The Fine Line between Personalization and Privacy in Marketing February 04, 2009
By Dave HenkelAs technology continues to advance, marketing and sales professionals can gather more information about their target audiences than ever before. With that information, there is excitement at the possibility of creating more relevant, personalized customer communications. Supporting this are statistics that show a better connection between a company and its customer yields a higher chance of retention and loyalty. However, just because data on customers and their preferences is available, doesn't mean it is always welcomed by the recipient. In fact, personalized communications can sometimes be regarded as a threat to privacy, particularly when they include even the most basic medical data or financial information.Printing technologies, database mining and other analytics technologies can allow for creating personalized campaigns that garner impressive response rates, but the growing consumer concern for customized communications that cross the line from a friendly, personal offer to an invasion of privacy simply cannot be ignored. Indeed, recent accusations of information misuse and even racial profiling by the Center for Digital Democracy and the U.S. Public Interest Research Group have left many sales and marketing executives extremely cautious. And rightly so. Cause for Concern In response to queries from a coalition of consumer privacy groups, the Federal Trade Commission (FTC) held public hearings late in 2007 to review issues related to "Ehavioral Advertising." This form of targeted marketing involves automatically tracking Internet users to gather technical information about their browser, operating system and personal information—such as the Web sites they visit, their online purchases, their geographic location based on an assumed or declared address, even their participation in online chat groups. Despite the fact that many consumers are willing to exchange some personal information for free services, software upgrades, reward points and personalized product recommendations, consumer watchdog groups claim that a marketing practice is an invasion of privacy when consumers aren’t told that they're being monitored and aren’t provided a simple and effective way to opt-out.
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The FTC has made efforts to strike a balance between the consumer's right to privacy and advertiser's need to research their customers. The agency has developed guidelines for industry self-regulation, advising marketers to take special care in the collection, handling, storage, and disposal of sensitive customer information. Apart from legislation like HIPAA, (Health Insurance Portability and Accountability Act) or in the financial industries, (Gramm-Leach-Bliley legislation), the government doesn't define exactly what kind of data is hands-off for sales reps or marketers. Choosing the Right Decision Based on the 2007 hearing, what did the FTC conclude in terms of how much personalization is too much? In its final report, the agency identified several highly sensitive areas of information: • Medical data, including insurance information as well as chronic health conditions, medical history, genetic information, prescription drug and related purchases.• Financial information, such as bank accounts, personal income, investments, credit ratings, income tax and related data. • Personal identifiers like Social Security, credit card, driver's license and even telephone numbers; physical descriptors like height, body weight, eye color or clothing sizes.• Any material directed to a minor. • Individual sexual preference or orientation. Going a step further, the FTC has developed some useful guidelines for handling this type of information. These include:• Take Stock. Inventory the sensitive data you have on file in a centralized database, on individual computers, disks and CDs, correspondence, and other hard copy files. Credit card and other personal information may be in the sales or human resources department computers, as well as in the accounting or payroll system. • Scale Down. Legal requirements may dictate long-term archiving of some data, but businesses may be storing customer credit card numbers well past the account expiration dates, or sales histories for customers they haven't seen for years. • Lock It. Keep hard copy files and removable digital storage like CDs, disks and drives in locked file cabinets and locked offices. Businesses that operate with computers linked to a central database can establish a hierarchy of who needs exactly what data and use software applications to block access to anyone else. Complex password protocols are also useful for stand-alone or laptop computers. • Pitch It. If personal information on customers, employees, and suppliers isn't actively in use, destroy it. This means shredding, burning, or pulverizing paper documents and over-writing digital storage media—not simply hitting the "delete" button. • Plan Ahead. Protecting company and customer information must be taken seriously for simple good will and, worst-case scenario, to avoid legal liability. Develop a written security policy detailing how every member of your organization should handle sensitive information, along with a clear plan for dealing with a situation like a computer system breech. Decide beforehand who may need to be notified and how; this can include your customers. Investigate every complaint or reported violation immediately to help determine vulnerabilities and correct them. Keep It Both Relevant and Appropriate The fact remains that businesses do have the right to offer desirable products and services, and research their customers to improve the chances of a successful sale. Relevancy should be top-of-mind for sales and marketing executives, because if certain customer information has little to do with your company's goals, it should be avoided. Too often sales and marketing executives can get caught up in the creative aspects of what's possible and lose sight of the real goal—communicating your company's messages. As with any professions, communication with the general public is key. Ongoing dialog with customers about data collection, data safety, and their preferred level of privacy can help sales executives and marketing personnel gauge the success and professionalism of their efforts. General information provided by the customer, like gender, age, and geographic location, can be used to improve response, yet eliminate the need to mine the database too deeply and risk triggering privacy alarms. When used appropriately, personalization is an effective tool for increasing sales and securing customer loyalty. Dave Henkel is president of Johnson & Quin located in Niles, Illinois. Johnson & Quin is a national leader in targeted full-service direct mail printing and production, offering the latest data and personalization technologies. He can be reached at dhenkel@J-QUIN.com.
Wednesday, 4 February 2009
Can Buying Blind Save Web Ads?
Can Buying Blind Save Web Ads?
Start-Up Offers Marketers Coveted Sites -- but They Don't Know Which Ones
by Abbey Klaassen Published: February 02, 2009
NEW YORK (AdAge.com) -- Blind faith.
It's not the way many do business, particularly in an age of return on investment and a stinging recession. But for one online-advertising start-up, that kind of faith -- among buyers, sellers and publishers -- is what's needed to help prop up declining costs per thousand and dwindling sell-through rates.
FIXING ONLINE ADVERTISING
First in a seriesThe idea behind Brand.net, launched by a couple of ex-Yahoo execs, is that a publisher will give an online ad network high-quality inventory only when it's clear the network won't tell advertisers that the publisher is part of the network. That means advertisers don't know for sure but have to trust that they're buying quality, premium sites; even the network's salespeople aren't quite sure what sites are being used in each campaign they sell.
It's the only way to get premium publishers comfortable using networks again, especially as a worsening economy and increase in supply leads more top inventory to go unsold, said Brand.net CEO Elizabeth Blair.
"I completely respect the direct-sales model, and if [publishers] can't make that model work, they're not going to be able to stay in business, and that's bad for the internet," Ms. Blair said.
