Archive for the ‘marketing’ Category

Groupon’s stock price: a symbol of the inherent problems with the group-buy model?

I’ve written several times about group buying services and the problems they can pose for businesses and for consumers. Here in Ottawa, a Byward Market butcher shop nearly ran itself into the ground after trying to use group deals to dig itself out of business trouble.

Well, I have to revisit the topic based on two news stories that I saw today.

First was news that king of the group-buy services Groupon had missed already cautious revenue and earnings targets. This led to its stock price dropping as low as $3.21, from a giddy IPO price of $20.

And back in Ottawa again, consumers are VERY upset with ambitious group-buy company Your City Deals. Why? They offered a $100 gas card for $49. After nearly 10,000 were sold, they announced they couldn’t fulfil the deal — the SAME DAY they announced a $50-million deal to expand their service.They’re getting lots of negative feedback on Facebook and on Twitter, as you might guess.

So there are a few things to point out here. Number 1: Don’t go on TV when you’re trying to drum up business and support for your fledgling group-buy company and say you’re in the business of supporting small to medium business marketing efforts when you’re offering up gift cards to a national gasoline retailer. What business is that helping?

Number two: What chump threw $50 million into a market segment that seems to be falling apart?

Number three: if you’re a business with $50M in financing, shouldn’t you do something about an office beyond renting a post-office box at a photocopy shop? That’s what CBC found out.

I have no idea whether this fiasco is just one more in a series of roup-buy fiascos, whether the people behind this company are simply in over their heads or whether there’s something more nefarious at play.

But if you didn’t already think that group buys were a really bad idea for businesses and consumers, I don’t know what more evidence you’d need. Or am I wrong? Tell me if I’m off base in the comments.

I’m a major lover of whisky. In fact, for part of this weekend, I was rhapsodizing about the interesting whisky selection at a new LCBO store in my neighbourhood to all and sundry.

However, as a PR guy, this news release from giant whisky brand Johnnie Walker put me in need of a drink.

“JOHNNIE WALKER® LAUNCHES BOLD NEW ADVERTISING CAMPAIGN

by Pat Roberts

‘Where Flavour Is King’ showcases products’ credentials rooted in the big, bold flavours of Johnnie Walker whisky

Johnnie Walker, the world’s number one Blended Scotch Whisky, is this week launching a new global advertising campaign. Entitled ‘Where Flavour Is King’, the campaign focuses on the array of rich and intense flavours that are found in each blend of Johnnie Walker whisky.

From its origins in 1820, the Johnnie Walker label has always been committed to its quest to blend whiskies of exceptional flavour, refusing to compromise on quality. This dedicated attitude to finding exotic and exciting tastes takes the product on a special journey of distillation, maturation and blending, to produce the ultimate, unrivalled blend. The flavours, derived solely from the simplest ingredients of barley, water and peat, are mythically transformed through distillation and years of maturation in charred wood casks before being unleashed through the craft of the master blender.” 

You can’t be serious. I don’t give a *@#%@# that you are doing a new advertising campaign.

Make good booze. Tell me about that. This is a far cry from the amazing short film that JW did a few years ago with the wonderful Robert Carlyle:

Now THAT makes me REALLY want a whisky.

I’ve been more and more interested in smaller organizations lately. Many small businesses and associations are using social media very well. But many others — among them people who I’ve worked with or who I’ve taught social media courses at Algonquin College — find social media to be a perplexing challenge.

Maddie Grant, series creator

I think one of the biggest parts of the social media challenge for small businesses and not-for-profits is to create a strategy that allows them to be confident they can meet the demands that social media place on an organization. I think it’s crucial that organizations without giant budgets or staff have a chance to create and maintain an effective social media presence.

You’ll have a chance to learn how to create a content strategy as part of a small organization from… well, me, this August. I will be part of the Summer Think Tank Series presented by SocialFish and CommPartners. This series of webinars is bound to be useful for people working in associations, not-for-profits, or any small organization. Maddie Grant has led the development of this series of webinars, and she has done a pretty impressive job.

