Facebook Advertising. P&G Failure.

Facebook AdvertisingI just read an interesting article in the Wall Street Journal about P&G (the largest advertiser on the globe) and its experience placing Facebook advertising in front of a highly targeted audience.

It seems that Proctor and Gamble had very limited success with the venture so far. It seems counterintuitive that it would not work as expected. Consider this:

P&G Facebook Advertising

The P&G brand Pampers is able to target new moms and pregnant women on Facebook. The very audience it NEEDS to excite to purchase. Feels like a no brainer. But P&G found the resulting sales less than exciting. As a result, while not giving up on Facebook, P&G is going to increase its TV advertising next year.

What is missing in Facebook advertising?

In other words, Proctor discovered that broad based rather than strictly targeted ads work better. What it is not grasping fully is WHY.

For most of the marketing world, P&G wrote the book on branding. In fact, it doesn’t really understand brand very well. What it invented and took to the level of a science is brand management. The entire marketing focus is on brand teams and the tight relationship between the brand managers and the product.

The reason the Facebook initiative is not working all that well is because the types of advertising that marketers create on Facebook turn out to be product ads and not brand advertising. The snippets are akin to billboards. They focus on efficacy and pricing, not on branding.

I say this because contrary to what P&G has made into its culture, branding is not about the product or HOW it works. Branding is about WHY it matters to the target audience.

Jif Facebook AdvertisingBranding works

The greatest brands in the world are, at their core, a reflection of the customer they need to influence. The greatest promise that Pampers can make is not how dry the baby is when you use Pampers (after all, every disposable diaper keeps the baby dry). It is about WHO the mom IS when she uses Pampers. How a Pampers mom is different and better than those that use a different brand.

Think of Jif peanut butter. Sure it promises that it tastes more like fresh peanuts but the brand promise that choosey mothers choose Jif is the driver of preference. That’s the sort of brand message I am speaking of.

To make Facebook advertising work for marketers, they need to have a MORE emotional message than they do in virtually every other medium. Facebook users have the attention span of a gnat and you must grab them in the gut to get them to invest in a message more intrusive than a billboard or coupon.pampers Facebook Advertising

If the medium is the message, then P&G must be better at selling the brand and not the product. It’s a brave new world of marketing and traditional advertising is becoming less effective. Advertisers struggle to become more effective and targeting sounds like the answer. It is.

But it requires a rethinking of what branding IS. The halls of P&G must stop harping on the agencies in the Proctor tent with the uniform call of “where is the demo” to an up-to-date demand of “where is the prospect’s emotional needs?”

Pop Culture lives on coolness

Pop Culture relies on fashion sensabilitites

Volkswagen as pop culturePop culture is a risky brand business. I heard a report this morning on Marketplace about Volkswagen. Basically, the report focused on the effects of the VW settlement on the automaker’s product development pipeline. The reporter stated that the multi-billion dollar settlement would make the Volkswagen new model pipeline a bit bumpy. He said that it might put a crimp on the innovation that VW hopes to achieve to keep their product line COOL.

Cool is a scary word for me in the branding business because the idea of cool is all about making a connection to an aesthetic sensibility that is connected to personal taste in an odd way. In some ways, maybe many ways, cool can be defined as a fad.

Cool is hard to bank on in pop culture

What was cool yesterday in pop culture may not be cool today. What was once considered cool can digress into downright kitsch. If you want proof, take a trek to Graceland and – aside from the greatness of Elvis’s talent itself and the voyeuristic thrill of peering into the private life of a celebrity – you’ll find that there is NOTHING in that mansion that we covet today.

Graceland is Pop cultureWe don’t want the blue shag rugs or the clumsy devices that passed for high tech in the day. What was once cool (and even, in the case of Graceland, where no expense was spared) is just a pile of dated junk. Pop culture cool just does not have legs. Cool by definition is mercurial.

Apple used to be cool. Much of that coolness came from the charisma and genius of Steve Jobs. Since his death, Apple is just innovative and has yet to hit the mark with the same coolness that Steve naturally oozed and made Apple products de rigueur.