Price declinesVirtually every publisher faces the problem of unsold inventory. But recently some publishers have cut back on their use of ad networks to get rid of that unsold inventory. The problem, according to those publishers, is that when third parties sell ads, it creates competition and ultimately drives down pricing -- especially as ad networks charge less than a publisher would.
So-called blind ad networks such as Brand.net have been around the online-advertising industry for a while, but they have typically had more success catering to marketers that have a higher tolerance for risk and generally care more about how well their campaign performs than the type of audience and environment it reaches. But the Brand.net pitch is going to more-risk-averse brand advertisers.
Advertisers, of course, need some information on where their ads are running and that the inventory is safe -- that the ads won't be next to videos of bloody street fights or comments laced with vulgarities. To address that, advertisers get a list of top ComScore sites in genre-based buckets. Brand.net does not say it has buying relationships with any publishers on the list -- only that the buy will include "sites like these." It has also launched a grading system, based on how the site content is organized, where the user-generated content is and whether it's moderated.
A site with only professionally created content gets an A ("most safe"), while a site with moderated comments gets a C. A site with highly dynamic or un-moderated forums gets an E ("most potential for some crazy UGC to surface"). Brand.net matches an advertiser's tolerance for risk with a publisher's grade and then uses the same technology that corporations use to block and monitor employee use of certain internet sites to scan every page at five-minute to 24-hour intervals to ensure something untoward hasn't snuck onto it.
"The technology is somewhat promising," said Andy Chapman, co-head of the Exchange at Mindshare, who has used the network. "There's more pressure on us and our partners to make sure we understand where this stuff is running and catch the occasional problem before it happens."
Throttling UGCBrian Leder, VP-digital director at MediaVest, said he likes that he can dial up or dial down the user-generated content, depending on a brand's sensitivity. "Our clients have to be in areas where they're comfortable with the content," he said.
Brand.net's operation is only one approach helping woo publisher inventory back to networks. Another, even newer network is Short Tail Media, whose philosophy is that transparency as to which sites are in its network is key. But it lets participating publishers create "block lists" of advertisers to whom the network can't sell because the publisher already has an important relationship.
"Portals are taking 75% to 80% of the ad share," said Short Tail CEO David Payne. "They're buying the ad systems, the behavioral companies, the ad networks, the end-to-end complete solutions -- which leaves these premium online publishers where they're at a disadvantage to the Big Four [Google, Yahoo, Microsoft and AOL]. Unless you find new strategies to band together as a group, [the portals] will always be bigger and have better technology."
Most networks targeting brands and premium publishers have a philosophy that lies somewhere in between that of the blind Brand.net and the transparency-focused Short Tail.
"We'll work with an advertiser on a custom basis to give them the comfort and the transparency they need but up to the point where we could hurt a publishers' business," said Mike Cassidy, CEO of Undertone Networks, another ad network in the space. "We won't take a short-term media buy at the expense of losing a publisher."
Start-Up Offers Marketers Coveted Sites -- but They Don't Know Which Ones
by Abbey Klaassen Published: February 02, 2009
NEW YORK (AdAge.com) -- Blind faith.
It's not the way many do business, particularly in an age of return on investment and a stinging recession. But for one online-advertising start-up, that kind of faith -- among buyers, sellers and publishers -- is what's needed to help prop up declining costs per thousand and dwindling sell-through rates.
FIXING ONLINE ADVERTISING
First in a seriesThe idea behind Brand.net, launched by a couple of ex-Yahoo execs, is that a publisher will give an online ad network high-quality inventory only when it's clear the network won't tell advertisers that the publisher is part of the network. That means advertisers don't know for sure but have to trust that they're buying quality, premium sites; even the network's salespeople aren't quite sure what sites are being used in each campaign they sell.
It's the only way to get premium publishers comfortable using networks again, especially as a worsening economy and increase in supply leads more top inventory to go unsold, said Brand.net CEO Elizabeth Blair.
"I completely respect the direct-sales model, and if [publishers] can't make that model work, they're not going to be able to stay in business, and that's bad for the internet," Ms. Blair said.
Price declinesVirtually every publisher faces the problem of unsold inventory. But recently some publishers have cut back on their use of ad networks to get rid of that unsold inventory. The problem, according to those publishers, is that when third parties sell ads, it creates competition and ultimately drives down pricing -- especially as ad networks charge less than a publisher would.
So-called blind ad networks such as Brand.net have been around the online-advertising industry for a while, but they have typically had more success catering to marketers that have a higher tolerance for risk and generally care more about how well their campaign performs than the type of audience and environment it reaches. But the Brand.net pitch is going to more-risk-averse brand advertisers.
Advertisers, of course, need some information on where their ads are running and that the inventory is safe -- that the ads won't be next to videos of bloody street fights or comments laced with vulgarities. To address that, advertisers get a list of top ComScore sites in genre-based buckets. Brand.net does not say it has buying relationships with any publishers on the list -- only that the buy will include "sites like these." It has also launched a grading system, based on how the site content is organized, where the user-generated content is and whether it's moderated.
A site with only professionally created content gets an A ("most safe"), while a site with moderated comments gets a C. A site with highly dynamic or un-moderated forums gets an E ("most potential for some crazy UGC to surface"). Brand.net matches an advertiser's tolerance for risk with a publisher's grade and then uses the same technology that corporations use to block and monitor employee use of certain internet sites to scan every page at five-minute to 24-hour intervals to ensure something untoward hasn't snuck onto it.
"The technology is somewhat promising," said Andy Chapman, co-head of the Exchange at Mindshare, who has used the network. "There's more pressure on us and our partners to make sure we understand where this stuff is running and catch the occasional problem before it happens."
Throttling UGCBrian Leder, VP-digital director at MediaVest, said he likes that he can dial up or dial down the user-generated content, depending on a brand's sensitivity. "Our clients have to be in areas where they're comfortable with the content," he said.
Brand.net's operation is only one approach helping woo publisher inventory back to networks. Another, even newer network is Short Tail Media, whose philosophy is that transparency as to which sites are in its network is key. But it lets participating publishers create "block lists" of advertisers to whom the network can't sell because the publisher already has an important relationship.
"Portals are taking 75% to 80% of the ad share," said Short Tail CEO David Payne. "They're buying the ad systems, the behavioral companies, the ad networks, the end-to-end complete solutions -- which leaves these premium online publishers where they're at a disadvantage to the Big Four [Google, Yahoo, Microsoft and AOL]. Unless you find new strategies to band together as a group, [the portals] will always be bigger and have better technology."