Check out this lineup:

• July 12: David Svet and Heidi Hancock will talk Pinterest for nonprofits
• July 26: Debra Askanase and Shelly Kramer will present on Google+ for nonprofits
• August 16 (my birthday!) I’m in the middle with Your New Content Strategy
• August 30: Gini Dietrich will talk how nonprofits can apply the lessons of  her new book Marketing in the Round
• September 13:  Amy Vernon will talk about Creating Content that Works.

Each of the webinars costs $129 US, and the whole series can be purchased for $499 US. And if you drop me an email, I might even have a discount code for you.

It’s a real honour to be in the lineup with these talented communicators who I like and respect. And I’m looking forward to finishing the presentation and doing it online, hopefully with you in attendance.

Hopefully, you know more about your advertising effectiveness than John Wanamaker did.

One of the classic quotes from the world of business is attributed to John Wanamaker:

 Half the money I spend on advertising is wasted; the trouble is I don’t know which half.

I’m guessing this is a familiar refrain for many business owners. It’s easy to spend money on advertising, whether it’s in the community paper, the local daily, radio, or online. Wouldn’t it be nice to have a gauge that you could use to measure the effectiveness of that advertising?

But before I give you a few tips, a couple of theoretical points to address. First, it can take multiple exposures to a message before people will act on it — or even notice it. This is called, in the business, “effective frequency.” So don’t think that you can simply run an ad, and based on that one exposure, people will flock to your business.

Second, advertising plays a different role for businesses at different stages of their lives. Al Ries, a renowned brand strategist, characterizes it this way: “PR creates brands; advertising defends brands.” So if you’re a new business, you might be focusing your efforts more on the PR side. If you’re an established, mature business, advertising may be taking a more prominent role.

So once you have a strategy in place and understand the role advertising plays in it… how can you tell if you’re wasting your money? There are some simple things you can do:

1. Track online. QR (Quick Response) codes are those square barcodes you see on ads, posters, and the like. If you use QR codes in your advertising, you can track how many times those codes are scanned. Even if you don’t use the QR codes, utilities like bit.ly offer similar abilities to track clicks (By the way, bit.ly will generate QR codes that you can use too). And plan out what your call to action will be. Don’t just send people to your website — create a specific page to point them to. Then you will know by traffic if your message is getting through.
2. A/B testing is your friend. This may sound a bit intimidating. But the concept is simple. Don’t just run one ad. Run two, with a variation in imagery, copy, and the like. Then use the tracking tools mentioned in tip 1 to look at which one is performing better. The easiest place to do this is online, using platforms like Facebook Adverts or Google Adwords, but you can do similar things with other forms of media, like print or direct mail. And it’s particularly important to do this when using Facebook ads, which according to online marketing smart guy Brian Carter, “burn out” far more quickly than other forms of advertising.
3. USE YOUR KNOWLEDGE. All of this stuff is only cool if you use it. Tracking the impact of your ads, measuring A/B results — you need to dedicate the time necessary to understand what the numbers are telling you.

Ryder Hesjedal kisses the Giro trophy (photo: steephill.tv/Reuters)

Yesterday was an uncharacteristically big day for me in terms of keeping an eye on sports.

Here in Ottawa, some friends were running in the Ottawa Marathon, so I wanted to know how they did (PS: WOO Karen!) In Indianapolis, one of my favorite drivers, Dario Franchitti, won a thrilling Indianapolis 500 victory. In Monte Carlo, the classic Monaco Grand Prix was won by Mark Webber.

