stake in HMV.
When I worked for Britvic, the Tango brand director (who I have to thank for hiring me in to my first real job), bought all the tabloid papers each day, in an effort to know what the brand's consumers were seeing, reading and talking about. For a while in the 90s I attempted similar discipline to the internet - visiting the "big" sites that would otherwise be out of my repertoire, as an act of professional diligence. Futile, obviously. (When vinyl records were invented my grandfather decided to amass a complete set of all the 78s published - he had to abandon that plan quite quickly too).
It is no longer possible to attempt to see through others' eyes. The biggest websites each deliver a combination of search and social, so we all see them differently. (The top 10 by hits are Google, Facebook, Youtube, Yahoo, Live, Blogspot, Baidu, Wikipedia, Twitter and QQ. You are forgiven for not knowing Baidu or QQ if you don't speak Chinese). Content led sites don't feature very highly - and I suspect our choices, at that level, are as fragmented as ever (the BBC is #41, livejasmin is #44 - take your pick).
This is part of a general trend of cultural and social fragmentation. I sat today on the tube next to a guy little more than half my age, as we both listened to our mp3s. I take a little pride in my music taste, but I suspect my age is beginning to show. Mine may be the most ear-bleeding trendy guitar based music in town but, as Decca observed with much foresight when they turned down the Beatles in 1962, "guitar groups are on the way out". My neighbour was listening to Tinie Tempah, for all I know.
Aside from being an obvious problem for media planning, this is a seismic issue for brands that have made themselves "relevant" to consumers by simply mimicking the consumer's perceived interests: "You like XXXXX, so do we!" If consumers aren't into the same things, just what should a mass market brand align to? The few big unifying consumer interests (such as major sports) are not very differentiating. And in many spheres there's little to unify consumers at all. (As far as I understand, the unifying theme of fashion these last few months has been nothing more complex than "socks".)
Affinity marketing was always lazy - the "in thing" is surely an overpriced way to reach the audience. Winning brands have the confidence to carve their own groove. The trick is doing so in ways that consumers are drawn towards.
Announcement today of the launch of "Everything Everywhere" branded stores - the joint name of the company which owns Orange and T-mobile. Isn't brand architecture a nightmare?
The rationale behind the new brand (until now it has existed as company name, more than as consumer offer) - rather than either maintaining two completely "separate" consumer brands or consolidating into just one is, presumably, that the company is trying to have its cake and eat it. By aligning the brands they hope to, over time, streamline the marketing spend, but by keeping both product brands alive they hope to continue to occupy two places in the consumer's consideration, not just one. There's a real risk that, under one brand, their market share simply couldn't be sustained. We can dismiss the company's claimed rationale, as explained by CEO Tom Alexander last year:
"What I wanted was a company name that did not distract or confuse from two very strong brands"
This doesn't ring true. T-mobile has nowhere near as much real equity as Orange, and anyway, now they'll have to invest in, build and sustain three brands. But who's to say, this strategy might work: there are certainly no hard and fast rules in brand architecture. Still, it remains to be seen how easily the "Everything Everywhere" brand can establish a distinct meaning. As Alexander himself has observed:
"We are going through this revolutionary step in the marketplace where people are getting iPhones, getting Google devices and we have Microsoft's Phone 7 coming into the market soon. It's not just about voice and text. It's about everything else you can do on a mobile phone. People are even talking about apps down the pub"
Quite. I find restaurants using an Urbanspoon app, with Google maps, on an Apple phone, via O2 networks. Do I really have the mental bandwidth for another brand in the mix? It will be interesting to see what they do after the 6 month trial...