Cool can be a goal for some brands. But hitting that sweet spot is a difficult task in pop culture. Predicting success is even more difficult.

Recognizing what is cool and developing product to that standard is near impossible. The parent brand can deliver permission for its coolness but adoption of that next cool thing is more about happenstance.

But it is not just a problem with Pop Culture

Movies as pop cultureThink about this for a moment: The major movie studios try to produce blockbuster movies. While they may not use the word cool to describe their intent, you certainly would not be stretching the definition of coolness by thinking about it in terms of a movie’s appeal.

What interests me here is how often the movie industry misses the mark. The studios invest millions of dollars in a script, director, cinematographer and proven stars and still turn out a BUST. You would think, with all of their resources, they would have more hits than misses. But predicting popularity is that near impossible.

Brands that make their reputation and mark by being considered cool are only as valuable as their latest iteration. The rest is left up to chance.

Honey Nut Cheerios Healthy Hearts

Honey Nut Cheerios hits a home run

Honey Nut CheeriosHoney Nut Cheerios is one of General Mill’s flagship brands. The cereal market is in a death spiral (read our in-depth market study on the cereal and breakfast category here) as tastes and consumer patterns change. Breakfast cereal used to be the staple food at breakfast tables across the globe but times have changed.

Honey Nut CheeriosThe venerable brands of my youth (Kellogg’s Raisin Bran, Kellogg’s Cornflakes, Post Raisin Bran, Wheaties and even Cheerios) are hard at work trying to expand the market.

Time was all of the advertising dollars was directed at kids. Even Wheaties (the breakfast of champions) was targeted at getting kids to prefer the cereal over other choices. Today, more and more brands are simply trying to expand the traditional audience by including adults in the advertising too. Most to little effect.

The reason for the failure is that brand permission does not come by simply featuring the target audience in the communication. You need to have the target audience say to themselves, “I want to be that.”

Enter Honey Nut Cheerios

The Cheerios parent brand has been talking heart healthy for many years now. There seems to be no dissenting voices in science that there are REAL benefits to oats (oat bran in particular) in the health and vitality of the human heart. But the message of heart healthy has done very little to expand the category and, while one of the more successful rebrands in the cereal market, Cheerios has continued to disappoint despite outperforming many others in the category.

But the Healthy Hearts Stay Young campaign may be a real game changer.

The commercial has the mandatory adult and child but the similarity ends here. The spots are an exuberant and charming combination of energy and brand without the usual feature of focusing only on the product. The spots are mesmerizing and are so well produced that you find yourself stopping on the commercial when channel surfing. The main spot is THAT good. The supporting spots are less powerful because it is the adult in the main commercial that is most appealing.

Stop the other branded slop.

General Mills Logo Honey Nut CheeriosThis campaign truly builds brand preference. I want to be THAT and I’m sure I am not alone. The precocious child is overshadowed by the talented adult and it is her movement and agility that holds sway in the spot. I simply can’t take my eyes off her and even see the little girl as a distraction. Despite the lack of traditional brand identification, I remembered this commercial as being all about Honey Nut Cheerios. It worked.

Scrap the silly honey bee, General Mills. He (or she) may be cute but the commercials are all about YOU and the natural ingredients. You took the bold step of making your prospects feel that they want to be part of the club and we don’t need any rational reasons why your honey came from bees. To my knowledge, all honey comes from bees.

A few words on Kellogg’s

AAPL Apple sales shrink

What is wrong with Apple (AAPL)?

AAPL-stock-chart
AAPL dropped 7%

It still turned a huge profit (one that most brands would tout as a great quarter) but most investors are worried that the Apple magic is gone as AAPL was down 7% in after-hour trading. iPhone sales did not grow for the first time ever and Apple’s sales declined for the first time since 2003.

Pundits talk about Apple’s lack of innovation in its product portfolio. Nothing has REALLY been new since the Apple Watch if you discount brand extensions of different sized iPhones and iPads.

