Facebook’s Incredible Potential as an Offline Retail Tool

Could Facebook Ads Replace the Circular for Retailers?

By: Dave Williams Published: November 09, 2012

With more than a billion users, Facebook has become a powerhouse in display advertising, but some continue to question whether Facebook ads can drive offline purchases.
That’s starting to change, as studies have indicated that online posts can have a huge impact on consumer action away from the platform. This correlation, along with Facebook’s commitment to new and improved ad products, means that Facebook is about to become the primary marketing tool for retailers and their brand co-marketing partners.
The long-awaited online to offline correlation comes from a study that recently appeared in the journal Nature that found that a single message sent to 61 million Facebook users influenced 340,000 of them to vote when they otherwise would not have. During the run-up to the presidential election, we saw major candidates, political parties, and a slew of advocacy groups turn to Facebook in an effort to sway undecided voters and drive voters to the ballot box.
It also implies that Facebook can influence offline shopping behavior, too, which is great news for retailers. Physical stores still account for 93 percent of total sales, and circular ads have historically been retail’s biggest tool for bringing consumers into stores. Retailers have been looking for a digital way to drive foot traffic.
Several companies have successfully built cooperative marketing structures online. Companies such as OwnerIQ, for example, enable online retailers like Crutchfield to retarget people who visit the web sites of electronics manufacturers, offering the flatscreen TVs they were just studying — at a discount. When it comes to driving brick-and-mortar sales from online, though, Facebook appears to offer the best solution yet. CPG brands gladly pay for retail circulars to help sell their products, and there’s reason to believe they could buy Facebook advertising to drive consumers into retail locations.

One company with which we work, ShopLocal, puts a retailer’s circular content into a database, including images and all the sale prices and details. In so doing it makes local data portable and extendable, so retailers can build online-only pages of the circular, or utilize QR codes to generate more content than exists in the print world.
The future of retail involves bringing circular content into as many channels as possible in a seamless fashion, to maintain consistent messaging across all media, including mobile, video, digital out-of-home. If the retailers or their brand co-marketing partners import that data into Facebook, they could reach a much wider audience with more precise targeting than typical display.
Facebook offers insight into consumers’ interests. So an advertiser using ShopLocal’s services could show someone who Likes a particular brand of soap an ad showing the product on sale at a nearby retailer.
Facebook users not only respond to offers, they actually share them. According to the social network, three-fourths of the 100 most popular “offers” claimed were not from users who were initially targeted, but from someone who saw the offer after it was shared. The offers create more awareness when they are shared, and even better is that they work.

BLiNQ Media was recently able to demonstrate an online-to-offline push to an ice-cream store on a day that normally draws very little foot traffic. By asking these Facebook users to mention the coupon, we could measure how many had come because they saw an ad on the social network.
The Election Day study in Nature validated our anecdotal experience. Local-level targeting gives retailers a huge advantage, enabling mom-and-pop stores to compete with big-box chains.
Another key challenge of course is measurement, which ties us back to the examples mentioned before. The Election Day story took years of research, while the ice cream campaign involved a single coupon good at one particular store. It’s complex to measure the effects of extending multiple offers that are valid at many retail chains in different geographic regions. For Facebook to succeed at driving offline purchases, retailers must feel confident that digital ads lead to in-store sales.
Third-party solutions are popping up, and Facebook is working closely with partners such as Datalogix, which uses robust in-store retail data to prove that ads work and to determine the right frequency, duration, messaging, and targeting that will produce the optimal offline results.

Showing Facebook users customized ad experiences based on the right creative message, targeting, and frequency localized for the consumer clearly helps drive in-store sales, which is the ultimate goal of every retailer. Retailers can take the first step by viewing Facebook as an excellent place to distribute weekly circular offers, expanding their reach beyond newspapers to drive awareness on the desktop, mobile and offers shared by friends.

Dave Williams is the CEO of Blinq Media.


The ‘I Think’ Syndrome Destroys Many a Campaign

It Doesn’t Matter If You Like an Idea, Will the Target Audience Like It?
By: Darryl Ohrt Published: October 31, 2012