Update 09:31 February 15
On Friday Nokia and Microsoft finally announced their anticipated collaboration. Makes a lot of sense. As the key competency set for mobile moves decisively from hardware to software, European manufacturers look suddenly exposed. Nokia's handset market share remains at 30%+, but Apple, with just 4% of the market is making 50% of the profit. Nokia is working hard for little return. It's a good fit: Microsoft is hardly the cutting edge of Silicon Valley, but Windows 7 is their best received platform for many years and anyway, both Apple and Google have begun to take on some of the same negative perceptions of corporate monoliths. So it adds real strength to Nokia's offer. And for Microsoft it pretty much guarantees them some market share which, until now, they've been unable to capture. Crucially, there wasn't an alternative solution for Nokia that made this much sense. The smartphone war is about to get exciting: Apple-iPhone vs RIM-Blackberry vs Samsung/Google-Android vs Nokia/Microsoft-Windows. Place your bets!
Rowse Honey's newly launched marketing activity has a lot going for it. They asked their own staff to write and film potential TV ads which are now online (facebook.com/rowsehoney), and they're asking people to vote on their favourite. It's a really nice demonstration of employee engagement - they've clearly managed to infuse their whole workforce with the joy of marketing. And what comes across is that they are a small, family centred company - quite an attractive, yet subtle, positioning for honey. Not bad, for their first ever piece of TV advertising.
There are at least three respects, though, in which it could go much further:
1) The awareness driving kicked off with a TVC about the potential TVCs - that's quite an investment in airtime when the whole thing could instead be given a chance to bubble up through social media. And in some ways a glossy launch TVC slightly undermines the "hand-made" credentials. If this is representative of the media plan as a whole (we'll soon see) then it's probably still too "conventional".
3) It takes time and effort to engage consumers in dialogue. By and large, we want that dialogue to be about our product/ service. By and large consumers want to talk about their own lives and interests. So alarm bells should ring when we come up with ideas to talk to consumers about advertising. How much better would this campaign be if these were employees' films about bees, or about flowers? Then people could talk about their own gardens, or photos from their holidays. "Happy bees make the best honey. Send us a photo of your favourite flowers and we'll make posters for our bees to enjoy"...
How often do communication campaigns really deliver ROI? I'd wager it's less often than most of us like to admit. A big splash of media will certainly drive brand awareness, but that's rarely the objective.
The new Co-operative Food ad is beautifully constructed, well executed and quite witty - with a refreshing, respectful tone of voice. But does the proposition stack up? Any parent will recognise the horror of the "weekly shop" - so it clearly addresses a need, but is the Co-op really a credible solution? The proposition is: "Only buy what you want, when you want it. Great food within easy reach". But to me the ad simply cries out "online shopping!", one thing the Co-op doesn't offer. Do busy families really have the time to "save time" by shopping more often? I can't see whose behaviour would actually change as a result of seeing this campaign.
There are some technical problems too. By tapping in to a real issue the campaign has the potential to generate dialogue. What would you do with the time you could save? (Remember Pantene's Swish mistake.) It should be well set up for social media... but there doesn't appear to be any - I couldn't even find a Facebook page. One problem is the ad lacks any signposting. There's an on screen url (rather faint and only visible for 4 seconds), but it redirects to the homepage not even a campaign landing page. And the proposition doesn't provide any good keywords (sadly, the brand name itself is not much good as a keyword either) from which to search likely social content. Sure enough, embedded in the website is the option to "tell us what you'd do if you could save time". But I wonder how many people will visit. A Facebook App could have gone a long way... Top 10 ways to spend Saturday morning... Vote on how your friends should spend more free time...
I'm a fan of what Co-op offers, and of it's recent marketing: it's done a fantastic job of revitalising it's image (from Londis to M&S). It's absolutely right to set the sights, next, on taking share off Tesco et al. But the brief for this campaign was probably flawed from the start.
What about Holland and Barrett's "Buy one get one half price" campaign? The problem for H&B is almost certainly footfall/consideration. The vast majority of us simply walk past the door. An ad offering a discount on "anything" and "everything" is little incentive unless you know a bit about the product range.
This kind of promotion is pretty expensive to run, so it simply has to deliver. The money "saved" by recycling last year's creative (and indeed the effort "saved" by recycling last year's mechanic), must be justified against that. I'm very unconvinced. A few years ago H&B was telling consumers to "come in for the price, stay for the advice". That may not have been effective ("advice" may not be their USP), but at least it laddered a benefit.