Most networks targeting brands and premium publishers have a philosophy that lies somewhere in between that of the blind Brand.net and the transparency-focused Short Tail.
"We'll work with an advertiser on a custom basis to give them the comfort and the transparency they need but up to the point where we could hurt a publishers' business," said Mike Cassidy, CEO of Undertone Networks, another ad network in the space. "We won't take a short-term media buy at the expense of losing a publisher."
How to Get a Brand on NBC's 'Today' for Nothing
How to Get a Brand on NBC's 'Today' for Nothing
Instead of Spending Tens of Thousands on a 30-second Ad, Just Stand Outside With a Sign
by Brian Steinberg Published: February 02, 2009
NEW YORK (AdAge.com) -- Most marketers looking to get their messages out by using NBC's popular morning-news program, "Today," figure they'll need to spend tens of thousands of dollars for a 30-second spot. And yet Taylor Larouche and her pals were able to snag much more time than that -- for free.
Unpaid placement: Rather than buying spots, many just hold up signs.
Photo Credit: Mark MainzMs. Larouche, a 20-year-old Penn State student, and a "street team" of other college students lined the plaza in Manhattan's Rockefeller Center at 5:15 a.m. on a cold Monday morning in mid-January. Their intent was to hold signs during the broadcast of "Today" calling attention to thon.org, a website devoted to raising money to thwart childhood cancer. But they got a lucky break. At about 8 a.m., no less than host Meredith Vieira approached the group, talked to them and took note of their sign -- all with the cameras rolling. "We made our signs real glittery and big, and we just really wanted to get our message across," said Ms. Larouche.
The college students discovered what some savvy marketers with limited ad budgets already know. In this age of branded entertainment and sponsored integrations, NBC is inadvertently giving away tens of thousands of dollars in commercial time on its flagship morning program.
A 30-second ad on "Today" is worth between $50,000 and $60,000, according to media buyers, and a sponsor is likely to reach what Nielsen Media Research said is an average live-plus-same-day audience of more than 4.96 million in the first 15 minutes of the 8 a.m. hour.
Public-relations pros have long known that if you send out someone in a costume, or plant an appealing enough spokesperson in Rockefeller Plaza at the break of dawn, you might snag some precious screen time when the "Today" anchors go out to do a meet and greet. But now, so does everyone else. "We had figured we'd get on the 'Today' show because we knew the viewership, the audience is so strong, and lots of people watch that segment when they go outside," Ms. Larouche said.
Step right upExecutives at "Today" don't seem to be fretting over lost ad revenue. While Ms. Larouche's group had to pass through metal detectors, crew members on the scene were only interested in whether their "glittery signs" were appropriate for broadcast on TV and were legible, she said. "We always welcome all fans and visitors to the 'Today' show to stand outside on Rockefeller Plaza with or without signs," said Megan Kopf, a "Today" spokeswoman, in an e-mail statement. She declined to make executives from the program available for comment. "We only remove people from the Plaza if they are posing a security threat or if their signs have profanity, which is very rare," she added. "Most visitors to the Plaza come to see the show and meet our anchors."
Ironically, these may be just the sorts of advertisers NBC Universal would like to monetize in the days ahead. On Thursday, the General Electric media concern and Google launched an effort that lets the search-advertising giant serve as a broker for a limited amount of ad inventory on NBC digital-cable outlets Sleuth and Chiller. The Google program is expected to roll out to CNBC, MSNBC, Sci Fi and Oxygen. When the venture was announced in September, NBC executives indicated they hoped to reach out to smaller and local advertisers who weren't traditional buyers of national TV time.
People, presumably, like Linny Boyette. On Jan. 28, a man in sunglasses and a hooded parka was spotted holding aloft a huge umbrella covered with the logo for 1-800-LAWYERS, a direct line to attorneys in different regions of the country. Representatives of the company did not respond to a call seeking comment. But Mr. Boyette, a stalwart "Today" attendee, said he was not paid to hold the umbrella.
'Today': Stand behind host, get exposure. Mr. Boyette also often sets up a banner featuring the number "1-800-LAW-CASH" behind the "Today" hosts as they start their 8 a.m. banter. The sign also calls attention to a blog associated with a radio show moderated by host Brian Smith on WICC in Bridgeport, Conn. "It helps," Mr. Smith said, because it reminds former listeners who have moved out of his area about where to find him.
The banner appears because Irving Pinsky, a New Haven, Conn., attorney, arranges for it to be there through Mr. Boyette. "The outdoor part of the 'Today' show is like a block party in New York City," said Mr. Pinsky, who added that he tries to help friends by placing the sign.
At 1-800-LAW-CASH, based in Brooklyn, N.Y., the company is puzzled by the ad. "This is something that we don't pay for and have no connection to," said Rich Palma, the company's chief operating officer. Still, it's clear that the appearance of a random sign on "Today" can generate results. "We get calls all the time: 'How did you get that space?'" Mr. Palma said.
~ ~ ~Contributing: Max Lakin
Instead of Spending Tens of Thousands on a 30-second Ad, Just Stand Outside With a Sign
by Brian Steinberg Published: February 02, 2009
NEW YORK (AdAge.com) -- Most marketers looking to get their messages out by using NBC's popular morning-news program, "Today," figure they'll need to spend tens of thousands of dollars for a 30-second spot. And yet Taylor Larouche and her pals were able to snag much more time than that -- for free.
Unpaid placement: Rather than buying spots, many just hold up signs.
Photo Credit: Mark MainzMs. Larouche, a 20-year-old Penn State student, and a "street team" of other college students lined the plaza in Manhattan's Rockefeller Center at 5:15 a.m. on a cold Monday morning in mid-January. Their intent was to hold signs during the broadcast of "Today" calling attention to thon.org, a website devoted to raising money to thwart childhood cancer. But they got a lucky break. At about 8 a.m., no less than host Meredith Vieira approached the group, talked to them and took note of their sign -- all with the cameras rolling. "We made our signs real glittery and big, and we just really wanted to get our message across," said Ms. Larouche.
The college students discovered what some savvy marketers with limited ad budgets already know. In this age of branded entertainment and sponsored integrations, NBC is inadvertently giving away tens of thousands of dollars in commercial time on its flagship morning program.
