14 December 2007

The logo wars 1: London Olympics vs Keith Haring.

Ever wondered if have seen the London Olympics 2020 logo before? It was developed by London agency Wolff Olins who claim that it was at the vanguard of such a new form of visual identity, that it would create a seismic shift and move the Olympic brand into the 21st century and to a new type of audience and markets.

Researching another blog for DIFFUSION, we couldn't help noticing the similarity between it and the work of 80s New York based artist Keith Haring.

Now what would Keith think?

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Assume the position: branding in 2008

2008 marks the death of “fact free” brand decision making and branding programs as business looks for return on investment. Business will start to get that brand value needs to be understood, measured and acted on. Australian businesses are under increasing pressure to understand and evaluate how their brands impact their bottom lines. Responsibility will start to shift out of marketing departments and into corporate strategy. We will see a move away from a reliance on traditional empiric and historical research models to the use of brand analytics that are forward looking and provide prescriptions for responsible corporate action.

Here’s how we see this shift happening:
Any brand activity can now be subjected to massive and organised digital surveillance. Companies will soon get the idea that their brands and reputations need to be both guarded and monitored. BRAND MONITORING has exploded in the US, particularly amongst digital brands and within the online activity of all brands, and in turn companies will look for more sophisticated ways to measure and understand brand effects in the market.

To do this they’ll need to ratify brand value using BRAND ANALYTICS. It might better be called Brand Valuation 2.0 but it goes well beyond the balance sheet. Analytics creates predictive models around how to build brand value, and how to provide better and more insightful answers to business questions around demand, brand and performance.

Once they get a handle on both brand activity and value they will see that traditional BRAND POSITIONING IS DEAD and move to the new DYNAMIC POSITIONING models. Defining brands to capture a point in a marketplace presupposes that markets and customers are static and clearly defined. It’s a machine age view. We’ll need to throw out the USP along with the single fixed brand idea. Today’s brands need to be dynamic entities, given both direction and momentum, and allowed to change within markets.

While no one says brand identity guidelines are about to be abandoned (after all someone has to define physical and functional attributes of the brand), there will be more reliance placed on BRAND PORTFOLIO MANAGEMENT approaches using BRAND ENGAGEMENT across all stakeholders. It’s not enough to know the touch point, you need to know how to manage the interaction to ensure the integrity of the response and consequent action. This is going to even be even more important as stakeholders push for more meaningful corporate social responsibility programs.

Challenging old notions that corporations own themselves, the concept of the SOCIAL OWNERSHIP OF CORPORATIONS will become a marker for a much larger trend. CSR will increasingly become an element of brand vision and strategy. Business will have no choice but to become more transparent, more comfortable in its own skin, less inclined to communicate through stage managed campaigns and communications and ultimately begin to acknowledge their part in the fabric of the world.

image copyright Keith Haring

16 November 2007

Return on influence: metrics and measurement for brands in social media.

One of the emerging dynamics of social media is the compelling need for companies and organisations interested in tracking their brand, positioning, reputation and saliency within this space is to have some way of measuring return on both investment and influence.

Many organisations want to be able to measure their involvement or even assess potential returns prior to investment but are slowly coming to the realisation that traditional web-based analytics alone are not going to do the job, so the next question is crucial – what and how should be measured?

The crux of the issue is that regardless of the success of brand monitoring companies like Neilsen BuzzMetrics and TNS Media Intelligence/Cymfony, at this point in history their work is both highly speculative and also completely unique to the interpretation of the entity doing the measuring.

While the ability to track the tone, perception and nuances of discussions around a company and its brands, either via social media or even within it, cannot be achieved through web metrics or traditional advertisement measurement alone, the real problem is that even among the eight or so market leaders Forrester Research identified last year, there is no universally agreed standard upon which to base either measurement and metrics.

Certainly, the measurement attributes identified by Factiva, one of the vendors included in the Forrester study, could likely be considered to be part of any brand monitoring mix but this mix is also likely to be far more dynamic than anticipated.

