Several weeks ago, I spent the entire day at Macy’s. Not shopping – department stores scare me a little – but attending a conference on Interactive Retailing. The keynote speaker was Mindy Grossman, the CEO of HSN. I say, “HSN” rather than “Home Shopping Network” because one of the modernizing changes she has made is updating the name – kind of like KFC, but with less to hide.
I found this change in name particularly interesting because in 2002, I did quite a bit of work with HSN. I was one of two marketing leads in Hearst Magazines’ Brand Development Group, i.e., licensed products. Products ranging from Marie Claire fashion to Good Housekeeping cookery to Cosmo hair accessories and Country Living quilts were frequently featured on HSN and QVC. Seeking to find a fit between the HSN brand and the Marie Claire flair was tricky, so I coined the phrase “Hot Styles Now!”
Coined the catch phrase: “There’s No Place Like HSN.”
Eliminated $100 billion in product.
- I’d like to know how she selected which product to eliminate. Rationalizing a product line is a valuable and tricky endeavor. You want to upgrade your brand, but you don’t want to alienate your core audience.
- Did she use the BCG matrix – identifying stars, cash cows, problem children and dogs based on market share and growth? Was there qualitative and quantitative research involved? Did she, like Showtime, define the unique look, feel and personality of HSN and then pick products that supported it and simply felt right? Did she segment her target market? I certainly hope and imagine she did. I think that market segmentation is perhaps the most important element of marketing strategy.
- I’d also like to know what led to the transformation. How, as I alluded above, did she evaluate where she was and where she wanted to go? Was it an upfront strategy or more of an incremental evolution?
The end goal and end result was a transition to a lifestyle network.
- That is big. I sounds like she identified the core of her brand and her audience and expanded from a retail channel to an entertainment/transaction vehicle. Very interesting.
HSN added culinary programming noting that the appetite for this kind of programming has not been sated.
Cute choice of words: appetite for culinary things has not been sated… Also quite a statement. Even with a 24/7 Food Network and Food Network spinoff (Scripps re-purposing of “Fine Living).
- In fact, even with food content on Bravo, TLC, the Travel Network, A&E, ABC Family Channel, BBC America, Discovery, Fox Reality, MTV, Style Network, AMC, FX Network, MSNBC, TV Land, Hallmark Channel, Lifetime and Lifetime Movie, Oxygen, SoapNet, WEtv, Comedy Central and Spike TV (phew!), there is still an unsated appetite. In any case, HSN feels that this appetite has not been sated – perhaps, like chocolate, having food content just makes us all want even more – so, “she is going after that.”
Mindy started her talk with some key Internet data points:
- Oh, how I love data…
Here they are:
Peer reviews are the #2 source of content/activity after search
30 billion videos viewed each month, ___% on YouTube [darn, missed the # and will have to look it up]
When a person has a DVR, 40-60% of viewing is time shifted
- By the way, I spoke with a physicist working on the Hadron Collider, and he broke the news to me that time shifting is not the fourth dimension. It has to do with the Speed x Time = Distance equation. Oh well.
The web is becoming more sociable than searchable
- Nice alliteration
Facebook had 400 MM users in February of 2010
- Yup, it’s more than that now.
4 of 5 Internet users visited social networking site
11% of time online is on social networks
eBay is experimenting with outlets
- I didn’t know that. I’ll need to search on it when I get a sec.
Online gaming is growing in popularity – 65% of households game! More than 40% of those who game are women. A lot [missed the number] are over the age of 50. 57% are earning or spending virtual currency daily.
- Wow and whoah. 57%! On virtual currency! Take in for a moment that companies like Zynga have figured out a way to turn online value into money! This is worth taking a pause to digest. I’m glad that I’m working on a social gaming speaking event. It’s hot, hot, hot!
The leaders in social mobile networking activity are 35-46 years old.
- Kids, by the way, are pretty much satisfied with Facebook when it comes to social networking.
- Oops – speaking of food content, it’s time for lunch. Gotta run.
- Good news is that Mindy’s people have invited me to do an audio interview, so if you have any questions you’d like me to ask, send ‘em on over!
Yesterday, I shared with you some thoughts about measuring payback on ad spending. Thoughts that I am collecting as part of a specific inquiry. Today, I jumped to a later chapter in my analysis for a little diversity and thought therefore, that I would go ahead and begin a fresh post:
Let’s jump ahead for a moment to the big picture. What is it my inquirer wants to know? In sum, she wants to get a handle on the dynamics of the ad market as it transitions from print to digital. She would like to understand why people are moving, why people are staying and how the different users of advertising as well as their intermediaries think about print vs. digital from both the intangible, e.g., business need/presence, and the tangible, e.g., better bang for the buck for banner ad, ability to market to a certain demographic.