How many times in a brainstorming meeting have we heard statements that begin “I think that …,” followed by a personal experience related to the idea at hand. Or one of the team will say something like, “I would never watch that,” in reference to a proposed concept.
When conceiving ideas, we all want to relate to our audience target, and identify with the market. But the reality is, our targets are far different than most of us as individuals. Comments like these have killed great concepts, and can lead ridiculous concepts to execution and launch.
We demand comprehensive creative briefs prior to digging into a project. So why are we so apt to throw them aside in favor of a personal opinion? Because we’re bad scientists.
In psychology, personal construct theory professes that people act as scientists, channeling their thoughts and actions based on what they predict and anticipate. A 35-year-old single, male marketer might expect that a 45-year-old mom with three kids will act in a particular manner, based on his personal experiences. But does he have the life experience to properly identify with a busy mom?
As creative people, we’re opinionated. We want great ideas to see the light. We like our own ideas and project their success on our intended targets. And this is mostly wrong.
How can you avoid bad science? As a practice, I’ve done my best to remove “I think…” from rationalization of concepts. It’s a simple trick, but it forces you to focus on the core rationale for what you’re presenting — not why you think it’s important or destined for success. A response of “the target has shown a propensity toward this type of entertainment” is more impressive than “I think this will be huge. I know that I would totally use it.” Whenever possible, prove it out with research, strategy, evidence or experience.
Sounds like common sense, right? It should be, but once you begin listening for it, you’ll be surprised at how many clients, accounts and creative people suffer from the “I think…” syndrome. In some circles, it’s an epidemic. I’ve heard the phrase uttered by junior creatives, senior creatives and people who should really know better.
It’s time we put science and experience before opinion. I think … we can do better
Darryl Ohrt is a former punk rocker, professional internet surfer and executive creative director at Carrot Creative in NYC. He’s one of the three super-hot bloggers that make up AdVerve, and admits to knowing just enough about the creative business to be dangerous. Keep your distance.

DISCOUNTITUS, The Disease that’s sweeping the marketing community

Positioning Is the Only Cure

Published: July 06, 2011
Al Ries
Last month, J.C. Penney hired a new chief executive who used to run Apple stores. In a New York Times article, here’s how CEO Ron Johnson described his plans for Penney: “Take this great American brand and make it become something unbelievably exciting.”
Fat chance.
Most department stores are infected
You seldom see a department-store advertisement based on anything except a sale. The latest J.C. Penney ad was a six-page insert promoting a “Fourth of July sale.”
In addition to dozens of “super hot buys,” the insert features “Red Zone clearance, final-markdowns 80% off. New markdowns 50-70% off.” Also featured is “jcpCA$H,” offering consumers “$10 off any purchase totaling $25 & up.”
Belk, Dillards, Kohl’s, Macy’s, Sears and most mainstream department stores are also infected bydiscountitus.
Kohl’s, in particular. A typical mailing: “Start with these incredible sale prices of 20-60% off. Take an extra 15% off everything. Plus add a $5 bonus.”
Airlines to pizza to car insurance
In industry after industry, the discount is the focus of the advertising.
Here’s the opening dialog of a typical Progressive commercial featuring Flo and a potential customer.
“Are you a safe driver?”
“Discount! Do you own a home?”
“Discount! Are you gonna buy online?”
Over at Geico, “15 minutes could save you 15% or more on car insurance.” Geico and Progressive are the biggest spenders in the category. Last year Geico spent $741 million on advertising. Progressive, $506 million. Longtime car-insurance leaders like State Farm ($453 million) and Allstate ($368 million) are lagging behind.
Penney vs. Apple
Over at J.C. Penney, if Ron Johnson plans to use an Apple strategy to turn his company around, it’s too late. Once discountitus has spread through an industry, it’s awfully hard to eradicate.
Take airlines. Yesterday, airline companies competed on the basis of who could build the better brand. Today, airline companies compete on the basis of who can offer the bigger discounts. No wonder Southwest Airlines is a big winner, and most airline customers can’t explain the difference between American, Delta and United.
One reason why discountitus is spreading so rapidly is the internet. Clipping coupons is being replaced by typing on keyboards. Groupon and the other daily-deal websites are only one factor. Anybody who owns a computer today can get competitive prices on a host of items almost instantly.
Unless you want to spend the rest of your life doing discount marketing, you should be asking yourself, “What’s the cure?”
Believers vs. agnostics
Take a closer look at the consumer a company is trying to reach with its advertising and PR.
Psychologically, consumers can be divided into two categories: 1) Brand believers and 2) Brand agnostics. And they vary by category. They can be believers in one category (ketchup) and agnostics in another category (airlines).
Watch believers go through the Sunday supplements. They only clip coupons for brands they already use.
Watch agnostics go through the Sunday supplements. They ignore brands and clip coupons for categories. (Extreme agnostics don’t buy anything without a coupon.)
Discountitus is turning brand believers into brand agnostics. The lure of a “big discount” is enough to seduce a consumer into thinking that all brands in the category are pretty much alike.
In categories that have not been seriously contaminated, the cure for discountitus is a dose of positioning. But as Prophet, a leading marketing consultancy, reported in its latest state of marketing study: “Positioning has always been about differentiation. But in this unfolding environment, differentiation is short-lived.”
We differ on that. The cure for discountitus is not differentiation. Nor is positioning essentially about differentiation, either.
Positioning is owning a word in the mind
As discountitus spreads its way through the marketing community, that word more often than not is “leadership.”
Leadership is what makes Google the most powerful brand in the “search” category. Leadership is what makes iPod the most powerful brand in the “MP3 player” category. Leadership is what makes Heinz, Hertz, Haagen-Daz, Hellmann’s, Home Depot and a host of other brands powerful in their categories.
But how to you get to be the leader? And how does the leader keep from catching the discountitus disease?
Launch a new brand in a new category
Over the past few decades, it’s become clear that the only way to become a leader is to launch a new brand in a new category.
Like Apple did with the iPad, the first tablet-computer. Currently, the iPad has some 75% of the tablet market.
An also-ran that has been line-extended to death has no hope of ever becoming the market leader. The best it can do is to narrow its focus to shore up a position in a segment of the category.
Has Pepsi-Cola ever substantially increased its share of the cola market with Pepsi-Cola Retro, Pepsi Throwback, Pepsi Twist, Pepsi Natural, Pepsi Raw, Pepsi A.M., Pepsi Kona, Pepsi Light, Pepsi Max, Pepsi XL, Pepsi Blue, Pepsi One or Crystal Pepsi?
No, it has not. In fact, regular Pepsi-Cola has fallen behind Diet Coke to third place in the cola category.
What’s next for Pepsi-Cola? More of the same. Pepsi Next.
Lower the boom on price
If you read the papers, you know the regular price of most products or services on the market today is “50% off.”
Every Thursday, our local newspaper, The Atlanta Journal-Constitution, features “This week’s best deals.” Last week, there were eight. One was “free.” One was “40% off” and the other six were “50% off.”
That’s not unusual. By far, the vast majority of daily deals are 50% off or BOGO — buy one, get one free.
When rumors of Apple’s imminent launch of a tablet computer circulated on the internet, the pundits predicted the product would be priced around a thousand dollars.
Apple surprised them with a list price of $495. The company lowered the boom at a level that competitors had difficulty getting under. Today, you find the table-computer market remarkably free of discountitus.
Apple used the same strategy with its iTunes brand by insisting on a 99-cent price. (Don’t feel sorry for Apple. The company is making its money on volume, not on margin.)
When you’re the leader in a category, you cannot be overtaken by a competitor who thinks differentiation is going to make a big difference.
And when you’re the leader in the category and you lower the boom on price, you can inoculate the category from the disease of discountitus.