Last year Factiva tried to get an understanding of the prevailing thinking, hosting a roundtable of influential bloggers and social media critics which identified the following measurement attributes (I've left out explanations of those that need no explanation):

1. Analytics and activity

2. Community activation/call to action

3. The "Conversation Index", define as the ratio between blog posts and comments-plus-trackbacks. This attribute is one subset of measuring participation and engagement but when I look at the majority of external corporate blogs alongside trackbacks and comments even in our brand sector, the actual ratio is low.

4. Demographic/s

5. Influential ideas or memes which the "intensity" or "velocity" of the spread of an idea or message over time. (A "meme" refers to an idea or discussion that grows and spreads from individual to individual into a lengthy chain of commentary. Rather like an idea train.)

6. Participation and engagement, where a recipient not only responds to a message but acts on it as well.

7. Reach, where it’s a lot less to do with sheer numbers than with influence.

8. Relationships and connections. For example, Factiva’s panel noted that a blogger may have a large, diverse audience but he or she may not have an intimate relationship with specific influential individuals within any given community.

9. Relevance, the question being how relevant to my company is a particular blog post among hundreds of a given meme?

10. Sentiment/tone/favourability

11. Content: the focus of coverage of social media. In most cases, this means a narrow, but extremely detailed focus on one subject or issue and it explains the importance of certain blogs over others within their respective niches.

Factiva’s panel concluded that to be successful companies need to use a combination of several key measurement attributes to understand and drive their own social media success for internal and external stakeholders.

Brand monitoring companies need to be able to help clients develop and execute plans which monitor and measure these changing attributes within a specific context and within a sphere of operations. Brand agencies then need to able to be bipartisan and develop strategy that acknowledges both measurement and metrics are dynamic and that a company's ability to identify those key attributes important to it might actually be limited. Setting these against a wider brand context and against other metrics might be another way of helping to define their brand influence.

07 November 2007

Can Facebook get social advertising right?

Facebook is ratcheting up social commerce and wants to turn every member into a promoter for advertisers.

The New York Times reported overnight that Facebook founder Mark Zuckerberg announced the site would now feature what it describes as “social ads.”

On September 24 the company filed in the US to protect the trademark “SocialAds” in relation to “advertising and information distribution services, namely, providing advertising space via the global computer network”.

The new feature will be included in the news feed section of individual profiles and will enable advertisers to create their own profile pages and that will will let users identify themselves as fans of a particular product or service. For example, it might be that I might identify myself with Apple and so a newsfeed would be produced that says "Stephen Byrne is a fan of Apple". This message may also be featured in banner advertising which may include my picture or in single line text advertising that often runs as you load applications.

Facebook says it will initially offer social ads to advertisers for free but would continue to charge for banner advertising which could run with the endorsements.

“Nothing influences a person more than the recommendation of a trusted friend,” said Zuckerberg.

Facebook is also going allow advertisers to tap into the vast stores of data that its users provide, allowing advertisers to target users along geo, socio, demographic and psychographic.

In Australia Facebook has just over 1 million users (I checked) and is growing fast. Zukerberg was quoted as claiming it had 50 million global users with 25 million users visiting Facebook each day. It loads 65 billion pages on which advertisements can be displayed each month.

Zuckerberg is short on any projected ROI or effective measures of both the existing advertising and the proposed social ads but on the back of the recent $240m Microsoft investment, it's a direct threat to Google's highly successful AdSense network and surely competitor MySpace won't be far behind in developing a similar offer.

What's clear is that, as I noted in the previous DIFFUSIOBlog Intrusion vs seclusion, the move represents a new phase in the development of social exchanges. It will be interesting to see whether Facebook users will embrace it or whether it will be shunned.

05 November 2007

Intrusion vs seclusion: some reasons why direct marketing is failing online.

Direct marketing is failing online because brand owners, marketers and their agencies are relying on old forms of marketing, according to the latest Harvard Business School research.