But most important of all for me: young Ryder Hesjedal of Victoria, BC, won the Giro d’Italia. Ryder is the first Canadian cyclist to win a “Grand Tour”, as races like the Giro are called. Ever. To this cyclist, the accomplishment is superhuman. In three weeks, riders travel the equivalent of Vancouver to Sault Ste. Marie (or, if you’re an American, from the TransAmerica Tower in San Francisco to Harpo Studios in Chicago.) Along the way, they ride some incredibly difficult climbs, with gradients that can average over 10% and peak over 20% (think bicycling up flights of stairs). At the end of each day, the sprinters push their bikes up to over 40 mph and jostle their way to the ribbon.

And cyclists do this day after day (in the Giro and the Tour de France, there are two rest days in the three weeks of riding), sometimes after falling. Remember this from last year’s Tour de France?

The second rider falling was named Johnny Hoogeland. He went upside-down into barbed wire. He got 33 stitches. After he finished the day’s race! And then he finished the tour – 12 more days of riding. With 33 stitches.

My point is: cycling is a tough sport, an incredible feat of athleticism. In Europe, it’s also a massive sporting event. The budget for the Tour de France in 2009 was $140M US. 15 million spectators see the Tour pass by them, and it’s estimated that spectators spend more than $50M US. It’s broadcast worldwide, and there are 3.5 BILLION television watchers.

But in North America, it’s an extremely niche sport, even after Lance Armstrong. Most of my friends are casual observers of cycling at best. When I went to my local pasta shop yesterday, I suggested they do a Ryder special to celebrate the victory. I might as well have suggested a “Red Planet” special to celebrate the existence of Mars.

What’s all this cycling crap mean, anyway? What’s my point? Well, I have two.

1. Context. 
2. Culture.

When you’re doing social media work for your business, you need to have an intimate knowledge of your context, and your culture. If you’re selling baby clothes online, then don’t talk about Maxim magazine. If your chosen community is marathoners, don’t talk about swimming.

How do you figure out what to talk about? What matters?

Step one: LISTEN. To understand your audience, your community, your market, LISTEN to them before your start talking.

Step two: CONVERSE. Don’t pitch. Don’t sell. CONVERSE. Talk to people about what they do, talk to people about what’s happening in the interest that you share.

Just because you care deeply about something doesn’t mean your friends, your customers, or your community automatically does. Test the waters. Understand the culture of your community. Understand the context of your business. You don’t make the rules. The community does.

Except in this case, where I got to talk about Ryder Hesjedal.

I got pointed to an interesting slide deck yesterday from a company called ABLE. ABLE is a NYC based company doing social media marketing for food and wine clients. They did a survey of French and US wineries about how they used social media.

The short version of this? More wineries are active on social media platforms in the US than in France. And the US wineries are reporting that Facebook is a particularly powerful tool to generate sales.

Part of this is boosterism. ABLE quite naturally wants its potential clients to believe that social media is a must for them, and that they need to devote more time, money, and resources to it.

But there are some surprising numbers in here. What do you think of these?

• 4 in 5 French wineries don’t have a dedicated marketing manager creating content on social networks.
• Fewer than 1 in 13 use FB advertising.

Now, the report does suggest that France’s wineries are jumping into the social media vat of grapes with both feet. But there will be challenges ahead for French wine. How will they prioritize markets? What will they do to ensure they’re creating content that matches the culture and languages of their markets? And how will they ensure that they’re doing their social media work strategically, rather than just hopping onto Twitter or Facebook?

I wonder if Vaynermedia has been watching this happen. Would seem a natural place for them to excel.

And I wonder if there were any indications of how wineries are measuring what they do against goals they set for themselves.

I was watching my local newscast the other night when I watched a story about a local — and legendary — butcher shop.

Aubrey’s Meats is over 100 years old, and located in the Byward Market, one of Ottawa’s oldest areas. This may be one of its problems, actually. The Market, as it’s known to us Ottawans, is usually packed with a combination of tourists in search of the right tchotchke to take home to a coworker or maiden aunt and young revelers heading to The Heart and Crown or the Chateau Lafayette to get their drink on. If I’m gonna buy some steaks or a nice roast for the grill I’m not going to head to the Market.