Even music sales have moved beyond Apple’s iTunes store as more and more music consumers subscribe to streaming services and no longer buy music. What was at one time a disruptive technology, iTunes now seems like yesterday’s news.

But the REAL problem is an emotional issue. It is a brand problem.

Apple. The world’s most powerful brand (Ticker symbol AAPL) does not look so indomitable as it once did. It looks, well, vulnerable.

What is missing? Magic masqueraded as vision. Steve Jobs is missing.

I own AAPL and virtually every Apple product

 As an Apple guy since I bought my first Mac in 1984, I have never owned a PC. My first smartphone was an iPhone and my first tablet was an iPad. I have upgraded all of my purchases along the way and own an iPad Air, iPad Pro, iPhone 6, MacBook Air, Apple TV (new generation) and AirPort routers. Even our office server is a Mac.

AAPL and CEO Tim Cook
Tim Cook

AAPL Apple LogoIf you look at my stock portfolio, I own a nice chunk of AAPL. I bought most of my AAPL stock before the iPhone launch and have enjoyed both growth and more recently dividends from the company. But my personal identification has suffered. I don’t have the personal connection with the Apple brand I once knew. I even occasionally miss the Keynote announcements that were once marked in my weekly planner.

I used to think
of Apple in personal terms. I thought of Apple in terms of Steve, the mad genius behind the curtain. I waited with baited breath for the next insanely great product that all came in rapid succession since the introduction of the first iMacs.

AAPL and designer Ive
Jonathan Ive

I like Tim Cook. I think he is an amazingly competent CEO. I admire Jonathan Ive, who is more than just a gifted designer. I still love the products. But it is harder to have that deep of an emotional connection to the company.

Like most of you, I felt I had a relationship with Steve. I recognize that it was a complete fabrication of intimacy, but those of us who buy emotionally into brand loyalty rarely self examine the core reasons why we care so deeply. We care and that is enough in itself.

Apple could come out with a reinvention of the automobile. It could reinvent the television. It could reinvent the Steve Jobs and the iPhone grew AAPLkitchen for that matter and it would not replace the loss of connection I felt with the brand itself.

Apple will continue to be a powerful brand and will continue to innovate and make money. AAPL will rebound from its current drop and take its place in the world of Blue Chip stocks. But, make no mistake, the BRAND (as an emotional religion) is in decline.

I may appreciate BMW and IBM but I do not LOVE them. That died with Steve Jobs. I held onto the scraps of that affection for a long time. But I no longer think it blasphemy to buy a competitor’s product. Suddenly, I am looking at product benefits and attributes and the blind affection that arose from the elevation of the brand to mythical proportions is sadly gone.

Affinity programs and why they fail.

Affinity Programs Rarely Create Affinity

Almost all businesses from retailers to transportation companies have affinity programs designed to foster brand loyalty. Most work very poorly and often are simply a table stake in the category. Retailers, manufacturers and airlines will often find that their customers belong to a host of affinity programs that most certainly includes their competitors. (Affinity programs are an extension of CRM. Read an article on CRM here)

Affinity programs are similar to coupons

In many ways, discount coupons can be part of the affinity programs because they are all aimed at fostering trial and gaining repeat business.

As retailers know all to well, this sort of affinity program has severe limitations because consumers all begin to regard the couponed price as the real price.

Affinity programsAs a result, a business built on couponing lowers the standard price point significantly and reduces margins. P&G (Proctor & Gamble) are victims of this game. As margins reduce so do advertising dollars. What these packaged goods giants are left with is poorly supported brands that rely on a discount price for business success. Not a very good model to say the least.

I have written extensively about the airline industry in the past. Nowhere are affinity programs more a part of day-to-day business and many are utter failures. Often times the programs seem more like a criminal sentence rather than a benefit. Let me give you a personal case in point.