Al Ries is chairman of Ries & Ries, an Atlanta-based marketing strategy firm he runs with his daughter Laura.

How FACEBOOK makes your global brand feel local

National Brands Are Only Beginning to Understand What Local Businesses Already Know About the Social Network

Published: July 18, 2011
Dave Williams
One of the greatest aspects of Facebook for marketers — maybe the greatest — is that consumers willingly share their information, opening the door to the precise targeting that advertisers dream of. Yet many brands still look at Facebook merely as a way to acquire fans, with little thought given to monetizing that list. Very few national or international brands take full advantage of Facebook’s targeting capabilities. At this point, between 60% and 70% of Facebook’s ad revenue comes from small businesses.
Such businesses are realizing the benefits of targeting consumers on a local level, similar to the way small businesses take advantage of radio, newspaper and billboard advertising to drive local sales. National brands shouldn’t feel excluded — they, too, can engage their audiences on a more intimate level by targeting locally. And unlike traditional display, Facebook gives advertisers national scale on a very local level. Unfortunately, many are leaving this opportunity untapped.
There are multiple uses for localized display on Facebook, including local events, new store openings, holiday offers and other local promotions. Consider a cellphone service provider’s marketing strategy. In addition to the centralized national marketing team, such companies often have local marketing groups responsible for particular regions. Agencies typically like to maintain a single point of communication, pushing the local groups out of the Facebook advertising strategy.
But think of the possibilities for customizing on a local level: New store openings, local promotions, even extended 4G coverage in the region are all valuable opportunities to engage consumers on the local level. It makes little sense to ignore the local angle.
Localized creative is effective at generating awareness and ultimately driving people into stores, building higher order value, and powering transactions. Think of it like the Sunday circular that runs in the newspaper every week. Instead of buying ads in the paper, brands can push weekly specials out to localized audiences, and do so far more efficiently with mass reach and frequency.
We recently ran a campaign to promote a celebrity in-store appearance for a cell phone provider. By targeting the youth market in that region with customized Facebook display ads, we achieved a 0.26% click-through rate, relatively high for any type of display. That high CTR foreshadowed massive attendance at the in-store event, completely surpassing expectations.
Groupon and Living Social are two other companies that know how to effectively leverage this local display strategy, and you’ve undoubtedly seen one or both companies advertise deals in your city in Facebook’s right-hand column. Both companies have national reach, but their business model operates on a local level, so proper targeting pays dividends in scale.
Starbucks is the most popular global brand on Facebook in terms of fans, but it can still use local strategy effectively to maximize reach and frequency in high-density markets. Every Starbucks offers the same products, but consumers often develop relationships with the brand through their neighborhood location. Starbucks often leverages this brand association via campaigns that give consumers coupons for free pastries with a drink purchase. The campaign is national in scope, but it applies the advertising weight at a localized level to maximize consumer appeal and revenues when they visit their favorite Starbucks store.
Nor is local limited to geographic targeting. Brands can target students at specific colleges and universities with unique back-to-school offers, introducing new residents to the local franchises. This is a popular strategy as brands compete for share of mind and wallet of students as they return to school this fall.
Brands traditionally disregard local online advertising because it seems time-consuming and difficult to scale. Localized websites draw small audiences, which offer very little ROI. Facebook, on the other hand, makes it easy to look at which percentage of the population will see your local message, and then build a national campaign customized and targeted on a local level at a reach and scale not previously attainable through traditional display or search advertising.
The local companies currently running campaigns on Facebook rely on the social network’s self-serve ad tool. That’s great for small companies trying to reach a few thousand consumers, but it breaks down for brands trying to reach tens of thousands of people in multiple locales. Doing that requires an entire team customizing and targeting the creative, and there’s just no way to make money that way. Facebook’s direct-sales team doesn’t offer local customization because of the time required.
Fortunately, companies with access to Facebook’s Ad API can automate the process, giving brands fully customized campaigns for individual locations on national (or even international) scale with customized targeting and creative at a fraction of the time and effort.
Marketing on a local level maximizes the impact of your marketing campaigns on Facebook by minimizing advertising waste and maximizing your reach and frequency with the right audiences, making the brand offering more appealing. Customizing an ad makes your brand message relevant to a consumer on a level where he or she can easily engage and take action. It combines the reach and targeting capabilities of Facebook in order to maximize brand awareness and drive consumers into an actual location to make a purchase — which is, after all, the purpose of marketing.
Dave Williams is the CEO of Blinq Media.