The question presents itself to me therefore, which came first the tangible or the intangible? Personally, I think it was the intangible with the tangible playing a part in terms of low risk from a cost point of view. When a client asks me whether marketing dollars should be moved online or to specific new platforms, my reasoning is seldom led by efficiencies. True, the efficiencies are there, and I touted them heartily when writing a business plan for Campfire. (Remind me to share some.) But the reasons advertisers should, have and are going digital include the following:
#1 Your consumers, your customers, your audience is going online. You need to be where they are. As Rishad Tobaccowala once said, “I don’t know whether you are behind your competitors, but I know you are behind your consumers.”
Even if your audience is not quite there yet, I’d rather be there when they arrive than try to find them once I get there. It’s kind of like a party. Fashionably late is not as fashionable when you’re trying to make a good impression and get a jump start. Few marketers and brands are on foursquare. In fact, foursquare has only 750,000 people on it (albeit a 4-fold increase in the last few weeks). But those who were there first – Bravo, Intel, Zagat — have already made an impression, gotten the press and gotten an advantage.
So, number one, you need to be where your peeps are.
Moreover, you need to be where the puck is going, not where it is now. You may still have a critical mass of your core market watching tv, but what about tomorrow’s market? What about the young mothers who are going online for advice and community, spending more time consuming media on their laptops or mobile devices with less time to spend watching daytime soap operas – to the extent that they still exist? You need to get to know these women in their formative, digital years.
#2 Digital media allows for all kinds of targeting. Not just demographic but behavioral, social, key word, contextual and, eventually (once I understand it), semantic. Moreover, let’s think about the word demographic. With geo-location technology, it’s possible to target at the GPS-level. I mean, I mean, in the not too distant future – if not today – a marketer will actually be able to, finally, really, know that I am leaving my yoga studio and walking by the bakery. Good time for a shout out, no?
So digital targeting is not just specific and flexible, but it’s dynamic. With current prevalent print technology, an advertiser knows that I read “Elle” magazine, but does he know whether I, personally, also read “Wired?” Does he know what I do before and after I read my magazine? At what point do I go ahead and purchase the item advertised in the magazine? Not easily.
With the current geo-location analytics technology, a marketer will be able to know what my literal path to purchase is. He’ll know that I go from my house to work, to lunch to the subway to the gym to the grocery store. Now, how he uses that is a new question, but the fact that this kind of information is available is fantastic.
So, to review, the reasons to spend on digital media include:
(1) that’s where you’re consumers are
(2) there are incredible opportunities with respect to targeting and intelligence
#3 Why Not? Why waste the opportunity? If you are advertising offline, why not continue the conversation digitally. The incremental cost is probably not too big in the scheme of the campaign. It extends the impression – both in time and depth – and it offers an opportunity to capture information. It’s a move from one-to-many to one-to-one. “Thanks for coming to my party, now tell me more about yourself.”
Now that I have brought up this third reason, I’d like to go back to part of the original question, i.e., why are some people staying and some people going, and what is the dynamic of the market as it transitions from print to digital. Well, at the risk of getting touchy-feely, this third reason suggests that an advertiser extend his or her buy by adding a digital element. These platforms can and should work together. Is digital cannibalizing analog, or is it possible that the whole will be bigger than the pieces, yielding a bigger payout and thus additional dollars to fund the whole campaign. Well, that’s high math (and cost accounting) but certainly something to think about.
A colleague of mine asked me to provide some bullet points that she could incorporate into a note she is writing on my behalf. I wrote something quite mature and professional and then let loose with the following. I think it’s actually quite appropriate and simply need someone to post it on my behalf on LinkedIn. Or maybe not… In any case, here’s what I’ve written this exceedingly warm afternoon:
Karen is the most impressive, coolest, prettiest, nicest, most generous, incredible person I know. Her mind works in ways that others can’t fathom. She is selfless and makes those around her feel like they are walking on sunshine. Any client she works with experiences immediate dramatic revenue growth. I have considered moving my practice to NYC just so that we could work together more often. She is also a proposal writing machine.
In addition, Karen is the best house guest you could imagine. I have thought about getting a second home on the East Coast just so that she could visit me more often.
And most important, dogs love her. When she looks at them, their fur immediately becomes soft and smooth and straight as if it had been brushed for hours, and their teeth become minty clean and bright.
This blog is about advertising returns, in particular gauging the efficacy of different types of advertising campaigns. It was inspired by the questions asked me by a client seeking to understand how retailers and advertising agencies view payback on ad investment through different advertising vehicles.
We began with catalogs. Now catalogs are typically considered to be a “lower funnel” or direct advertising tool. While a well-done catalog can positively impact brand perception and equity and can stimulate upper funnel results such as awareness, interest and desire, most catalogs are judged on tangible results.
What then are the tangible results we are looking for? A smart marketer will begin his or her campaign with that question, rather than measuring them after the fact. In direct marketing, these are referred to as Key Performance Indicators, or KPIs. In the case of a retail catalog, these KPIs will reflect specific desirable consumer actions such as: making a purchase, visiting a website, returning a business reply mailer, signing up for a mailing list. Most enticing, of course, is sales volume.