A 30-second ad on "Today" is worth between $50,000 and $60,000, according to media buyers, and a sponsor is likely to reach what Nielsen Media Research said is an average live-plus-same-day audience of more than 4.96 million in the first 15 minutes of the 8 a.m. hour.
Public-relations pros have long known that if you send out someone in a costume, or plant an appealing enough spokesperson in Rockefeller Plaza at the break of dawn, you might snag some precious screen time when the "Today" anchors go out to do a meet and greet. But now, so does everyone else. "We had figured we'd get on the 'Today' show because we knew the viewership, the audience is so strong, and lots of people watch that segment when they go outside," Ms. Larouche said.
Step right upExecutives at "Today" don't seem to be fretting over lost ad revenue. While Ms. Larouche's group had to pass through metal detectors, crew members on the scene were only interested in whether their "glittery signs" were appropriate for broadcast on TV and were legible, she said. "We always welcome all fans and visitors to the 'Today' show to stand outside on Rockefeller Plaza with or without signs," said Megan Kopf, a "Today" spokeswoman, in an e-mail statement. She declined to make executives from the program available for comment. "We only remove people from the Plaza if they are posing a security threat or if their signs have profanity, which is very rare," she added. "Most visitors to the Plaza come to see the show and meet our anchors."
Ironically, these may be just the sorts of advertisers NBC Universal would like to monetize in the days ahead. On Thursday, the General Electric media concern and Google launched an effort that lets the search-advertising giant serve as a broker for a limited amount of ad inventory on NBC digital-cable outlets Sleuth and Chiller. The Google program is expected to roll out to CNBC, MSNBC, Sci Fi and Oxygen. When the venture was announced in September, NBC executives indicated they hoped to reach out to smaller and local advertisers who weren't traditional buyers of national TV time.
People, presumably, like Linny Boyette. On Jan. 28, a man in sunglasses and a hooded parka was spotted holding aloft a huge umbrella covered with the logo for 1-800-LAWYERS, a direct line to attorneys in different regions of the country. Representatives of the company did not respond to a call seeking comment. But Mr. Boyette, a stalwart "Today" attendee, said he was not paid to hold the umbrella.
'Today': Stand behind host, get exposure. Mr. Boyette also often sets up a banner featuring the number "1-800-LAW-CASH" behind the "Today" hosts as they start their 8 a.m. banter. The sign also calls attention to a blog associated with a radio show moderated by host Brian Smith on WICC in Bridgeport, Conn. "It helps," Mr. Smith said, because it reminds former listeners who have moved out of his area about where to find him.
The banner appears because Irving Pinsky, a New Haven, Conn., attorney, arranges for it to be there through Mr. Boyette. "The outdoor part of the 'Today' show is like a block party in New York City," said Mr. Pinsky, who added that he tries to help friends by placing the sign.
At 1-800-LAW-CASH, based in Brooklyn, N.Y., the company is puzzled by the ad. "This is something that we don't pay for and have no connection to," said Rich Palma, the company's chief operating officer. Still, it's clear that the appearance of a random sign on "Today" can generate results. "We get calls all the time: 'How did you get that space?'" Mr. Palma said.
~ ~ ~Contributing: Max Lakin
McD's Secret Sauce: It Embodies Value
McD's Secret Sauce: It Embodies Value
Big Mac Marches On as Others Stumble Due to Unflinching Focus on Value -- and Adapting What That Means to Varied Consumers
By Emily Bryson York Published: February 02, 2009
CHICAGO (AdAge.com) -- With no sign the economy will improve anytime soon, fast feeders are rolling out the value offerings thick and fast. But by relentlessly reminding consumers about its 6-year-old dollar menu, McDonald's has managed to own the space.
McDonald's has figured out how to translate its value message to more than one audience. Not only has the push translated into sales -- McDonald's reported stellar fourth-quarter and full-year sales last week, and emphasized that dollar-menu sales are hovering around 13% of sales -- but the fast feeder has also figured out how to translate its value message to more than one audience.
Still, while consumers may wind up ordering pricier sandwiches, the dollar menu gets them in the door. "Even my kids tell me if we need to save money, we need to eat at McDonald's," said Darren Tristano, exec VP at Technomic. "It's scary to hear them say that." But it's one effect of the fast feeder's massive ad buy, Mr. Tristano said. "They've been pushing it so hard that when you think McDonald's you think value."
Dan Dahlen, exec VP-restaurants and retail at Nielsen IAG, said McDonald's dollar-menu ads don't score particularly high in overall recall. He said the spots are "microtargeted" to specific groups, "and if you cut that data tighter demographically, I bet they'd be much higher." He said when competitors try to reach everyone with the same ad, it just isn't as effective. "They've gotten the most out of their TV investment because they know who they're targeting and what to say and when to say it," he said.
Mark Carlson, senior creative director-McDonald's USA, said the chain has been careful not to overuse value messaging during the economic crisis, although it added the tagline "Now more than ever" to its dollar-menu advertising in the second half of 2008. "That said, though, we believe we offer value across our entire menu. That's important, because we know our customers use our menu in different ways," he said.
Value is relativeAnother concept that McDonald's seems to understand: Value means something different to everyone. For a college student, it may be a sandwich for a buck, but for a working mother, it may be driving through for a breakfast latte that's a dollar cheaper than Starbucks.
Different strokes: McDonald's says because people define value differently, consumers seek bargains beyond dollar menu.
Photo Credit: Mary AltafferLast week, McDonald's CEO Jim Skinner also credited chicken, breakfast and the chain's expanding beverage choices with its 5% increase in fourth-quarter same-store sales. Starbucks, by comparison, reported a 10% decline in same-store sales for the quarter. They will be implementing a value strategy this spring.
The chain's other competition is doubling down on value, too. Wendy's is advertising a sandwich trio, and Burger King has brought its sandwich family back to the airwaves. Subway is still offering the "$5-Foot-Long" promotion that catapulted the chain into phenomenal double-digit sales increases during 2008. The aggressive promotions even have some of McDonalds' biggest cheerleaders fretting.
McDonald's also recently took its double cheeseburger off the dollar menu and is now charging extra for the second slice of cheese. The McDouble, with one slice, has taken its place at the $1 price point. "In a time when everyone is kind of sharpening up their swords for price wars, these guys are staying back and guarding the kingdom," said Larry Miller, an analyst with RBC Capital Markets. "It's really smart, and it's a bold move, but I don't know if they can hold them off."