Ad Age Digital A-List: Kinect

Microsoft Invited Gamers to Drop Controller and Get off the Couch, but Interface Has Potential Use for Medicine, Education, Advertising and Beyond

By: Beth Snyder Bulik Published: February 27, 2011

Microsoft Kinect’s advertising lure of “You are the controller” appealed to many remote-weary households this holiday. About 8 million of them, in fact, in just the first 60 days after its November launch.
Of course, a $500 million launch budget with co-marketing brand partners such as Pepsi, Kellogg, and Burger King didn’t hurt either. But all said, it wasn’t the marketing blast that propelled Kinect to the Digital A List (Microsoft is no stranger to massive product launches; evidence the reported $500 million launch marketing budgets also for Vista and Windows Phone 7) but the personality of the product, along with its positioning and potential.
Kinect took the idea of motion-sensitive gaming, launched successfully by Nintendo with its Wii console in 2007 and advanced it, not only by adding more gaming “wow” but also by cultivating the potential to go beyond gaming. Reviewers couldn’t hide their delight at the ability to control game play with simple gestures and voice commands.
And that “natural user interface,” as Microsoft calls it, has been hacked and hailed for its possible uses beyond the gaming world, from medicine and education to advertising and e-commerce. Coming this spring is a Microsoft-sanctioned Kinect for Windows software developers’ kit for noncommercial use, allowing “academic researchers and enthusiasts” inside access to Kinect technology. (A commercial version is in the works for an undecided later release.)
As Steve Clayton, editor at Microsoft’s Next at Microsoft blog, wrote: “The possibilities are endless. Natural and intuitive technologies such as Kinect can be more than just a great platform for gaming and entertainment. They open up enormous opportunities across a wide variety of scenarios, including addressing societal issues.”
But just as important — for now, anyway — is that Kinect has revitalized the aging five-year-old Xbox 360 console. Not only does it give Xbox 360 owners an innovative way to play, but it gives potential gamers interested in the hands-free technology a reason to buy Xbox 360 consoles. Xbox 360 was the only console to see an increase in sales for year-over-year sales in December 2010, and it was a hefty 42%, according to Microsoft.
Kinect’s 8 million in consoles sold during the holidays is not only 5 million more than Microsoft’s initial prediction of 3 million, but also comparatively brisk when looking at other top-selling tech products’ first 60 days, such as Apple’s iPad (2 million) and iPhone (less than 1 million), and the motion-sensitive predecessor Wii, which sold more than 3 million during that time.
Of course, those are a bit apples-to-oranges comparisons — Kinect is an accessory, less expensive and not a brand-new product category with breakthrough hurdles to overcome like the others. However, it is still an undeniable out-of-the-gate success.

Ad Age Digital A-List: All Things D

Blog Thrives by Competing — Aggressively — Against Other Blogs, as Well as Parent Dow Jones’ Flagship Wall Street Journal

By: Nat Ives Published: February 27, 2011

You might not think it sounds like a big scoop: A post last Tuesday revealed the date of a tech company’s next publicity event.
But this one regarded the world of tech, the land of gadgets and the not-insignificant nation of Apple. “Exclusive,” the post announced in the headline, “Apple iPad 2 Event Set for March 2.”