Airlines use affinity programs as a cornerstone of customer relationships

I have frequent flyer accounts on a multitude of US airlines. These affinity program accounts promise advantages on international carriers as well because of the alliances (like the STAR Alliance, SKYTEAM or ONEWORLD Alliance). I am a perfect example of a prospect who belongs to a host of competing programs. How then do the airlines try to compete for my business? In a word—Status.

United Airlines affinity programsWhen you fly as much as I do, gaining status on one or more airline is not that difficult. The key number to remember is 100,000 miles. Generally, at that threshold your status is considered premier. Don’t confuse this with PREMIER STATUS, which is an industry designation. I am speaking of having gained a premier position in status over other flyers. And this is where the trouble begins. The promise of status is very different from the reality.

I have flown over 2.5 million miles on United Airlines. As a result, I earned their top tier status. I am officially known as a Star Alliance, 1K Gold Member. This means I have flown over 100,000 miles in the previous calendar year. Sounds impressive on the surface but the system really falls apart after that.

Global Services. The Pinacle of Affinity Programs

On United Airlines they have a special status known as Global Services. If you have ever waited in your designated line at a United gate you have probably heard this group called to board the aircraft after people with disabilities that need extra time to board and in conjunction with military service people in uniform. United does not disclose how they formulate the invitation to Global Services but there are plenty of blogs around that speculate in a revealing if not an accurate way on just how they do it.

Global services is the ultimate affinity programTwo years ago, United awarded me with a Global Services member invitation. Benefits included first on the aircraft boarding, upgrades to first class 72 hours before your flight based upon availability. A separate phone line to call to speak with a Global Services representative. No fee charges to change a reservation. Hotel rooms paid when needed —regardless of the reason (including weather). And if possible, they will even pick you up at a connecting gate with a tight connection and whisk you off directly to the next gate in a company automobile. I have even had them bump a fellow traveler from a flight in order to guarantee me a seat in a last minute change.

Affinity programsSounds pretty good. And it can be. The problem is in how United manages the Global Services membership. It turns out that Global Services status is not based upon miles flown but rather the revenue you generate for the airline— in comparison to your peers.

This past year, for example, I flew my usual 100,000+ miles on United. I also have a United credit card upon.which all of my travel is booked. My Hilton Honors program is linked to the United account (Hilton touts it as double-dipping) and even my Hertz rentals get logged into my United Mileage Plus account.

This year, United took away my Global Services status. The reason? Because their revenue was down on my total spend. I’m now just a 1K flyer.

I know, who am I to complain. Well I’m going to complain and I’ll tell you why. I am a human being and we all feel about our privileges in the same way we feel about a coupon price being the REAL price. Once we have it we feel punished without it.

How should affinity programs measure affinity?

What United did not recognize was the value of my long term business with them. They have no metric for understanding it and as a result will be the ultimate loser in this game.

American Airlines affinity programsAs a 1K, I’m on upgrade lists but I rarely get them because they continue to discount the first class seats up until the time of departure and award the remaining seats to any and all Global Services members. I no longer have a designated customer service rep to help me sort through the myriad of travel issues that accompany this many flights per year. On top of this, no one cares if my connections are tight or that I miss flights because of delayed connections. Well, almost no one because my clients and I care. It’s just that United does not.

Affinity programs

What United does no know is that I also have a premier status on American Airlines. I am an Executive Platinum with American and United just said goodbye to  all of my business.

Here is a bit of history. My local airport is a small regional one in Greensboro NC. Aside from a few select destinations like New York, Chicago, DC, Atlanta, Philadelphia and Dallas all flights require a connection. Many years ago I started flying with US Airways because they had the most connections out of Greensboro. I could get almost anywhere in the nation via a short 20 minute connecting flight through Charlotte NC.

As my international business grew, I began to fly more and more on US Airway’s STAR Alliance partner United Airlines because they had great connections internationally through another partner airline Lufthansa. Over the years, I flew more and more connections through United as opposed to US Airways because the hubs of Dulles, O’Hare and Newark worked as well for me as connections from Charlotte.