But I digress. Aubrey’s Meats, according to its own “About” page, found itself in a serious bit of difficulty recently. The death of its owner and his declining health meant employees were running the shop. And not too well.

…in December 2010, Catherine Davis, the store’s bookkeeper, was made ad-hoc manager of Aubrey’s. When she took over, certain employees had run our store, between rent to the city and money owed to the suppliers, into a debt in excess of $300,000. Though it didn’t appear so, Aubrey’s was a sinking ship that some might not have tried to save. Out of a respect for Brian and his work, and an undying faith in this store’s potential, Catherine set about to keep Aubrey’s afloat.

So they were in trouble. Like some on a sinking ship, they grasped at anything that looked like it might help them float. And what they grabbed were Groupon and Kahoot.

They embarked on a number of different offers. One offered $200 in value for $89. They sold over 1000 of those. They offered others at $55 for $175 worth of meat. They sold thousands of those.

HANDLE WITH CARE

The hammer started to fall for the people running Aubrey’s when they realized that they couldn’t fulfil all the orders placed. So they limited it to redeeming $50 worth of meat at a time. Now they’ve suspended all redemptions until May 1.

What went wrong here? I think it should be obvious. The cash crunch they found themselves in made them decide to try this for an immediate cash infusion (even though they only get a portion of the revenue — according to the butcher who is the spokesperson for Aubrey’s right now, each $55 coupon resulted in $24 in revenue to Aubrey’s). But they didn’t look even one step down the road to figure out what to do if they SUCCEEDED with the offers. I feel for Aubrey’s employees. It sounds like they’re in a tight spot. But they’ve done themselves no favours by pursuing this strategy.

The companies which marketed their deals? I’d wager that they’re in no way suffering the way Aubrey’s is.

This isn’t a new story. Others, including my buddy Anne Weiskopf, have written about some of the challenges of managing daily deal sites for small businesses. Don’t just dive in. Think about the risks AND the potential benefits. If you’re new to doing that sort of thing, get advice. And if you’re considering a daily coupon site, you need to not only ask what will happen if your offer goes nowhere, you need to  think VERY carefully about what the implications of SUCCESS will be. Dying of popularity is not any better than dying of neglect. 

___

UPDATE, January 23: Three of the four companies which issued coupons for Aubrey’s meats are refunding those coupons, according to CBC Ottawa. Those are: Team Buy, DealFind and Groupon. CBC is reporting that Ottawa-based company Kahoot told its customers:

“We have been made aware of these unfortunate circumstances regarding Aubrey’s. Unfortunately we are unable to refund vouchers outside of seven days after purchase. If interested in a refund, we suggest going directly to Aubrey’s as they are now liable for their commitment to honour all vouchers sold.”

I wonder if Kahoot has thought about the several thousand people who bought through them rather than another of the coupon sites, and how likely they are to return to Kahoot to purchase.

UPDATE, JANUARY 24: I’ve asked Kahoot a couple of questions:

1. Can you provide the statement sent to customers who purchased Kahoot deals for Aubrey’s?
2. Is Kahoot concerned that its decision to not refund coupons will cost it brand loyalty when compared to the decisions of Teambuy, DealFind and Groupon to refund the coupons?

I’m hoping for a reply more substantive than this one from them:

Just 3 more and I get one free!

The Consumerist is one of my must-read blogs. But I don’t necessarily read it for solid marketing and communications advice. Until this morning, when I opened up my feed reader and found a post called “The Silly Hat Shop.”

It reminded me of a cool furniture store in my neighbourhood in Ottawa. They sell the sort of furniture that funky condos would have, as well as custom design services for furniture.

On their door, they trumpet that they’re on Twitter, Facebook, and LinkedIn. What’s that mean? For Twitter, they’ve posted 76 tweets in two years, with less than 50 followers. Most of those tweets are for sales on their products. On Facebook, a page with 133 friends and an unending series of sales. And on LinkedIn? Well, they have some employees there.

