Cause For Pause

Posted August 2, 2010 By s.applegate

It has been a long-standing and fairly widespread notion among marketers that the difficult economy impacting sales would reverse itself with a vengeance once pent-up demand was liberated. The new survey released in July by Deloitte and the Harrison Group contains data that indicates the demand pool may not exist or, at least not with the intensity that marketers hope.

While recessions drive obvious responses such as 61 percent of respondents reporting more price consciousness and 42 percent being more frugal and smarter, 65 percent agreed with the statement, “Even though I am spending less on products now, it doesn’t feel like I’m sacrificing that much.” If that’s not enough, 79 percent identified with the statement, “I feel a lot smarter now about the way I shop vs. two years ago.” Some appear to thrive on the challenge of saving as evidenced by 81 percent of the respondents agreeing that “It’s fun to see how much money I can save by using coupons or my shopper loyalty card.”

When consumers feel this way, it dashes positive anticipation that shoppers will return to unrestrained spending habits once the economic recovery deems it is safe to do so. 44 percent of consumers in this survey agreed that “I can’t believe how wasteful I used to be when I shopped.”

Consumer attitudes toward private-label brands show that they don’t feel they’re settling for less by spending less since one third identified with the statement, “I often feel that I am sacrificing when I purchase a store brand instead of a national brand.” The economy hasn’t made people indifferent to brands but it has made them more discriminating as evidenced by the fact that seventy-five percent of those surveyed agreed that “Going through these economic times has caused me to realize which brands I care about and which ones are less important to me.”

Rather than waiting for pent-up demand to break free, it’s a great time for marketers to objectively assess their overall position in terms of the competitive landscape, brand positioning, loyalty programs and promotional offers to optimally place themselves for the more economically prosperous days that we all hope lie ahead.

For more information or help realigning your strategy and tactics, contact Applegate Media Group at 887.515.5557 or info@applegatemediagroup.com.

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Business Travel ROI

Posted August 1, 2010 By s.applegate

As companies feel greater pressure to grow the bottom line, an obvious cost-cutting measure is to reduce or eliminate business travel. Recent data released by Oxford Economics, US Travel Association and BEA show this could be a short-sighted tactic.

According to the February 2009 survey of 400 corporate executives, 51 percent report that their organization has decreased the amount of business travel in recent months and of those who made cuts, have reduced their budgets by an average of 35 percent. Sounds like smart business moves until you look deeper at some of the respondent level data and econometric modeling to see that the key research findings reveal quite the contrary:

- Curbing business travel can reduce a company’s profits for years. The average business in the US would forfeit 17 percent of its profits in the first year of eliminating business travel. It would take more than three years for profits to recover.

- Econometric analysis and surveyed executives confirmed a similar magnitude of business travel ROI: for every dollar invested in business travel companies realize $12.50 in incremental revenue.

- Corporate executives confirmed what business travelers asserted: 28 percent of their business would be lost without in-person meetings.

- Both executives and business travelers estimate that roughly 40 percent of their prospective customers are converted to new customers with an in-person meeting compared to 16 percent without such a meeting.

From a competitive standpoint, this has significant implications. Three-quarters of all businesses believe that increasing travel, while competitors are reducing it, can build market share and customer relationships. Roughly half or, 53 percent say reducing business travel will give their competition an advantage.

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Who is Blogging?

Posted August 1, 2010 By s.applegate

According to the Sysomos report that examined more than 120 million blog posts, 53.3 percent if all bloggers is between the ages of 21-35. While the data is self-reported, we believe it is directionally accurate given the extraordinarily high number of data points.

Sysomos also found that the number of men and women is relatively equal with men at 49.1 percent and women making up 50.9 percent of total bloggers.

The country with the greatest share of bloggers is the US with a 29.22 percent share followed by the UK at 6.75 percent and Japan at 4.88 percent. California has the most bloggers (14.1%), and New York is number two with 7.2%. So what do you think? Do we have too much free time on our hands in the US or are we just incredibly resourceful?

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E-Newsletter Advertising

Posted July 1, 2010 By s.applegate

Sending out your own e-mail newsletters and promotions can be highly effective, but it’s not the only form of e-mail marketing. Advertising in other companies’ e-newsletters should be a part of the overall online media strategy. Advantages of e-newsletter advertising are:

1. Engaged and qualified audience

Your customers and prospects rely on e-newsletters as an information source. Your ads in e-newsletters put you in front of an audience who is looking to learn about products and services like your own with a potential intent to purchase.