Notch another win for All Things D.
Since the brand began as a conference in 2003 and added a news site in 2007, All Things D has become a particular sort of powerhouse in the overheated space devoted to tech news. It’s part of Dow Jones, so it’s got that gravitas, not to mention the talent, reputation and influence: Its first conference attracted speakers including Bill Gates, Steve Jobs and Sergey Brin and Larry Page. But it’s got the speed and humor of a blog.
It’s hard to imagine the Journal publishing an article entirely about the date of Apple’s event to introduce an upgraded iPad in the first place — although it might — but the All Things D post got to write it in a style that the Journal simply doesn’t: “It’s not clear when Apple will begin sending out its famous invites for the gathering, but I am guessing soon, in order to get the Apple faithful to the proper level of froth.”
That post was by Kara Swisher, who co-founded All Things D along with another longtime Journal writer, Walt Mossberg, initially as just a conference. “Just” a conference, the idea went, but also a good one.
“We both went to a lot of conferences and we thought they mostly sucked and they didn’t have real journalistic value,” Mr. Mossberg said last week. He spoke from his house, where he was testing a competitor to the iPad in his capacity as personal technology reviewer. “The Wall Street Journal and Dow Jones had a conference division we didn’t know much about. We went to them and said, ‘Let us do this.'”
This was years ago, of course, before changes in the media landscape forced some variation of “entrepreneur” or “business development” onto the modern journalist’s job description. “They looked at us funny because we were columnists, we were reporters, and that was it,” Mr. Mossberg recalled. “To their credit, they let us do it.”
It may have helped that, even though this was also before “paid content” became a bit of a grail for the news business, tickets to the first D conference would begin at $2,495 and rise to $2,995. It sold out.
The news site, which now pumps the All Things D brand into the ecosphere every day all year, took a little longer to sell. But the tech space was crawling with upstarts of varying degrees of quality. The Journal was missing an opportunity.
“I’d seen a lot these blogs, especially these tech blogs, which were just not done by professionals with standards and ethics,” Ms. Swisher said, minutes after posting her iPad 2 event exclusive. “It irked me that they did so well.”
The “previous administration” at Dow Jones, meaning those in charge before the Bancroft family sold to News Corp. for more than $5 billion, didn’t leap on the blog idea as quickly as it green-lit the conference, Ms. Swisher said.
“It took awhile to explain blogs to a mainstream media company,” Ms. Swisher said. “We started with the conference, which was immediately profitable, which they get. Eventually we had such a well-known brand we could kind of explain what we wanted to do with the web.”
The site went live in April 2007, coincidentally right around the time Rupert Murdoch was making the Bancrofts an offer. It began with four writers: Mr. Mossberg and Katherine Boehret, who also continued to write for the Journal; Ms. Swisher; and John Paczkowski. Peter Kafka, focusing on the media piece of the tech world, joined in October 2008. And however far and fast last week’s iPad 2 exclusive traveled, the site has often produced meatier scoops. Traffic is on the rise, averaging 1.4 million visitors a month last year, up from 887,000 in 2009, according to All Things D.
The conference has, meanwhile, become a tech touchstone of its own. You may have seen the video of Facebook CEO Mark Zuckerberg sweating and blinking as he struggled to answer questions about user privacy at D8, the eighth D conference, held last summer. The ninth iteration of the D conference, this May 31 through June 2, sold out weeks earlier than anticipated. Standard ticket price: $4,795. Sponsors include Microsoft, Lenovo, Qualcomm, Ricoh, Advanced Micro Devices and NYSE Euronext.
It’s less clear, because Dow Jones won’t say, whether the site is profitable in its own right. While the conferences, including the first D: Dive Into Mobile conference last December, benefit from dual revenue sources of attendees and sponsors, the site has only ad sales. Dow Jones points to recent hires at All Things D as a sign of the site’s strength, including Ina Fried on all things wireless, Tricia Duryee on e-commerce and gaming, Liz Gannes on social media and Arik Hesseldahl on the enterprise beat, all new since October.
“We really don’t talk about profitability, but sometimes actions speak louder than words,” said Kelly Leach, senior VP-strategy for Dow Jones. “The fact that Dow Jones felt strongly enough about the site to essentially double down and make a significant investment in the journalism, that was done because there’s a belief that this can be an even bigger contributor, that this has the potential to scale in a way that the conference can’t.”

Deals, Dips, Discounts: Companies Risk Losing Customers Down the Road

Retail America Is Having a Big Sale — but for How Long?

by Al Ries

Published: February 07, 2011

The day I received a Christmas card with a coupon from my automobile dealer, I knew the bubble was getting ready to burst.

Last year, 3 billion coupons were redeemed out of the hundreds of billions that were printed. But that’s only the tip of the discount iceberg. Not only is Retail America awash in coupons, it’s also awash in discounts, sales, doorbusters and loyalty programs.

Such esoteric ideas as strategies and slogans have all but disappeared in retail marketing as store after store across the country has focused its media guns on sales and more sales.

DOUBLE TAKE: Burger King goes the two-for-one route.
Consider Burger King’s recent TV commercials. Two chicken sandwiches for the price of one. What’s the strategy? To get people to switch from burgers to chicken sandwiches? Or perhaps to position Burger King as a two-for-one place like Little Caesars did decades ago? Instead of “Pizza. Pizza,” perhaps we’ll see “Chickie. Chickie.”