Big Mac Marches On as Others Stumble Due to Unflinching Focus on Value -- and Adapting What That Means to Varied Consumers
By Emily Bryson York Published: February 02, 2009
CHICAGO (AdAge.com) -- With no sign the economy will improve anytime soon, fast feeders are rolling out the value offerings thick and fast. But by relentlessly reminding consumers about its 6-year-old dollar menu, McDonald's has managed to own the space.
McDonald's has figured out how to translate its value message to more than one audience. Not only has the push translated into sales -- McDonald's reported stellar fourth-quarter and full-year sales last week, and emphasized that dollar-menu sales are hovering around 13% of sales -- but the fast feeder has also figured out how to translate its value message to more than one audience.
Still, while consumers may wind up ordering pricier sandwiches, the dollar menu gets them in the door. "Even my kids tell me if we need to save money, we need to eat at McDonald's," said Darren Tristano, exec VP at Technomic. "It's scary to hear them say that." But it's one effect of the fast feeder's massive ad buy, Mr. Tristano said. "They've been pushing it so hard that when you think McDonald's you think value."
Dan Dahlen, exec VP-restaurants and retail at Nielsen IAG, said McDonald's dollar-menu ads don't score particularly high in overall recall. He said the spots are "microtargeted" to specific groups, "and if you cut that data tighter demographically, I bet they'd be much higher." He said when competitors try to reach everyone with the same ad, it just isn't as effective. "They've gotten the most out of their TV investment because they know who they're targeting and what to say and when to say it," he said.
Mark Carlson, senior creative director-McDonald's USA, said the chain has been careful not to overuse value messaging during the economic crisis, although it added the tagline "Now more than ever" to its dollar-menu advertising in the second half of 2008. "That said, though, we believe we offer value across our entire menu. That's important, because we know our customers use our menu in different ways," he said.
Value is relativeAnother concept that McDonald's seems to understand: Value means something different to everyone. For a college student, it may be a sandwich for a buck, but for a working mother, it may be driving through for a breakfast latte that's a dollar cheaper than Starbucks.
Different strokes: McDonald's says because people define value differently, consumers seek bargains beyond dollar menu.
Photo Credit: Mary AltafferLast week, McDonald's CEO Jim Skinner also credited chicken, breakfast and the chain's expanding beverage choices with its 5% increase in fourth-quarter same-store sales. Starbucks, by comparison, reported a 10% decline in same-store sales for the quarter. They will be implementing a value strategy this spring.
The chain's other competition is doubling down on value, too. Wendy's is advertising a sandwich trio, and Burger King has brought its sandwich family back to the airwaves. Subway is still offering the "$5-Foot-Long" promotion that catapulted the chain into phenomenal double-digit sales increases during 2008. The aggressive promotions even have some of McDonalds' biggest cheerleaders fretting.
McDonald's also recently took its double cheeseburger off the dollar menu and is now charging extra for the second slice of cheese. The McDouble, with one slice, has taken its place at the $1 price point. "In a time when everyone is kind of sharpening up their swords for price wars, these guys are staying back and guarding the kingdom," said Larry Miller, an analyst with RBC Capital Markets. "It's really smart, and it's a bold move, but I don't know if they can hold them off."
What an Oscar Nod Can Bring to the Box Office
What an Oscar Nod Can Bring to the Box Office
'The Reader' Saw Ticket Sales Soar 238% in the Day After Its Nomination
By Claude Brodesser-Akner Published: February 02, 2009
LOS ANGELES (AdAge.com) -- The major studios traditionally spend an average of $15 million to $20 million to market their films during Academy Awards season to secure a nomination. Yet, research firm Media by Numbers looked at 24 years of best-picture nominees, from 1982 to 2006, and found that the average nomination boosted box office by only $13 million.
'Slumdog Millionaire': Box-office receipts increased 83% after nomination. Clearly the math doesn't add up -- unless you're a graduate of the Harvey Weinstein school of marketing.
"Let me tell you, a nomination, in the period between now and the Oscars, is still huge," said the iconic Hollywood producer, speaking about the best-picture nomination of the Weinstein Co.'s "The Reader."
"The effect will be enormous at the box office. Now we're going to double, triple, maybe even quintuple our gross. It's still the Good Housekeeping seal of approval."
According to Fandango, "The Reader" saw a 238% increase in online ticket sales in the 24 hours after it received its best-picture nod. Its box-office grosses increased 9%, despite the fact that the Weinstein Co. had the film in 50 fewer theaters than the weekend before.
'Keep up with Harvey'But not everyone is Harvey Weinstein. He is widely detested throughout Hollywood's studio marketing departments, and not just because he's racked up scores of best-picture nominees over the years. Rather, he is hated for securing best-picture nominations with frugality amounting to, as one rival put it through gritted teeth, what the big studios spend annually on Snapple.
The major studios usually spend between $15 million and $20 million to try to "keep up with Harvey" in recent Oscar contests, according to various studio marketing chiefs, though the economy has dampened the spending somewhat this year.
But the payoff at the box office is relative. The smaller a nominated film's production budget, the more worthwhile its Oscar box-office boost, regardless of the size of that boost. For a specialty studio release with no marketable stars, such as Fox Searchlight's "Slumdog Millionaire," the post-nomination sales are a lot more meaningful than for, say, a CGI extravaganza with Brad Pitt that has been in theaters only a month. "The Curious Case of Benjamin Button" cost $150 million to make.
For "Slumdog," the Best Picture nomination amounts to a bonanza. "I am sure it's the most profitable nominee [this year]," Mr. Weinstein said. Indeed, in the weekend following its best-picture nomination, Fox Searchlight's $15 million "Slumdog" grossed $10.6 million -- an 83% increase in box office that was helped by adding 833 theaters, despite the fact that the movie had been out for 11 weeks already.
The ultra-low cost of "Slumdog" also means that Searchlight is in a better position than other nominees' studios to keep spending on the film's marketing. Searchlight declined to comment.
On the flip side, an Oscar nomination for best picture can't save an unpopular film, and the cost of exploiting a nomination can even wind up hurting a film financially. Universal's drama "Frost/Nixon," for example, grossed just $3 million at the box office in its post-nomination weekend. That was a leap of 351%, aided by adding nearly a thousand theaters to the film's release pattern. But consider that "Frost" cost $25 million to make, and with a worldwide gross of just $14 million so far, any box-office bump from an Oscar nomination is likely to be more than eclipsed by the cost of the film's Oscar marketing campaign, estimated to be near $8 million.