2. New leads

Advertising in other companies’ e-newsletters exposes your company to a target audience who may not be customers or prospects already.

3. Connection with a well-known publishing brand

E-newsletter advertising provides an opportunity to build credibility through a relationship with a respected information source.

4. Increases your own e-mail subscriber database

E-newsletter ads can be used to collect e-mail addresses of new prospects, and grow your own in-house list.

5. Delivers hard-to-reach prospects

E-newsletters that are targeted to specific industries allow you to connect with hard-to-reach prospects or gain visibility in new markets.

6. Ability to segment

Some publishers allow segmentations of their subscriber lists, sending specific content to certain groups. This would enable you to personalize your advertising message to different groups within the subscriber list.

7. High delivery and open rate

Electronic newsletters land your advertising message right in your prospect’s email inbox. Your customers sign up to receive e-newsletters, so your message is received in a welcome context. Since subscribers accept emails from the publisher, there is less likelihood of email bouncing or ending up in a spam filter.

8. Measurable ROI

Because e-newsletters are subscription-based, publishers are able to measure their performance. They are not only able to measure the open rate, but also see who opened the email and who clicked on your ad. To boost your click-through rate, consider offering something of value – a discount, free shipping, case studies, webinars, etc.

9. Save money, resources and time

An e-newsletter advertising campaign increases your visibility to potential customers without the need for time-consuming list maintenance and content creation. Ads are quick, easy and less costly to create.

Contact Applegate Media Group at 887.515.5557 or info@applegatemediagroup.com to put together a targeted e-newsletter campaign for your business.

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Product Placement Basics

Posted July 1, 2010 By s.applegate

Product placement is a promotional tactic where a real commercial product is used in fictional or non-fictional media to increase consumer interest in the product. There are three ways product placement can occur:

1. It simply happens.

2. It’s arranged, and a certain amount of the product serves as compensation.

3. It’s arranged and there is financial compensation for placement or integration.

The goals of product placements are:

- Image recognition – make the product known.

- Functionality – placement should be implemented in a way that shows what the product does and how it can be used.

- Emotional attachment – the use of a product should illicit a positive emotional response from the audience.

Food, cleaning and beauty products as well as electronics generally do well with product placements. Beauty products, apparel, small electronics and cars are often the best product placement performers because they are purchased for social validation.

The most common types of product placement are:

Product placement in movies

If done correctly, product placement in movies can actually add the sense of reality to a movie that the use of non-branded product simply can not achieve. The best examples of product placement are seamlessly woven into the narrative. Two of the now-famous product placements are Ray-Ban sunglasses in Risky Business and America Online in You’ve Got Mail. The most successful product placements include a tie-in advertising campaign linking the product with the film and announcing the association before the movie’s release. On the other hand, poor use of product placement can seem forced and obvious, detract from the credibility and quality of the experience, and compromise the integrity of the story.

Product placement on TV

Product placement is not as widespread on TV as it is in the movies, but it is a rapidly growing industry. More commonly referred to as “product integration” in this medium, this process has to share its advertising space with traditional advertising unit — the 30-second spot. On American Idol, product placement is renewed year after year by AT&T Wireless, Coca-Cola and Ford. Unconfirmed compensation to American Idol by each of the three companies is said to be around $26 million.

In-game product placement

Gamers are an extremely attractive advertising target. They have above-average household incomes. Game consoles are becoming “digital hubs” in the living room, resulting in greater advertising exposure for all members of the household. Finally, gamers respond positively to product placement. In one study, 70% of gamers considered product placement a positive feature that added to the reality of the game. Studies have also shown that short-term recall rate of brand names in video games is upwards of 40%, with sports games taking the lead with a 54% brand recall rate. This makes video game product placement one of the most effective ways to create consumer awareness. Product placement in video games can range in degree of interactivity. Game streetscapes can contain billboards with advertisements for products. Products can also be woven into the story of a game.

Reverse product placement

While traditional product placement refers to integrating a real brand into a fictional environment, reverse product placement refers to creating a fictional brand in a fictional environment and then releasing it into the real world. In an early example of reverse product placement, the restaurant chain Bubba Gump Shrimp Co. was brought to life through its association with the film Forrest Gump. In this example, fictional product was so popular with viewers that a company decided to create a real-life version. Reverse product placement can also be used to generate buzz about a product before its launch. American Apparel launched a line of jeans in the virtual world Second Life several months before launching them in its real-world stores. Since it is often much less expensive to release a fictional product than to manufacture an actual product, reverse product placement can be used to gauge the public’s interest in a proposed new product.