H&B reported a strong December (like for like sales +2.3% when, as we know, the economy in general was going backwards). Why have they had to revert, so soon to this campaign (which has already been extended into February)? Holland and Barrett has a long, rich history but with ownership having passed from a cash and carry to a pharmacist to a supplement manufacturer to a private equity group over the last 20 years, it is hardly surprising they appear to have forgotten what their proposition is.
And without a good proposition, no campaign will succeed in doing much more than (temporarily) increasing awareness levels.
2) Consumers are squeezing brands and retailers viciously by demanding deals and discounts.
Next's figures (a reasonable barometer of the High St) are down, blaming both "extreme weather conditions and increased competitor discounting". But its the discounting - not the snow - we have to worry about, for that's where the pressure on margins lies. The snow may come and go, but in a cut throat retail environment, with so many companies in weak positions, the discounting is sure to go on.
The move to online is the obvious root cause of HMV's woes. This is the sharp end - how much future is there, really, in high street music and video selling? Will shutting 60 stores really save their business? Does a 20% drop in share price adequately reflect the possibility of the company collapsing?
Online shopping on Christmas day itself is predicted to have reached £153m in the UK - and been a more popular pastime than attending a Christmas church service. That's where we're at, people. (A very effective piece of PR for IMRG).
So first priorities for 2011:
1) Make sure your brands' online presence is right. Invest some time reviewing Search Engine performance - and doing something to improve it. And ensure your online retail distribution is sufficiently broad.
2) Think - hard - about how to compete in a perpetually discounted world. How can you offer discounts without undermining your brand? (because simply refusing to discount is probably suicidal). And how do you demonstrate and justify the added value that will make consumers buy the premium variant when low cost alternatives exist? Time to shine a bright light on brand architecture - so often the darkest recess of marketing strategy.
At the end of 2009 I suggested terror, technology, celebrity and debt as a 4 word summary of the preceding decade.
What's the word for 2010? Strong candidates would be disclosure or openness.
The Wikileaks cables are one example of the power of technology to change how information works - and crucially to give us all access to more of it.
Another is the ongoing evolution of social media. I've been to a couple of gigs recently (trying, in vain, to regain my youth), and been amused by quite how many people are taking photos - many of which are promptly uploaded to Facebook or Flickr. Go online and it is very easy to find popular reviews and feedback from events that took place just hours ago, as well as stuff in anticipation of events that are coming up. Event promoters - like politicians - are no longer in control of the flow of information.
This kind of disclosure isn't going to go away. If the US government cannot shut down whistleblowers, then brands certainly can't. Courageous brands are already adopting openness as a virtue. I think the next couple of years will enforce it on us all. (And, in the end, good thing too.)
While watching Have I Got News For You last week, I noticed that the BBC has decided to display a hashtag (#bbcHIGNFY) as the show opens. Shortly after, I spotted Question Time sporting one too (#bbcqt). I was intrigued - do the twitterati really watch Question Time? And if so, what do they say about it? So I flicked open the Twitter App on my phone. As it happened, a particularly unctuous hedge fund manager called Hugh Hendry was on the show's panel, and a lot of the #bbcqt tweeting was directed at him:
callummccrae1: Hugh Hendry is a wanker that is all. #bbcqt markjepson: On a serious note, Hugh Hendry is an obnoxious cretin. #bbcqt
The twitterers had a point, but that's by the by. What struck me was how this totally changes the viewing experience. A passive 'slumped in front of...' moment becomes an active social one. Suddenly we're all sharing a vast virtual sofa, muttering our asides to each other.