What's an Oscar nomination worth? More than a winAs Paul Dergarabedian, CEO of Media by Numbers, will rush to tell you, each year there are a cluster of ever-changing variables around a winning film that could keep audiences out of theaters: Are the nominated films all still in theaters? Of limited commercial appeal? Toward the end of their runs? Filled with big stars who're also nominated? If you can't see the film or don't want to, the win makes any average Best Picture Oscar boost "essentially meaningless."
Worse, as Mr. Dergarabedian notes, while there's potential payoff in a nomination (see story, this page) continuing to wage the marketing war to secure a win is only rarely worth the extra expense when it comes to the box office.
"The Oscar honeymoon period is by far the most fruitful," he said, referring to the time between a film's nomination and the Oscar telecast. "In fact, the honeymoon is often more fun than the marriage -- the win. You get the most box-office benefit out of that period before."
But regardless, the Oscar marketing battle must often be continued after a nomination, not out of any sense that victory is imminent or even because it's financially worthwhile. Instead, it's to preserve relationships with stars and directors. This is Hollywood, after all.
'The Reader' Saw Ticket Sales Soar 238% in the Day After Its Nomination
By Claude Brodesser-Akner Published: February 02, 2009
LOS ANGELES (AdAge.com) -- The major studios traditionally spend an average of $15 million to $20 million to market their films during Academy Awards season to secure a nomination. Yet, research firm Media by Numbers looked at 24 years of best-picture nominees, from 1982 to 2006, and found that the average nomination boosted box office by only $13 million.
'Slumdog Millionaire': Box-office receipts increased 83% after nomination. Clearly the math doesn't add up -- unless you're a graduate of the Harvey Weinstein school of marketing.
"Let me tell you, a nomination, in the period between now and the Oscars, is still huge," said the iconic Hollywood producer, speaking about the best-picture nomination of the Weinstein Co.'s "The Reader."
"The effect will be enormous at the box office. Now we're going to double, triple, maybe even quintuple our gross. It's still the Good Housekeeping seal of approval."
According to Fandango, "The Reader" saw a 238% increase in online ticket sales in the 24 hours after it received its best-picture nod. Its box-office grosses increased 9%, despite the fact that the Weinstein Co. had the film in 50 fewer theaters than the weekend before.
'Keep up with Harvey'But not everyone is Harvey Weinstein. He is widely detested throughout Hollywood's studio marketing departments, and not just because he's racked up scores of best-picture nominees over the years. Rather, he is hated for securing best-picture nominations with frugality amounting to, as one rival put it through gritted teeth, what the big studios spend annually on Snapple.
The major studios usually spend between $15 million and $20 million to try to "keep up with Harvey" in recent Oscar contests, according to various studio marketing chiefs, though the economy has dampened the spending somewhat this year.
But the payoff at the box office is relative. The smaller a nominated film's production budget, the more worthwhile its Oscar box-office boost, regardless of the size of that boost. For a specialty studio release with no marketable stars, such as Fox Searchlight's "Slumdog Millionaire," the post-nomination sales are a lot more meaningful than for, say, a CGI extravaganza with Brad Pitt that has been in theaters only a month. "The Curious Case of Benjamin Button" cost $150 million to make.
For "Slumdog," the Best Picture nomination amounts to a bonanza. "I am sure it's the most profitable nominee [this year]," Mr. Weinstein said. Indeed, in the weekend following its best-picture nomination, Fox Searchlight's $15 million "Slumdog" grossed $10.6 million -- an 83% increase in box office that was helped by adding 833 theaters, despite the fact that the movie had been out for 11 weeks already.
The ultra-low cost of "Slumdog" also means that Searchlight is in a better position than other nominees' studios to keep spending on the film's marketing. Searchlight declined to comment.
On the flip side, an Oscar nomination for best picture can't save an unpopular film, and the cost of exploiting a nomination can even wind up hurting a film financially. Universal's drama "Frost/Nixon," for example, grossed just $3 million at the box office in its post-nomination weekend. That was a leap of 351%, aided by adding nearly a thousand theaters to the film's release pattern. But consider that "Frost" cost $25 million to make, and with a worldwide gross of just $14 million so far, any box-office bump from an Oscar nomination is likely to be more than eclipsed by the cost of the film's Oscar marketing campaign, estimated to be near $8 million.
What's an Oscar nomination worth? More than a winAs Paul Dergarabedian, CEO of Media by Numbers, will rush to tell you, each year there are a cluster of ever-changing variables around a winning film that could keep audiences out of theaters: Are the nominated films all still in theaters? Of limited commercial appeal? Toward the end of their runs? Filled with big stars who're also nominated? If you can't see the film or don't want to, the win makes any average Best Picture Oscar boost "essentially meaningless."
Worse, as Mr. Dergarabedian notes, while there's potential payoff in a nomination (see story, this page) continuing to wage the marketing war to secure a win is only rarely worth the extra expense when it comes to the box office.
"The Oscar honeymoon period is by far the most fruitful," he said, referring to the time between a film's nomination and the Oscar telecast. "In fact, the honeymoon is often more fun than the marriage -- the win. You get the most box-office benefit out of that period before."
But regardless, the Oscar marketing battle must often be continued after a nomination, not out of any sense that victory is imminent or even because it's financially worthwhile. Instead, it's to preserve relationships with stars and directors. This is Hollywood, after all.
Denny's Grand Slam Giveaway a Hit With 2 Million Diners
Denny's Grand Slam Giveaway a Hit With 2 Million Diners
Restaurant Says It Exceeded Estimates at Total Cost of $5 Million
By Emily Bryson York Published: February 03, 2009
CHICAGO (AdAge.com) -- Score one for beginner's luck. Denny's first Super Bowl spot, which offered free breakfast to America, seems to have put bums in seats. The restaurant claims it surpassed its estimate that it would serve up to 2 million people during today's eight-hour Grand Slam giveaway. And all for the low price of $5 million.
Even early in the day, a very unscientific poll made it appear that many Denny's restaurants were giving away upward of 1,000 breakfasts.