One of the most important advantages of product placement as an advertising tactic is that it can not be bypassed because it is integrated into the media. Products have already found their way into movies, television, video games, music and books, but with digital technology continuing to skyrocket in both form and function, there’s a seemingly endless stream of new and innovative ways to put products in front of potential consumers.

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New Technique: Transpromo Marketing

Posted July 1, 2010 By s.applegate

While bill ads have been around for a while, in general they have not been targeted based on actual transaction history. Cardlytics, the company behind this new program officially launched last November, has done just that.

How does the program work? When bank customers sign in to view their online statement, they see reward offers in three different places:

1) Alongside transactions

2) In a column on the transaction page, or

3) On a rewards-summary page.

An offer is activated once the customer actually clicks on it. Following activation, when the customer uses the credit or debit card with the featured merchant, the reward is then processed by the bank. Rewards can be applied to transactions made online or offline, and no special software or interaction is needed by merchants.

The program makes use of a pay-per-performance model, so Cardlytics is paid only when consumers redeem the offers. Costs vary based on the client category and the specific offer type. Average campaign activation rates are 15%, but have been as high as 45%. According to Cardlytics, advertisers, consumers and banks alike have embraced the new concept, and so far, major marketers such are McDonald’s, Macy’s and Staples have signed up. The company has implemented more than 100 marketing campaigns reaching nearly half a million customers to date. By the end of the summer, they expect to have 50 to 70 financial institutions on board, which will enable it to reach 10 million customers.

McDonald’s ran a 6-week test campaign in their Houston region encompassing 140 stores. The 10% cash back offer appeared in transaction statements alongside McDonald’s purchases as well as purchases made at competing chains. Of those who had not been to McDonald’s in the last three months, but who had visited a competitor, 19% converted the McDonald’s offer. The heaviest fast food consumers, those that spent over $75 on fast food over the three month period, converted McDonald’s offer at a rate of 60%.

Privacy concerns are not an issue because while Cardlytics is privy to transaction data (name of the merchant, transaction date, amount spent and customer’s zip code), it does not have access to customer names, account numbers or home addresses. That information is managed by participating banks, and it stays behind the bank’s firewall. In fact, Cardlytics argues that their ad model is less intrusive than many behavioral-targeting tactics because it doesn’t cookie customers or follow them online. The lack of negative reaction from the consumers is evidenced by low opt out rates – less than 5%, which is about two-thirds less than the 12% – 15% the company was modeled for.

Transactional promotions or transpromo marketing is one of the most effective channels for customer retention strategies and loyalty programs, providing numerous up and cross sell opportunities. Its top advantages are:

1. Precise targeting capabilities

2. High response rates

3. Pay-for-performance model

4. Turnkey set-up

5. No creative fees

6. Fast implementation

One disadvantage of transpromo marketing is a potential of enticing and rewarding customers to make purchases that would have been made regardless of the offer.

What are your thoughts on transpromo marketing? Are you ready to embrace it?

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Most Popular Location-based Social Networks

Posted July 1, 2010 By s.applegate

Gartner defines location-based services (LBS) as services that use information about the location of mobile devices, derived from cellular networks, Wi-Fi access points or via satellite links to receivers in (or connected to) the handsets themselves. Examples are services that enable friends to find each other, parents to locate their children, mapping and navigation.

Location-based services may be offered by mobile network carriers or other providers. They are also known as location-aware services. Some of the most popular ones are as follows:

Foursquare
Most recently released data cites 1.2 million users. A significant number of local businesses are participants, with PepsiCo as one of the largest advertisers. Read our April article for more details on Foursquare.

BrightKite
Founded in 2005, BrightKite launched its first big brand program in May this year for Starbucks. The program involves Starbucks-branded badges. Featuring a Facebook-like friend feed, users can upload pictures and comments about where they are and what’s going on. They can log in, check in and let their friends know what they’re doing. BrightKite has 1.5 million users.

MyTown
This monopoly-like game lets users buy real estate by checking in to real-life locations. The service, which has 2.3 million users since its launch in December of 2009, has worked with brands such are H&M, Travel Channel, Olay and Microsoft Windows.