Even many high-end stores are joining the rush to slash prices.

Lord & Taylor … “60%-80% off. Save big all over the store.”

Saks Fifth Avenue … “50% off already reduced prices for a total of 65% to 70% off.” Brooks Brothers … “Savings up to 50% off regular retail prices.”

And what newspaper or magazine sells subscriptions at their full prices? As The New York Times says, “Stay 100% informed, for 50% less.”

In fact, 50% off seems to be the magic discount. Our local newspaper, The Atlanta Journal-Constitution, runs a weekly column under the heading “This week’s big deals,” the vast majority of which are 50% off or “buy one, get one free” in everything from soup to plastic surgery.

(Will Geico someday have to change its slogan to “15 minutes will save you 15% or more on car insurance”? Saving 15% is so yesterday.)

Like most marketing fads, the coupon craze is typical of the follow-the-leader thinking rampant in the marketing community — if everybody is using coupons, then they must be an effective marketing tool.

And they are — in the short term. It’s easy for a company to check sales and redeemed coupons to decide if its couponing program is financially successful or not. But what happens in the long term? How many customers will a company lose tomorrow because they stocked up on sale products today?

The end of a bubble is often marked by a spectacular development and the coupon bubble reached a climax on Dec. 3, when news began to circulate that Groupon had rejected a $6 billion buyout bid from Google. A shade more than two years after its founding in November 2008, Groupon is worth in excess of $6 billion? Or maybe $15 billion, the figure quoted in a New York Times article about a planned Groupon initial public offering.

The Groupon concept is to give consumers the opportunity to buy coupons for something like 50% off regular prices. Then Groupon splits coupon sales 50-50 with local retailers. Sounds like a great deal for Groupon, a lesser deal for consumers and a road-to-ruin deal for local retailers.

But hope springs eternal, of course. Presumably, all those consumers who bought products and services for 50% off are going to be happy to return to their local retailers and return to buy those same products and services at full prices.

That’s not going to happen. What is going to happen is that those same consumers are going to go back to Groupon and wait for the next 50%-off sale.

You see the same phenomenon happening across the retail spectrum. Macy’s, Kohl’s and most department stores seem to have ditched the idea of positioning their brands, instead relying on discounts, sales and coupons to keep consumers coming back into their stores.

Nobody is more sale-crazy than the folks at Jos. A. Bank. They’re creative, too. Every week or so, the clothing chain gives its discount strategy a different twist. The latest Jos. A. Bank twist: “50% off entire site. 60% off any second item. 70% off any third item.”

In marketing, the advantage is being different. When everyone else is running sales, it’s hard to be different by running a sale. Today, a chain can be different by not running a sale. The biggest beneficiary of the coupon craze is Walmart, which seldom runs sales or issues its own coupons.

A recent Walmart ad compared the prices of featured products at leading national drugstore chains with its own prices. Walmart prices were “20% less, on average, than the leading national drugstore chains.”

Someday, some leading consumer-packaged-goods brand will run an anti-coupon campaign that could shake up the industry. “No coupons. Never issued them. Never will.”

Notice how effective Southwest Airlines has been with its “No change fees” and “No baggage fees” campaigns. As a matter of fact, Southwest has been successful by doing almost everything just the opposite of the strategies employed by the big carriers. No first-class service. No international flights. No food. No pets. No advance seating reservations. No inter-airline baggage exchange. No corporate discounts.

One of the secrets of Zappos’ success is the absence of deals; it stands out as a paradigm of price stability. Consumers don’t have to worry that someone will buy the same shoes next week for 50% off.

As America becomes more monolithic, I think you’ll see the value of sales and coupons inevitably decline.

In the past, discount devices like coupons were effective in broadening a brand’s customer base, especially if a company could keep them out of the hands of its regular users. With the advent of social media, that’s getting more difficult do. The word about deals can spread rapidly.

Look at a website called Coupon Sherpa, a source for online coupons, grocery coupons, printable coupons, restaurant coupons and coupon codes to over 5,000 stores. Slogan: “Never pay full price again!”

Is that the future of retailing in America? Only time will tell.

‘You’ve Got to Tell Stories That Grab People by the Collar,’ Says Risk-Taking CEO

How Chrysler Chief Olivier Francois Is Selling Detroit

By David Kiley

Published: February 21, 2011

Joel Martin, principal of Eight Mile Style Music and co-owner of Eminem’s song catalog, is used to getting the cold shoulder from Michigan automakers who have generally found the rap artist’s song lyrics too spicy for their mainstream audiences. So, imagine his surprise when he got a call on his cellphone one day last December from an assistant at his Ferndale, Mich., office that said “The president of Chrysler is here looking for you.”