The paper, entitled Digital Interactivity: Unanticipated Consequences for Markets, Marketing, and Consumers, released last month by Harvard Professor John Deighton and a Vancouver Research centre director Leora Kornfield argues that the much anticipated transformation opportunity in marketing created by digital interactivity is not unfolding along the lines of a traditional model of direct marketing.

Research like this is the elephant in the room for digital and advertising agencies and their clients, who continue to cling to the dated notion that consumers (of all kinds) really do look at this stuff and believe that digital based direct marketing is both cost effective and really has a demonstrable ROI.

Deighton and Kornfield argue that under the old model digital media would use the rich profiling data it gathers to create more penetrative marketing messages which would go more deeply and more precisely into consumer lives than broadcast media had been able to do.

Instead, they claim the threatened intrusion is actually delivering seclusion.

“The transformation is unfolding on a model of consumer collaboration, in which consumers use digital media that lie beyond the control of marketers to communicate among one another, responding to marketing's intrusions by disseminating counterargument, information sharing, rebuttal, parody, reproach and ... fandom” (they might be meaning Apple here or eBay’s newly created Neighbourhoods), Deighton and Kornfield said.

They describe marketers in peer-to-peer environments as an ”interloper, more talked-about than talking” and that marketing, against an old definition, may now be less a matter of domination and control, and more a matter of “fitting in.”

The article identifies five discreet roles for interactive technology:

1. Thought tracing: which is typically what Google does, and which allows advertising to be served on the basis of user's search terms and patterns of usage.
2. Ubiquitous connectivity: the notion of always on and connected especially with the increasing penetration and speeds of broadband alongside mobile phone usage. Microblogging via sites like Twitter is a good example and there are huge opportunities for marketers to exploit ideas around “attention banking”.
3. Property exchanges: in their ideal form best represented by the late lamented phenomenon of Napster and file sharing. More market acceptability of this has been built by eBay, Flickr and Youtube.
4. Social exchange: Deighton and Kornfield cite South Korea’s Cyworld, where 40% of all South Koreans maintain a presence and where 90% are in their 20s, generating $100 million in revenues each year (Wikipedia 2007). They identity the explosion of Facebook and MySpace as more recent Western examples but question whether this phenomena will “change society and therefore markets as much as the automobile did”.
5. Cultural exchange: they describe marketing as a “cultural producer”, aspiring to be an author in the culture of its customers. Most importantly for marketing to play this role it needs to be “welcomed, not resisted. “

The paper concludes that while meaning-making still remains the central purpose of marketing communication, the shift from broadcasting to interaction within digital communities is moving the locus of control over meanings from marketer to consumer and rewarding more participatory, more sincere, and less directive marketing styles.

What matters for marketers, say Deighton and Kornfield, is that the form of interactivity most attractive is the one which can facilitate personal identity projects and contribute to the collective making of meaning. And within this context, digital based direct marketing as it currently stands – the use of email, spam, banners, interstitials, splash pages, microsites etc etc - makes a marginal contribution to our identity and the creation of meaning.

As it stands the research is qualitative and largely desk research and while it suggests a direction for direct marketing, it doesn’t back its assertions with any quantitative evidence, though there is plenty around (we remember the Australian Financial Review’s digital unit telling us that click through rates on banners on it’s marketing pages were a mere .01%).

Maybe the best way to view this paper is as further evidence that more traditional passive direct marketing is not working in the new fragmented digital world. The challenge is how to stay ahead and engage an increasingly antipathetic target market.

01 November 2007

Westfield tops global property brand charts.

Global property companies are increasingly acknowledging the value of their brand as a primary value driver.

Certainly DIFFUSION's experience working with companies Grosvenor and the Simon Property Group seems to demonstrate that building a brand centric culture will increasingly yield better bottom line results.

UK brand valuation company Brand Finance, acknowledged as one of the world's leading brand valuation companies, rated Australian property group Westfield at the top of its recent global property brand index report with a brand value of US$1.0bn (A$1.1b) alongside fellow Australians Stockland, the Goodman Group, GPT and Mirvac in its top 30.