What does their online presence say to me? I’m NEVER buying full price from them, and they aren’t that different from a Leon’s, a “The Brick”, or other furniture stores.  In short, Ben Popken needed a hat and bought one at a new hat store. They then subjected him to a variety of marketing and loyalty techniques that, in his opinion and mine, don’t fit a hat shop. A frequent buyer card? Really?

I’d also wager that neither the hat shop nor the furniture store have put a second of thought into how they are going to evaluate the success of their frequent buyer club or their Twitter account.

Being a great buyer / retailer of hats, of furniture, of whatever, does not make you a great communicator of what you’re REALLY all about. If you sell great funky furniture that deserves premium treatment — and prices — why not treat it that way? And act as if you’re a trusted advisor rather than a salesman? If you sell hats, don’t treat them like they’re a cappuccino.

And if you can’t think this through because you’re too close to your store, too much in love with what you do — hire someone with a clear vision and trust their insights to do it for you.

(Photo CC licenced from Flickr user Slimmer_Jimmer)

Saw a chart today from Silicon Alley Insider:

There was something about the reported result that 21 per cent of consumers said they subscribed to the local paper mainly for coupons that made me go “hmmm.”

Apparently, coupons are growing (at least in the US — I can’t quickly find Canadian statistics). US coupon company Valassis had some interesting numbers in a report (registration required):

• In the first half of 2011, US companies distributed 167 billion coupons — that was down from 2010, but apparently up from 2008 and 2009
• Almost 90% of those are distributed either through inserts in newspapers or by direct mail
• Digital coupons are growing at a faster rate than traditional coupons

• Is there a value in unredeemed coupons — even if I don’t clip and use a coupon, does it offer some value as an ad?
• Is this a rate of return that businesses are really happy with?
• Are tools like Groupon and their competition any better?
• Do the numbers on coupon redemption suggest that there’s something wrong with the survey charted above?

Help me understand this, will ya?

Last month I blogged about my frustration with a lack of solid Canadian data on Internet use.

That frustration has by no means abated. Since I wrote that post in mid-December, I’ve been trying to get information about the seemingly moribund Canadian Internet Project, but so far to no avail. The good news is that sometime between December 16 and early January, their site went back online. However, the last content added seems to be a 2008 report titled “Canada online!” based on 2007 data.

There was a glimmer or two of light on the horizon though. I learned that Industry Canada has a team working to refresh its Digital Economy site. That’s good. And then yesterday, my friend Lydia pointed me to a report from new research firm Abacus Data that’s just come out this morning.

“What’s the big deal with Facebook” is a 10-page report based on a public opinion survey that explored who’s using Facebook up here in Canada and what they’re using it for. There’s some fascinating data here. Some of it is confirmatory of hunches that most of us have — that the younger a person is, the more likely they are to use tools such as Facebook and the less likely they are to see sharing information as risky. But just having confirmation of this is useful.

But here’s the big story in the data for me:

Graph from page 10 of the Abacus Data report

The fact that the number of people identifying Facebook as the most likely source of information about their friends goes from 8% for 60+ folks to 46% for 18-29 year-olds is information. But look at that text messaging bar. That’s 1 in 5 young people getting friend information via text.

That’s an amazing shift in carrying information. It requires incredibly condensed language; it also requires incredible virality — that text needs to push the receipient to pass the information on to another person. And that means that within the incredibly condensed language, there has to be attention and time to pushing on information — the texts have to have “hooks”. I’m not suggesting that 18-29 year-olds are taking marketing classes — I’m suggesting that unconsciously they’re practicing a version of SEO for texts and interpersonal communication. What is that? Would you call it TFO — text forwarding optimization? I’m not sure.

I’m really excited that Abacus Data is doing this work. Perhaps eventually, we’ll have a lively and productive Canadian Internet Project doing the same thing.

And in the meantime, I’m still hoping that people will ask  – or answer — themselves why we have so little native data on such an important phenomenon.