The assistant didn’t have it quite right. Olivier François is CEO of the Chrysler brand, as well as chief marketing officer for all of Chrysler, which includes the Dodge, Jeep and Ram brands. He’s also CEO of Fiat’s Lancia brand in Europe and CMO of Fiat. And to know how Mr. François operates is to know that it was very much in character for him to drive over to Mr. Martin’s office with no appointment, hoping, or even expecting, that he would be there to discuss using a classic Eminem song, “Lose Yourself,” in a Super Bowl ad. In the end, the meeting took place at 10 p.m. on a Sunday night.

Mr. François, 49, on the job at Chrysler for 15 months, is gaining a reputation among his ad agencies, dealers and staff for surprising them and taking the kinds of risks that make them feel more confident than they ever did while owned by German carmaker Daimler or private-equity firm Cerberus Capital. His latest roll of the dice was a two-minute, $9 million Super Bowl ad, featuring Eminem’s anthem and the rap star himself, to launch a new strategy and tagline around the Chrysler brand: “Imported From Detroit.”

“He’s a maniac,” said Mr. Martin of Mr. François, noting that he and Eminem turned down over 100 deals to use the song in ads before agreeing to sell it to Chrysler. “The whole thing had a surreal quality to it … this French guy and all this he was telling us about loving Detroit and how important [Eminem] is to the city.” If it weren’t for Mr. François’s salesmanship, “We never would have done it,” he said.

While the gambit took a lot of ad-watchers off-guard, the idea of featuring the city of Detroit and playing up the heritage and history of making cars is not a new idea. “This idea has come up for Chrysler, Chevrolet and Pontiac a handful of times in the last 20 years,” said Gary Topolewski, an independent creative director who has worked on Chrysler, Dodge, Jeep and other car brands. “But it always got shot down by the executives who have worked in Detroit their whole lives, fearing it wouldn’t play on the coasts.”

But Mr. François greenlighted the idea, which originated with Wieden & Kennedy.

“Maybe it takes people from outside the city to see the possibilities and passion,” said Mr. François. Of the four brands he took over, Chrysler has been the biggest challenge. It is not generally viewed as a luxury brand, but he is positioning it as “new” luxury. “Beautiful, passionate design and comfort for people who don’t forget where they came from,” said the Paris-born Mr. François, who thought he would enter the diplomatic corps after getting a political science degree in the late 1980s. An advertising and marketing degree from Sorbonnes Celsa, however, led him to Citroen and then Fiat.

When Fiat took control of Chrysler after the federally assisted bankruptcy, it didn’t take long for Mr. François to hit on the need to change the way the company thought about its messaging. Long-time agency BBDO was served notice after working on the Chrysler business for 65 years. A review ensued in which agencies had to prepare strategies for Chrysler, Dodge and Ram Truck brands. The Richards Group of Dallas won Ram; Fallon Worldwide took Chrysler and Wieden & Kennedy took on Dodge. Global Hue retained Jeep and multicultural duties.

Since then, Mr. François has restructured things, separating agencies by job rather than brand. Wieden now leads on all national branding for Chrysler and Dodge. Global Hue remains lead agency on Jeep, though Wieden produced the launch campaign for Jeep Grand Cherokee in 2010, and will continue to compete for national Jeep model launches. Doner, Southfield, Mich., replaced Fallon when the latter resigned Chrysler to take on General Motors’ Cadillac, and handles the retail-driven ads for all four brands. Richards retains Ram, with the thinking that the truck market is a unique ad space, and also because Chrysler plans to introduce more models — such as commercial vans — under the “Ram” brand. And Global Hue handles multicultural ads on all four brands.

“Things sorted themselves out based on which agency was doing the best job at each function,” said Mr. François, who admits it can be tough for agencies to work with him because of how much he gets involved “as a creator.”

Quick on his feet
He is known for making fast decisions mostly on instinct. “Meetings tend to run fast, and ideas don’t get a lot of wind-up,” said Richards Group CEO Stan Richards. In November 2009, Mr. François approved putting “rip” videos (mood videos created with stock photography and voiced by agency staff used largely for internal use) produced by Richards for Ram truck and Global Hue for Jeep on national TV as commercials despite low production values. “I was shocked, but I did not object,” said Mr. Richards, whose voice was on the ad, with a laugh.

Last August, Mr. François approved an idea after just a few minutes of brainstorming with Wieden staffers on how to respond to protests from animal-rights groups over the use of a chimp in a Dodge retail ad — the chimp was removed, but the clothes he was wearing were left behind, giving the ad an odd “invisible chimp” effect. Not only was PETA pleased, but the new commercial went viral; the original hadn’t. And for an Independence Day-timed Dodge ad, he approved a spot showing George Washington leading a column of Continental soldiers into battle against British redcoats driving Dodge Challengers. “Some of our team had a lot of doubts, but I knew right away and approved it off the storyboards,” Mr. François said.