Loopt
Loopt’s community is built on three principles – Connect, Share, and Explore. Loopt turns a mobile phone into a compass. Installing the application allows a map on the phone to be populated with user’s friends’ locations and spots they’ve visited. Loopt has 3.5 million users and is soon expecting to launch a service for retailers who can use the app for loyalty-reward programs.

GyPSii
GyPSii is a location-based network that allows users to upload photos, videos and other information about themselves and then geo-locate this information. Geo- locating is when a user, for example, takes a photo of an ice cream stand, uploads the photo to GyPSii’s service and then adds the GPS location to it. Once everything is tagged and loaded, GyPSii pushes the image out to other users with a location on an online map that lets friends see where the user is and how to find the spot from the photo. GyPSii has over 2 million users.

Gowalla
The service has 250,000 users and focuses on travel. National Geographic and Washington Post have signed up to offer unique content.

GateGuru
A navigational app for airports, it rewards users for checking in to terminals and rating businesses. Since it launched in December of 2009, 125,000 users have signed up. In June, JetBlue will launch a program to reward frequent travelers and point leaders with airline freebies like plane tickets and vouchers.

Citysense
Citysense is a location-based social network of a different kind. Rather than having a friend feed, Citysense populates a map based on the location where people are transmitting a cell phone signal from. Without the need to log-in, users can see where their friends are congregating and instantly get information about what’s happening at a local hot spot. Currently, only BlackBerry users can take advantage of the service, but an iPhone application isn’t far behind. Citysense is available in the city of San Francisco for alpha testing, and will eventually roll out to major metropolitan areas in the US and abroad.

According to Gartner, the rapid increase in LBS users is due to the greater availability of GPS phones, reduced prices and abundance of app stores. What do you think? What is your favorite location-based social network and why?

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CMO Priority Punch List

Posted June 1, 2010 By s.applegate

Based on the study conducted by Jupiter Research and Verse Group, marketers believe that the current economic crisis is accelerating their need to find new ways to position their brands across multiple delivery platforms. This represents a challenge because 89% of marketers say their marketing efforts are under greater executive scrutiny due to the suffering economy.

To meet these priorities, marketers should:

  1. Quantify and measure the value of marketing programs and investments. Set clear performance targets and measurement methods and employ marketing mix models that link programs to targeted customer behaviors and corporate performance.      
  2. Build an integrated and complete view of their customers and prospects and take time to truly understand them. This includes developing a dedicated marketing database with complete customer interaction history, supplemental data indicating future behavior, as well as demographic and psychographic data. Using this data to flush out clusters drastically improves the success of marketing campaigns.
  3. Anticipate customer needs. Stay ahead of the curve on trends and developments that are shaping customer choices and make an extra effort to collaborate with customers. One way to do this is by monitoring and engaging in blogging and other social media.
  4. Add value to marketing messages. One estimate puts the number of marketing messages a typical US consumer sees per day at 3-5,000. As a result, customers are tuning marketing communications out and demanding control over who can market to them.
  5. Move beyond “spray and pray” marketing. Replace the same message sent to all customers and the same media delivering the message with customized media plans and messages tailored to different customer segments.
  6. Implement centralized rules but decentralize decision-making. This entails developing broad rules centrally for universal use at touchpoints with customers and interpreting them locally using all contextual information available. The touchpoint, the local context, how the rules were adapted and the results are fed back to the center for analysis and rule evolution. The whole model continuously evolves as the environment in which it operates changes.

 

With the current economic turmoil and explosion in marketing touchpoints – many of which are outside of a marketers’ control – studying the current structure of the organization, the strength of their marketing assets and the behavior of their customers is becoming increasingly more important.

What are your organization’s top marketing priorities this year? Share your challenges and we’ll share potential solutions.

 

 

 

 

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Ad Spending Signals Recovery

Posted June 1, 2010 By s.applegate

According to the study just released by Kantar Media, U.S. media spending grew 5.1% in Q1 of 2010 compared to the same period last year. Spot TV benefited the most, advancing 22% as advertisers were buying time they had not locked down in last summer’s upfront buying season. Significant increase was also recorded for national radio, part of an overall rebound that halted radio’s three-year decline, Sunday newspaper supplements, newspaper inserts, and network TV, which benefited from the Winter Olympics.

Not all media enjoyed the revenue increase as the spending was down for syndicated TV, magazines, local newspapers and out-of-home.

Among major ad categories, automotive increased its spending the most, with manufacturers increasing by 20% and dealers by 16%. Among the top advertisers, Pfizer had the biggest increase – a whopping 46%.