Photo Credit: AP"The response has been even better than we thought," said John Dillon, VP-marketing at Denny's. "We thought we were going to have a great day, and we had an awesome day. The response from customers both existing and new guests, as well as our staff and the restaurants, we couldn't have asked for more." The company estimates that the entire promotion, from Super Bowl ad buy to food costs, will total about $5 million.
Darren Tristano, exec VP, Technomic, a Chicago-based food-industry consultancy, described a turnout of 2 million as "pretty good." And since that breaks down to more than 1,000 Slams per restaurant, he said, "they must have been turning tables pretty fast."
"But given the state of the economy, it's not surprising," he said. "A free meal is a free meal."
For the uninitiated, Denny's Grand Slam meal consists of two pancakes, two eggs, two sausage links and two pieces of bacon. In other words, it's a little more pricey than the usual giveaways.
Related Stories
Ad Age Hits Up Denny's for Free Grand Slam
Four Reporters Brave Lines to Check Out the Breakfast Giveaway -- and to See If Chain Picked up Any Goodwill Along the Way
"This definitely raises the bar on the giveaways we've seen in the last year or two, and brings it up to the $6 level," said Mr. Tristano. Fast-food and fast-casual concepts such as McDonald's, Starbucks, Dunkin' Donuts, Taco Bell and even Ben & Jerry's have experimented with freebies to boost awareness or sales of new items.
Mr. Tristano added that the chain accomplished its feat despite the inconvenience associated with a sit-down breakfast at Denny's compared to other breakfast options. "It's not just driving through at McDonald's for a cup of coffee," he said. Many of the chain's 1,541 restaurants are located in the suburbs, and a Tuesday breakfast could have been hard for those rushing to work or already there.
But even early in the day, a very unscientific poll of Denny's restaurant made it appear that many restaurants were giving away upward of 1,000 breakfasts. Two Chicago-area Denny's said they had given away about 1,000 Grand Slams, a Lexington, Ky., Denny's said it had been more like 900, one in East Brunswick, N.J., said it had given away close to 2,000, and a Detroit Denny's said it easily surpassed 2,000.
Although food costs are generally about 30% of the retail price, Mr. Tristano said a Grand Slam probably costs Denny's between $1 and $1.50. It sells for $5.99. "That's' why they spent the money to get you in their seats." However, cannibalization can be a problem in promotions like these. Mr. Tristano said that many folks who showed up at Denny's planning to pay for their breakfast this morning may have opted for a free Slam.
Still, the promotion appears to have been effective based on most accepted ROI measures. Two million-plus breakfasts easily exceeds the 1% benchmark of giveaway success. Sunday's game had about 98 million viewers.
Denny's, which is caught in the same slump as the rest of the casual dining industry, is on a mission to revive the sit-down breakfast. The Grand Slam breakfasts are its best-selling item, with about 12.5 million served each year.
"The Grand Slam has always been a Denny's favorite," Denny's CEO Nelson Marchioli said in a statement. "This free offer is our way of reacquainting America with Denny's real breakfast and with the Denny's brand. You don't know the real Denny's unless you've been in our restaurants in the last several years, experiencing the quality of our new menu items and our service first-hand."
Restaurant Says It Exceeded Estimates at Total Cost of $5 Million
By Emily Bryson York Published: February 03, 2009
CHICAGO (AdAge.com) -- Score one for beginner's luck. Denny's first Super Bowl spot, which offered free breakfast to America, seems to have put bums in seats. The restaurant claims it surpassed its estimate that it would serve up to 2 million people during today's eight-hour Grand Slam giveaway. And all for the low price of $5 million.
Even early in the day, a very unscientific poll made it appear that many Denny's restaurants were giving away upward of 1,000 breakfasts.
Photo Credit: AP"The response has been even better than we thought," said John Dillon, VP-marketing at Denny's. "We thought we were going to have a great day, and we had an awesome day. The response from customers both existing and new guests, as well as our staff and the restaurants, we couldn't have asked for more." The company estimates that the entire promotion, from Super Bowl ad buy to food costs, will total about $5 million.
Darren Tristano, exec VP, Technomic, a Chicago-based food-industry consultancy, described a turnout of 2 million as "pretty good." And since that breaks down to more than 1,000 Slams per restaurant, he said, "they must have been turning tables pretty fast."
"But given the state of the economy, it's not surprising," he said. "A free meal is a free meal."
For the uninitiated, Denny's Grand Slam meal consists of two pancakes, two eggs, two sausage links and two pieces of bacon. In other words, it's a little more pricey than the usual giveaways.
Related Stories
Ad Age Hits Up Denny's for Free Grand Slam
Four Reporters Brave Lines to Check Out the Breakfast Giveaway -- and to See If Chain Picked up Any Goodwill Along the Way
"This definitely raises the bar on the giveaways we've seen in the last year or two, and brings it up to the $6 level," said Mr. Tristano. Fast-food and fast-casual concepts such as McDonald's, Starbucks, Dunkin' Donuts, Taco Bell and even Ben & Jerry's have experimented with freebies to boost awareness or sales of new items.
Mr. Tristano added that the chain accomplished its feat despite the inconvenience associated with a sit-down breakfast at Denny's compared to other breakfast options. "It's not just driving through at McDonald's for a cup of coffee," he said. Many of the chain's 1,541 restaurants are located in the suburbs, and a Tuesday breakfast could have been hard for those rushing to work or already there.
But even early in the day, a very unscientific poll of Denny's restaurant made it appear that many restaurants were giving away upward of 1,000 breakfasts. Two Chicago-area Denny's said they had given away about 1,000 Grand Slams, a Lexington, Ky., Denny's said it had been more like 900, one in East Brunswick, N.J., said it had given away close to 2,000, and a Detroit Denny's said it easily surpassed 2,000.
Although food costs are generally about 30% of the retail price, Mr. Tristano said a Grand Slam probably costs Denny's between $1 and $1.50. It sells for $5.99. "That's' why they spent the money to get you in their seats." However, cannibalization can be a problem in promotions like these. Mr. Tristano said that many folks who showed up at Denny's planning to pay for their breakfast this morning may have opted for a free Slam.
Still, the promotion appears to have been effective based on most accepted ROI measures. Two million-plus breakfasts easily exceeds the 1% benchmark of giveaway success. Sunday's game had about 98 million viewers.
Denny's, which is caught in the same slump as the rest of the casual dining industry, is on a mission to revive the sit-down breakfast. The Grand Slam breakfasts are its best-selling item, with about 12.5 million served each year.