Advertising “American” for Detroit automakers has been a kind of taboo, especially since, until recently, they badly lagged Asian companies such as Toyota and Honda. But Mr. François and his agencies have injected images of Americana and messages of pride, hard work and reward into their ads. “We’re from America,” proclaimed the Super Bowl ad. “The things that make us American are the things we make,” go the Jeep ads. Mr. François hints that he has much more in store to link the Chrysler brand to the comeback of the city of Detroit, in which he wants Chrysler to be a key player.

“You can do this sort of thing very badly,” said independent marketing consultant Dennis Keene. “But I have to say that Chrysler is bringing so much art to the messaging that I think it flies, though they are walking right on the line.”

Doner CEO David Demuth says working with Mr. François is “like working with a creative director on the client side.” He doesn’t just approve or reject ideas or storyboards like most CMOs. For example, trained early in his life in music, Mr. François sits down with composers and tells them exactly what he wants or is looking for. For the Super Bowl ad, he worked with composer Luis Resto on the adaptation of “Lose Yourself.”

The ad did not include Eminem’s lyrics, just the music. Wieden cast Detroit gospel choir Selected By God to perform in the Super Bowl ad, but it was Mr. François, said Mr. Resto, who directed the crescendo leading into Eminem’s line: “This is the Motor City. This is what we do.” Added Mr. Resto, “How many car marketing guys can sit down and tell you why he wants a ‘melancholy piano’…that was a first for me.” Indeed, Mr. François, who does not play piano, has nevertheless composed or co-composed music for numerous Lancia and Fiat ads. He gets no royalties or payments.

What he’s doing is importing the strategy to Chrysler that he has long used in Europe on Lancia ads. “You’ve got to tell stories that grab people by the collar, and that’s what we try to do,” said Mr. François. In a 2007 ad for the Lancia, he approached fashion designer and gay icon Stefan Gabbana to appear in an ad. Mr. Gabbana initially refused. But after Mr. François laid out the storyline of the ad in which Mr. Gabbana, driving a Lancia Delta, would be tempted by a beautiful woman and end up in a passionate kiss, he not only agreed, he agreed to do it for no fee. The ad created a publicity sensation in Europe and a sequel was produced.

Mr. François coyly said he does not like to use “spokespeople.” But his two ever-present BlackBerrys run deep with celebrities who have appeared in his ads: Carla Bruni Sarkozy, Richard Gere and even the Dalai Llama. Of those, only Mr. Gere took a fee, and it was for his charity. Even Eminem sold Chrysler rights to his song for 20% of what he could have gotten just to be part of the ad. Oscar-winning actor Adrien Brody directed a Chrysler ad late last year, his commercial directing debut, and voiced the ad as well.

No stranger to risks
Clearly Mr. François doesn’t mind poking at beehives. He launched the Richard Gere ad spotlighting the plight of Tibet the week the Beijing Olympics kicked off. And for the past three years he created Lancia ads to run the week of the annual World Summit of Nobel Peace Laureates to spotlight the imprisonment of Nobel Peace Laureate Aung San Suu Kyi, a Myanmar pro-democracy leader. The ads show laureates arriving in Lancias, and close to show a Lancia’s rear door opening with no laureate riding in the backseat, representing Ms. Suu Kyi’s absence. Mr. François was editing the latest ad when he got word Ms. Suu Kyi would be released, necessitating fast changes to the ad, which he directed from a Delta Airlines flight.

Given his track record, few doubt Mr. François’ ability to get attention for Chrysler’s slowly recovering brands. The Super Bowl ad, for example, generated more online buzz and news coverage than Chevy’s five ads combined. Dodge brand CEO Ralph Gilles defends Mr. François’s penchant for risk-taking. “People get all the product information they need online … the role of the ads should be to light a fire under them, and drive them online to check us out.”

But Mr. François has to turn those bursts of attention into sales and favorable opinion. Chrysler’s retail market share before Fiat took it over in 2009 was 8.9%, according to Automotive News figures, and by 2010, it hit 9.4%. In the three years Mr. François ran Citroen in Italy, the brand more than doubled market share to 6.5%.

The Chrysler-Fiat team has worked at breakneck pace since summer 2009 to make dramatic improvements to core vehicles. The 300 makeover alone cost $1 billion. “We are no longer ashamed of the products we are selling,” said brutally frank CEO Sergio Marchionne.

The biggest obstacle is the mostly terrible quality ratings from Consumer Reports and J.D. Power. The makeover has corrected many past sins, but it will take two to three years for the ratings to move up to reflect it because of how the organizations work their rankings, and even longer for consumers to trust.

Chrysler this year plans to do its initial public offering in the fall. It’s imperative that institutional investors and stock analysts believe Mr. Marchionne’s team and operation is headed in the right direction. Not only do retail sales need to climb, but the overall operation, from product to marketing, needs to have credibility with investors and the public.

Last year, Mr. François commissioned a corporate ad effort from Gotham, New York, but decided not to run it, deciding instead to plow the money into the Jeep Grand Cherokee launch. Said one Chrysler insider, “He knows where the priorities are: sales.”

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