Overall, the numbers from the study show a conservative, but steady growth as companies gauge consumer confidence levels and focus on fine-tuning their ad messages. In the coming months, we expect the growth to continue or intensify. We also expect an expansion in cross-media ad campaigns and the need to measure their performance more effectively, emergence of new mobile ad models to take advantage of rise in popularity of smartphones, and an increase in commercialization of social networking sites.

What are your expectations for the rest of the year and how can we help you meet them? Reply to this post, call us at 887.515.5557 or email at info@applegatemediagroup.com.

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New Trend: Augmented Reality

Posted June 1, 2010 By s.applegate

Unlike virtual reality, augmented reality does not create a simulation of reality. Instead, it takes a real object or space as the foundation and incorporates technologies that add contextual data to deepen a person’s understanding of the subject. For example, by superimposing imaging data from an MRI onto a patient’s body, augmented reality can help a surgeon pinpoint a tumor that needs to be removed. In this case, the technology used might include headgear worn by the surgeon combined with a computer interface that maps data to the person lying on the operating table.

When it comes to consumer use, emerging augmented reality applications are based on two approaches:

1. Printed codes – Users hold up a specially coded printed sheet in front of a webcam or video camera and a computer monitor. The code is translated and a holographic 3D image, that can be rotated and manipulated, is displayed.

2. Mobile devices – Users hold up their smart device to view a physical environment – a park, a city street, or a subway station. Multiple layers of information are overlaid on the phone’s screen – the available real estate, nearby bars and restaurants, etc.

There are dozens of video examples of how companies have used augmented reality for different applications – automotive, military, medicine, industrial, etc. We chose three that show how it can be applied in advertising.

 

Example #1: Papa John’s (click here to activate video)

By placing a code on their pizza box, Papa John’s has integrated their online and offline advertising strategies. The code takes customers on an “augmented reality road trip”, allowing users to drive a 1972 Camaro. Papa John’s offers and promos are seen alongside the road throughout the ride.

 

Example #2: GE (click here to activate video)

General Electric uses augmented reality to let users experience the power of their smart grid technology. The digital hologram brings the smart grid concept to life.

 

Example #3: Layar (click here to activate video)

Layar uses a cell phone camera and GPS capabilities to gather information about the surrounding area. It then shows information about restaurants or other sites in the area by overlaying them on the phone’s screen. When the phone is pointed at a building, Layar can show if any companies in that building are hiring or locate the building’s history on Wikipedia. Originally available in the Netherlands only, Layar is now also available to US Verizon customers who own Droid phones.

There are similar applications available for use on other smart phones. The Yelp app, for example, has an augmented-reality component called Monocle. It is activated when iPhone 3GS users start up their Yelp app and shake their phone three times. Monocle uses iPhone’s GPS and compass to display information, including distances, ratings and reviews, about local restaurants.

 

Limitations and Future Implications

Augmented reality is an emerging technology and as such, faces challenges that need to be overcome in order to achieve wider use. Some of the challenges/limitations are:

- Many augmented reality projects rely on specific or customized hardware and the mechanisms that correlate data added by technology with the real world are often technically complex. Despite the overall decrease in hardware costs, augmented reality projects can be expensive to develop and maintain.

- GPS is only accurate to within 30 feet and doesn’t work as well indoors. Developers are working to improve image recognition technology, which may be able to help.

- Cell phone screens may be too small for people to rely on. For that reason, augmented-reality enabled contact lenses and glasses will provide users with more convenient, expansive views of the world around them.

- Information overload and an overreliance on augmented reality could cause people to miss out on what’s right in front of them. Some people may prefer to use their augmented reality smart phone applications rather than an experienced tour guide, even though a tour guide may be able to offer a level of interaction, an experience and a personal touch unavailable in a computer program. Also, there are times when a real sign on a building is preferable to a virtual one, which would be accessible only by people with certain technologies.

- As with many web applications lately, there are privacy concerns. Image-recognition augmented reality applications will allow us to point our phones at total strangers and instantly see information from their Facebook, Twitter, LinkedIn or other online profiles. Although people willingly put information about themselves online, it could be unpleasant to meet someone and have them instantly know so much about our life and background.

Despite the limitations and challenges, augmented reality will change the way we perceive and experience the world around us. As it relates to advertising industry, augmented reality’s evolving functionality will create even more powerful opportunities to integrate print and digital campaigns, support point of purchase sales, and introduce innovative product placement ideas.

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