According Brand Finance's estimates brand value contributes up to 3% of what they define as enterprise value (defined as the combined market value of the entity and debt of a business less cash and cash equivalents), and averages 1.6% of enterprise value. While it's report states this is low compared to heavily branded FMCG categories like Coca Cola, it describes the resulting brand values as "still highly material".

What's apparent with the index and in a sense explains the rise and rise of property brands like Westfield is that our perceptions are usually based on the brand's functional attributes - such as access and location. Something that Westfield has concentrated on with it's deliberate nodal location strategy (see map above). This is best illustrated by drawing from HG Well's War of the Worlds, which described how the Martian fighting machines would dominate an area by combining into a group. This is pretty much what Westfield does - visibility and dominance - and why the brand has proved so pernicious in the daily lives of people in Australia, New Zealand the US and soon the UK.

Interestingly, Brand Finance raises two questions I think companies like Westfield and other dominant property groups need to grasp:

1. What brand architecture will prove to be most effective in the future?
2. How can a coherent and effective brand message be communicated ?

As far as DIFFUSION is aware, none of these major property groups have a head of brand addressing these important issues, instead continuing to rely on their marketing and investor relations departments to be the sole determinants. The absence of a real brand strategy is palpable.

In a recent visit to Tokyo, DIFFUSION was struck by how its shopping malls had evolved to become much more experiential, with customer service emphasised at every touch point. Something that is mostly ignored by the majority of western mall owners, more content to wring as much income from both retailers and consumers through a turnstile mentality. Sure Westfield might have magazines and a valet service, but why do some of its suburban malls want to start charging for Sunday parking? Doesn't this run counter to functional attributes of the brand, like access.

It's a simple thing really. And I might add a third question:

3. What is the brand promise?

DIFFUSION hopes it will be seeing some answers at the mall soon.

Symbolic obsolescence defines this century.

The concept of symbolic obsolescence is so new that it has barely crept into our lexicon, but is already affecting brands and their consumption.

I could find some mention of the term in an a number of design journal articles dating back to 1994 and you will be able to do your own search of references, but I couldn't even find a dictionary definition.

So here's mine:

Symbolic obsolescence: the perception that something is obsolete (noun)

Symbolic obsolescence is not attached to planned or functional obsolescence, which is usually determined by the brand owner. However, it is likely that the brand owner can take some responsibility for its occurence because of the rapidity of continuous product or service rollouts. Often these are disguised as improvements but in many cases, the improvements are so minor or competitively mimic others. Symbolic obsolescence occurs because consumers perceive that their status as is either a group or individually is affected (usually seeking to elevate it) by not acquiring the product or service. In a effect it's a contemporary update on the old saying "keeping up with the joneses", something explored by English philosopher Alain de Botton in his book, Status Anxiety.

Symbolic obsolescence is already part of modern consumption. Whether it's the Titanium card, the newest credit card from American Express or in Apple's update to its hugely popular iPod range, the iPod Touch. Let me demonstrate what I mean by way of review.

Here's a review from popular blog Endgaget:

It's hard to argue that there isn't beauty in simplicity, especially when it comes to consumer electronics. But there's such thing as too simple -- and sometimes too simple can turn into crippled. Most of our complaints about the touch have to do with what it lacks -- not in general, but when compared its big brother, the iPhone. Had the iPod touch come out first, the lack of a hardware volume switch, integrated speaker, and all those apps might have been perfectly passable, but now the expectations have been set, and we can't see how taking things away from users can possibly add value. Everyone in this industry is trying to give their customers more, but with the iPod touch Apple gave its customers less in what should have been the best iPhone alternative on the market. This time around, in Apple's obsession to edit, they managed to leave some of the best stuff on the cutting room floor.

or this from Wall Street Journal tech critic Walt Mossberg:

Apple says the Touch was meant mainly to present typical iPod features, not to replicate the iPhone, and it included the Web browser only so users could get onto Wi-Fi to use the mobile music store in certain places that required a log-in screen.