How then, do we link consumer activity to a particular catalog mailing? There are a number of tactics that can be used. Here are some examples:
1. Create and include a dedicated telesales phone number for each catalog.
2. Send catalogs to different geographic areas on different dates. Then keep an eye on traffic and spending, in store and online, during those periods in those geographies. The geography of an online shopper can be estimated based on the user’s IP address. (An Internet Protocol (IP) address is a numerical label that is assigned to devices participating in a computer network that uses the Internet Protocol for communication between its nodes.)
3. More to come…
I welcome your thoughts!
Later this month, I am hosting a talk by Saatchi & Saatchi Worldwide Chairman Bob Seelert. In preparation for this talk, I am reading his book, “Start with the Answer.” This afternoon, as I basked in the peaceful exhaustion of a Vinyasa class listening to a mellow arrangement of “Lucy in the Sky with Diamonds” in the “pink” area of the Pure Yoga studio, and reading through Mr. Seelert’s two-page chapters punctuated and summated by a chapter-specific “Bob’s Wisdom,” I sat up suddenly with a compelling need to tweet one of these takeaways: “If You Do Not Know Where You Are Going, Any Road Will Take You There.” Like Porter’s, “You Can’t Manage What You Can’t Measure,” this struck me as a key leadership tenet worth sharing with the tweetosphere.
But as I continued to read the chapter, I realized that it was much more. It was the holy grail. As a strategy consultant, and particularly in situations where I am the sole strategist leading the way on the development of a digital strategy roadmap or an overall marketing strategy, I find myself mired in the following question: What is a strategy, and what is a tactic. On a recent such project, I recall harkening back to my days as a pasta sauce brand manager when I was given the clear, organizationally-approved framework of objective, strategy, plan. Or… was it strategy, objective, plan? No, surely the first.
But in these new situations, what I saw as a strategy, others might see as a tactic, and vice-versa; and no one was really sure what the objective was. In fact, was the starting point an objective or a vision? Hmmmm… In one such situation, I found myself reaching out to Wharton classmates, Booz & Co. colleagues and other strategic gurus – only to find myself once again mired in the discussion of what the client viscerally responded to as a strategy vs. a plan.
Now, this is admittedly, not as clear cut as my three tiered delineation above. There is sometimes a cascading effect such that a high level “plan” might turn into a lower level “strategy” as the organization gets closer to implementation. I recall having this discussion with Charlie McKittrick at Ogilvy & Mather who nicely summed up his definition of strategy as: “a plan for the allocation of limited resources over time to reach an objective.” And in a note to him, I reiterated my comments above that “what may be a tactical element of a high level business strategy can also be the starting point for a marketing strategy (which in turn informs a creative plan and execution).”
All of that said – and serving as a sufficient preamble to allow me to shamelessly reprint what Mr. Seelert outlines in his book, here is a supremely clear cut, General Foods trained, overview of objective vs. strategy vs. plan:
“As a chief executive, it is your job to set a direction for the enterprise. Working with your team, you need to establish a clear vision or better yet, an inspirational dream that is specific to your situation and communicate it to everyone in the organization as often and as thoroughly as possible.
This also sets the stage for mapping objectives, strategies and plans that bring your directions to life and focus the efforts of your people. The first questions to clarify are: What is an objective? What is a strategy? What is a plan? Organizations can become tied in knots if they do not get this simple structure right.”
Hallelujah!!! I have been to those knots, and I have seen how tangled, turned around, and derailed a team can become.
“An objective can be described as a goal, an outcome, or an ‘end.’ It must be measurable.”
Hallelujah! B School 101: “specific, measurable results.” Anything can be measured – with enough creativity, “can-do” determination and cooperation.
“A strategy describes the boundaries you operate within to achieve the objectives. As such, they represent the ‘means to an end.’ A plan then is a set of action-oriented steps, taken in conformance with the strategies to achieve the objective.”
QED. Quite simple really.
“If the objective is to ‘build share of market,’ the supporting strategy might be, ‘utilize promotional incentives to generate trial among non-users.’ A plan flowing from this could be, ‘circulate a direct mail coupon of ‘x’ value on ‘y’ date.’”
The key here is the simplicity of the objective: “build share of market.” Simple but defining. Something that will keep you on track. An overarching framework by which all strategies and plans can be reviewed.
“Setting strategies is particularly important. By establishing boundaries, strategies help channel the organization’s efforts in the right direction and minimize the unfettered thinking and actions. They provide the mechanism for evaluating the strength or sensibility of plans as they come forth. The simple question to ask is, ‘Is the plan on strategy?’”
Hallelujah! So long, that is, as a company is willing to take a stand on its objective. That requires decision-making and consensus. “A well-defined problem is 90% solved.” – Einstein