For the time being it's rather cumbersome - and not everyone has a smartphone anyway. But one or two iterations and this stuff will be scrolling right across the screen - if we want it to. Some classifications of TV are more ripe for commentating than others - sport, soaps and reality shows are obvious contenders. And while we probably don't want to hear the whole world's commentary on our favourite movie, we may welcome contributions from our friends, so the Facebook hybrid of this will be interesting. A thousand strangers can add nothing to my enjoyment of Withnail & I, but if a friend writes "#withnail @alex - you perfumed ponce" on my wall? ... ROFLMAO
Ad breaks, let's face it, have always been fair game, so we need to work out how brands should react when ads are dissected live ("that stuff's crap"). And what about exploiting the new forum by integrating hashtags inside the campaign through an interactive creative idea? Carlton Draught in Australia has added a hashtag under the brand logo at the end of the ad, to some effect. But what about incorporating the hashtag, or some tweets, into the concept of the ad itself? You don't have to know what one of these campaigns looks like to know they exist. Write the brief.
Of course, in-programme (and indeed in-match) tweeting isn't new. What's new is merely that I have caught on. But if I've got it, then the rest of the population can't be far behind.
The Economist this week has an article on the impact of the economic crisis on consumer goods purchases. It quotes PwC and McKinsey evidence that consumers have significantly changed their behaviour - such as by buying own-label products, by buying less, or conversely by buying bulk, or even by deciding that some things aren't as essential as they used to seem. (Air freshener, anyone?) Well, you heard it here first - six months ago, but the data goes to reinforce the point.
93% of shoppers say they have changed their behaviour as a result of the economic downturn. (PwC)
18% of packaged-goods buyers switched from a premium brand to a cheaper one during the recession, with most saying they found that the pricier brand “was not worth the money”. (McKinsey)
Even more alarming are some of the comments by the Economist's readers:
TomNightingale wrote: Oct 14th 2010 12:18 GMT
The price differences between branded goods and own brand are mainly spent on advertising, Advertising does not create value, it consumes valuable resources and returns little, if anything. The value of a brand is largely its ability to persuade people to pay a higher price than they need to to buy a product, Advertising and brands allow parasites to take good livings at the expense of others. If the recent/current economic woes leave advertisers and "branding experts" in difficulties we should all rejoice. We don't need them; they make us all worse off.
pasam wrote: Oct 14th 2010 12:47 GMT
If the recession leads to a "Needs based Society" than the present (or past?) "Advertisement Induced Society", then that is a "silver lining". Let the "shine" of parasitic advertisement be ignored and let the chemistry of needs take over.
It's not as though we haven't heard these anti-brand views before, and they aren't very well informed - they take no account of the role of brands in delivering innovation, consistency, reassurance, confidence or convenience, for example. (But then I would say that, I'm a parasitic "branding expert".) However, they do have a compelling basic thrust: products which only sustain their premium through advertising are in a precarious position.
The conclusion we must draw from recent consumer research (both quali and quanti - pretty consistent on this matter for months now) is that long term success means delivering a premium-justifying benefit. It can still be emotional - reward, status and so on - rather than rational - taste, quality, features - but it must exist. Large swathes of supermarket aisles are still filled with brands that don't truly offer a benefit. What's worse, I fear some brand managers haven't realised that the rules are changing, or have deluded themselves that their own brand has a "real" distinctiveness when all it actually has is residual market share supported by media share of voice and retail share of shelf. Wake up!
The Chile mine rescue was a perfectly formed moment of global media. Respect due to Oakley for spotting the opportunity for a bit of product placement. As Oakley's press release explained it:
The rescue team in Chile is relying on Oakley eyewear to protect the miners’ eyes when they are brought back to the surface... Based on their requirements and full product specifications, Oakley donated 35 pairs of Oakley Radar® with Black Iridium® lenses in Path™ and Range® lens shapes
A good deed... and with it the certainty of appearing on every TV set in the world (33 times!), as well as a chance to convey their scientific credentials. I was in New York this week, and witnessed coverage of Oakley in both the US and UK - and no doubt there was coverage elsewhere round the world too.
Crucially, the mine rescue was perfect PR fodder: compelling, but with no hint of exploitation. Oakley don't seem to have invited any backlash by getting involved. In a poll on The Huffington Post, 90% of respondents thought it was a good thing for Oakley to have done. Smart stuff. I want some.
alex@tomorrowam
tomorrowam.co.uk
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