But it seems ridiculous to me to sell a powerful device with Wi-Fi and a huge screen, and to leave out things like an email program, even though you can use Web-based email programs. I assume Apple was concerned that the less costly Touch might compete too much with the iPhone if it had these features. In fact, if somebody can jam a voice-over-Internet capability into the iPod Touch, it might be more of a threat to the iPhone, which is tethered to a single cellphone carrier, AT&T.

In Australia, where the iPhone is yet to released (strange decision from Apple but then again it's not even 3G), the release of the iPod Touch was seen as something we should hold our collective breath for. However, what seems clear from both these reviews is that the Touch is merely an interim lower storage device available in a lower price bracket to the iPhone, with a lot less of it's features. It plainly exhibits planned obsolescence as both reviews attest to.

However, as symbolic obsolescence it would be difficult to find a better example. In a year's time the coolhunter buyers of this year's Touch will be out buying their hopefully 3G iPhone (unless they brought in a hacked version from the US or Europe) and the touch will be relegated to eBay dustbin. Why? Because to have one and to display it, both among our peers and to society, defines us.

Just as Moore's Law helped define the inevitable rise and rise of technology at the end of last century, symbolic obsolescence will significantly influence almost all brand owners and our pattern of consumption of brands this century.

23 October 2007

Yahoo7 tries another strategy shift.

Seven Network's announcement that it's Yahoo joint venture is undertaking yet another restructure not only points to a strategic shift in its operations but may also be a portent for the future of general media-based portals.

Last week Yahoo7's acting chief executive Rohan Lund, was reported to have presented yet another new strategy to arrest the site's declining fortunes as it continues to loose market share. The new strategy sees Yahoo7 abandoning what has been described as a "relentless advertising focus", to concentrate on both news and search as it seeks to oust Google as Australia's leading search engine.

According to reports in The Australian, the strategy is designed to do "anything to drive traffic to the portal" with Lund quoted as saying that the portal aimed to be home page for every Australian going online.

It's both a fairly naive assertion and a blind strategic assumption that against an ever changing landscape, Yahoo7 believes it can arrest the near 80% consumer and advertiser drawing power of Google.

And it's a lesson that Lund would do well to learn from his similarly well meaning predecessors.

For example, I've been online long enough to remember (and use) portals such as Apple's eWorld (see pic), Netscape, Lycos and Excite. All of which, except for eWorld, still exist in some form or another but whose drawing power in this market is either non-existent or negligible.

Hitwise, an internet ranking company who's data is based on market share of visits from a sample of nearly 3 million Internet users in Australia most recently ranked Yahoo7 in 10th place with just .9% of total Australian traffic.

This compares to Goggle's first place with a total share of nearly 10% of Australian traffic followed by 9MSN's meagre but significant 2.6%. Also in the top 10 is Myspace (2.17%), Hotmail (1.85%), Ebay (1.85%), Facebook (1.11%) and Youtube (0.95%)

Based on these figures theYahoo7 strategy has an uphill battle to overcome the status quo on both internet news and search.

And while some of its free-to-air news market dominance may also rub off on the online new service, what about the other Network 7 content and its ability to bring traffic and point of difference to the site?

Network 7's digital strategy is lagging behind both the ABC and Network 10 on areas such as after telecast access to immediate downloads. Downloading is becoming a huge threat to all Australian television networks as viewers become time shifters (as we have noted previously, even US television audience measurement is now done on the basis of total viewer ship including time shifting) and overall television viewing continues to decline.

It will be interesting to see if 7's Tivo marketing announcement is somehow bound into the notion of on-line content and directing free-to-air and subscription traffic flow, but right now it's fairly light on detail.

Further, the Yahoo and 7 team could flounder for the very reasons predecessors like Excite did. In 2001 former Excite founder William Hearst III, described the demise of the portal this way:

"The strategy was to build a national brand that could compete against AOL. To the extent that we spent money pursuing that strategy, which may not have
been the right strategy, perhaps, but to the extent that we spent money chasing that strategy, " Hearst said.