"The Grand Slam has always been a Denny's favorite," Denny's CEO Nelson Marchioli said in a statement. "This free offer is our way of reacquainting America with Denny's real breakfast and with the Denny's brand. You don't know the real Denny's unless you've been in our restaurants in the last several years, experiencing the quality of our new menu items and our service first-hand."
Ashton Kutcher Friends Video Series on Facebook
Ashton Kutcher Friends Video Series on Facebook
Actor Teams With App Maker Slide and Frito-Lay for Reality Show 'KatalystHQ'
by Michael Learmonth Published: February 04, 2009
NEW YORK (Adage.com) -- It's not quite a friend request, but Facebook users are about to get a look into actor Ashton Kutcher's work life in a behind-the-scenes reality series shot at his production company, Katalyst Media.
Ashton Kutcher: 'What we want to do is build a bridge from Madison Avenue to Silicon Valley with a stop in Hollywood.'
Photo Credit: APThe series, "KatalystHQ," will be a semi-scripted portrayal of life at a Hollywood production company where the boss is, well, Ashton Kutcher. "What we are trying to do with the show is take the everyday inner workings of an office and elevating that to push the comedy of mundane day-to-day activities," Mr. Kutcher said.
What makes this different from the standard celebrity-backed web series, which have a spotty track record, is the way it will be distributed, through an application on the popular social network Facebook. The app, called FunSpace, was created by Slide, a social application maker that is also a joint-venture partner with Katalyst. The show is underwritten initially by Frito-Lay's Cheetos brand. The first episode goes live Feb. 4.
The series is a first for both Slide and Facebook. Cheetos will be worked into storylines and given custom-made pre-roll ads. But Mr. Kutcher said the bigger opportunity, and the reason for working with Slide, is to engage with the target audience where they're hanging out in Facebook and create conversations around the content.
"Our target demo for this is 18-34, just out of high school or college and getting into the world world," he said. "The traditional thing of eyeballs-for-dollars changes when you enter into a social fabric where people are engaging with each other."
Slide will be providing the distribution for the series to make sure it generates enough impressions to satisfy the sponsor. Facebook doesn't have an economic interest in the deal, but will certainly benefit from the added engagement and time spent by fans on the network.
The deal resembles Media Rights Capital's deal with "Family Guy" creator Seth McFarlane and Burger King to create "Seth MacFarlane's Cavalcade of Cartoon Comedy," which is being distributed across Google's AdSense at network.
As users spend more time on social networks at the expense of other sites, it becomes an attractive distribution point for video. Slide competitor RockYou announced it will start distributing video as an ad network through its applications on Facebook and MySpace.
Facebook has been growing at 10% a month and will soon cross 160 million registered users if current rates hold. According to Nielsen Online, Facebook had 55 million U.S. unique visitors in January, which spent an average of two hours and seven minutes on the site.
"KatalystHQ" is the third attempt at a web series for Mr. Kutcher and Katalyst Media, which created the web animated series "Blah Girls," sponsored by Vitamin Water, and a live webcast "24 Hours at Sundance."
Mr. Kutcher sees "KatalystHQ" as having several cycles, and potentially multiple sponsors, as it evolves. And it won't be the last branded web series from Katalyst.
"What we want to do is build a bridge from Madison Avenue to Silicon Valley with a stop in Hollywood," he said. "I am enjoying that and hoping to come out of these ventures with a new model for content."
Actor Teams With App Maker Slide and Frito-Lay for Reality Show 'KatalystHQ'
by Michael Learmonth Published: February 04, 2009
NEW YORK (Adage.com) -- It's not quite a friend request, but Facebook users are about to get a look into actor Ashton Kutcher's work life in a behind-the-scenes reality series shot at his production company, Katalyst Media.
Ashton Kutcher: 'What we want to do is build a bridge from Madison Avenue to Silicon Valley with a stop in Hollywood.'
Photo Credit: APThe series, "KatalystHQ," will be a semi-scripted portrayal of life at a Hollywood production company where the boss is, well, Ashton Kutcher. "What we are trying to do with the show is take the everyday inner workings of an office and elevating that to push the comedy of mundane day-to-day activities," Mr. Kutcher said.
What makes this different from the standard celebrity-backed web series, which have a spotty track record, is the way it will be distributed, through an application on the popular social network Facebook. The app, called FunSpace, was created by Slide, a social application maker that is also a joint-venture partner with Katalyst. The show is underwritten initially by Frito-Lay's Cheetos brand. The first episode goes live Feb. 4.
The series is a first for both Slide and Facebook. Cheetos will be worked into storylines and given custom-made pre-roll ads. But Mr. Kutcher said the bigger opportunity, and the reason for working with Slide, is to engage with the target audience where they're hanging out in Facebook and create conversations around the content.
"Our target demo for this is 18-34, just out of high school or college and getting into the world world," he said. "The traditional thing of eyeballs-for-dollars changes when you enter into a social fabric where people are engaging with each other."
Slide will be providing the distribution for the series to make sure it generates enough impressions to satisfy the sponsor. Facebook doesn't have an economic interest in the deal, but will certainly benefit from the added engagement and time spent by fans on the network.
The deal resembles Media Rights Capital's deal with "Family Guy" creator Seth McFarlane and Burger King to create "Seth MacFarlane's Cavalcade of Cartoon Comedy," which is being distributed across Google's AdSense at network.
As users spend more time on social networks at the expense of other sites, it becomes an attractive distribution point for video. Slide competitor RockYou announced it will start distributing video as an ad network through its applications on Facebook and MySpace.
Facebook has been growing at 10% a month and will soon cross 160 million registered users if current rates hold. According to Nielsen Online, Facebook had 55 million U.S. unique visitors in January, which spent an average of two hours and seven minutes on the site.
"KatalystHQ" is the third attempt at a web series for Mr. Kutcher and Katalyst Media, which created the web animated series "Blah Girls," sponsored by Vitamin Water, and a live webcast "24 Hours at Sundance."
Mr. Kutcher sees "KatalystHQ" as having several cycles, and potentially multiple sponsors, as it evolves. And it won't be the last branded web series from Katalyst.
"What we want to do is build a bridge from Madison Avenue to Silicon Valley with a stop in Hollywood," he said. "I am enjoying that and hoping to come out of these ventures with a new model for content."
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