This seems to happen to everyone. Affinity Programs lose relevance.

What happened to me, as often happens to frequent flyers, is that my status with United grew and I tried to consolidate more of my flights with the airline to gain greater status. In an odd twist, United began to cut service from Greensboro at about the same time they acquired Continental Airlines.

United eliminated direct flights to Houston (a Continental staple flight), took on the Newark connection route and eliminated all real United flights from my airport. In its place they flew only United Express flights from GSO (as Greensboro is known) which utilizes small regional jets and are owned by companies like GOJet and other regional carriers. These flights were smaller and more cramped but the longest leg of the connection was Newark and you can put up with anything for an hour and a half.

Affinity programsThe next shoe to drop occurred when US Air merged with American Airlines, thus eliminating the option of any connecting flights through Charlotte. American is part of the ONEWORLD Alliance and not the STAR Alliance. At the same time as this merger, United stopped flying jet aircraft between GSO and Dulles and replaced those flights with a turbo-jet WW2 throwback that added 20 additional minutes to the flight.

Then United cut back on the frequency of flights eliminating the possibility of caching an afternoon flight out of DC for any international flights. Reliability of the on-time arrival of the connections was so bad that I took to always taking the earliest flight. Regardless of the length a layover I flew early because I was consistently missing my connections on United Express from Greensboro. To be safe, the best bet was first flight out in the morning on flights that originated from GSO.

Affinity programsThrough all of this turmoil, I remained loyal to United because of my Global Services status. They bailed me out of many a tight squeeze by meeting me at the gate and shuttling me to my connection. They provided me with the flexibility of flights by booking me on competing airline flights when the connection failed to work as planned. They treated me as if I mattered. As a result, everyone in my company flew United because often my colleagues fly with me. United failed to measure this value.

Affinity programs and the nNFL Baltimore ColtsThis past January, when United dropped me back to 1K status I gave up my loyalty. The reduction in status did not make me want to try to book more flights with the airline in an attempt to regain status. It had the exact opposite effect. It made me angry with them. I felt like a Baltimore Colts fan who had an emotional connection to a team that left me stranded in the middle of the night.

Suddenly I realized that my belief that I mattered to them was a figment of my own imagination. The affinity program was completely one-sided. They had no affinity for me.

In measuring my value to the airline, they failed to take into account the sacrifices I made to remain loyal. They also failed to calculate the value my fellow employees brought to United by flying with me. They completely missed the point. Affinity must work both ways or it simply does not work.

The brand opportunity for affinity programs

Here then is the brand effect of affinity programs; the value of a member needs to be calculated as a lifetime benefit not a short term measure. Once a benefit is granted it should be considered long term because anything less than that is viewed as a punishment. So the threshold of premier benefits needs to be a bit higher and the forgiveness of not meeting that criteria once gained needs to be significantly lowered.

Cvs affinity cardIt is possible that all affinity programs are incomplete or failed attempts at fostering loyalty. Often they begin to feel more like handcuffs than they do a life-line. The very act of specialness always requires that many be left out.

Think about this for just a moment. How special would it feel to be a premier member only to find out that everyone had the same status and boarded at the same time? You see the conundrum. Signaling out specialness is a double edged sword. It must cut a bit but not so much that it hurts.

Affinity programsThe airlines are in deep trouble. Currently, their revenues are up but that is due only to the dropping cost of fuel. They have never understood the costs of doing business and they continue to miss the value of customer loyalty. For the airlines the battle is defensive not offensive. They struggle to maintain loyalty and have very little to offer in the battle to steal market share.

To make up for this they have created affinity programs that express no love for the customer or prospect and reward only short term investment. They have never developed a metric to understand real value and fail to measure and reflect the sacrifice the member has made to remain loyal.

We have many choices in today’s world and most of us chose based upon short term values. Businesses, or rather brands must have a longer horizon. If they do not they become prisons rather than coveted havens.

 

Airlines and thier markets

The retail category market study

The worst marketing. Airlines.