"One of the lessons--and I hate to say it--is that you can gain a tremendous advantage by partnering with big, well-established companies, and people are
going to continue to do that. But those companies are going to find it very difficult to put their new start-up venture ahead of their own corporate responsibilities. So when you have a start-up controlled by big, established companies, it's going to be a little different than a real, stand alone start-up."

And this is really the conundrum for Yahoo7. When the joint venture was announced in December 2006, it was widely anticipated by joint venture chairman John Marcom that it was "in a prime position to capitalise as viewers change the way they consume television programmes."

But since then Yahoo7 has been slow to move and perhaps its unwise pursuit of Google, Fairfax and 9MSN underpins how wrong footed it has been.

Interestingly, as Hearst notes, perhaps it's no longer the case that the nation's leading television company no longer needs Yahoo to be its digital arm and that going out as a real stand alone company (in much the same way Fairfax has) and building its own identifiable set of online brands and services from its massive content base should be re-examined.

08 October 2007

Why companies are not marketing online as much as we would all like to think.

A new McKinsey survey of marketing executives from around the world shows that in marketing while companies are moving online across the spectrum of marketing activities, there’s also a problem with Web 2.0.

In July McKinsey surveyed 410 marketing executives from public and private companies around the world, representing industries such as business services, energy, retail, technology, and telecommunications. It asked respondents about the frequency and effectiveness with which they applied Web-based, digital techniques to five core marketing functions: sales, service, advertising, product development, and pricing. It also asked about future plans for digital marketing, including where respondents anticipated spending more money in the future.

However, while the survey shows marketing making a swift transition online, executives also indicate that they are making less frequent use of digital tools, including e-mail and informational Web sites to Web 2,0 tools such as wikis and virtual world.

Their concern, and one that DIFFUSION has seen echoing around the world since the first dotcom collapse, is the lack of capability and knowledge at companies and their agencies as well as an absence of meaningful metrics. It’s particularly notable that more than half of all current advertisers surveyed by McKinsey see this as a barrier—a proportion significantly higher than it is among nonadvertisers. Perhaps, it’s more to do with the fact that media agencies are still selling along traditional lines (see DIFFUSIONblog The Future of the Media Agency 21 July 2007) and so the real returns are still be masked by a fondness for brand building campaigns, rather than tactical activitiy focussed around identifying and selling to distinct customer needs. Hence, pay per click advertising looks great on paper but in reality, if its only ever awareness, and never translates to sales then there is a problem.

It’s also going to be a similar catchcry for companies looking to to reach customers through Web 2.02 tools such as blogs, podcasts, social networking (witness the corporate shutout of Facebook rather than embracing it as a social commerce tool), virtual worlds, widgets and wikis (increasingly being used by corporate to manage company perceptions externally). As the survey notes, will my company and agencies be able to keep up with what are ultimately ever expanding technologies and more competitive usage of these added to increasing customer sophistication and what is now the sheer visibility of global access to goods and services.

The survey reports that in 2010 respondents expect a majority of their customers to use the web as a funnel to discover new products or services online and a third to purchase goods there. A majority of the respondents also expect their companies to be getting 10 percent or more of their sales from online channels in 2010 — though, twice as many companies as have hit that mark today. But while these expectations appear to be driving plans for future spending, at least in some areas, DIFFUSION believes that companies who don’t plan for this expenditure and build capability around it are going to be left behind, not only by competitors but by their customers.

Social retailing goes beyond the media.

As both MySpace and Facebook begin to battle it out for the social media ascendancy, it’s becoming increasingly apparent that for retailers and advertisers (check brand owners) will soon to need to invest in this space to see how they integrate their ecommerce efforts with the customer intimacy social media promises. And this goes way beyond the current brand advertising or brand advocacy.

Social retailing, a term coined earlier this year by US technology consulting firm IconNicholson, combines mobile communication, online networking sites like Facebook with traditional off and online merchandising and it’s coming to a store near you.

In this increasingly brave new world a typical scenario could see us and our friends are constantly online and ready to advise whether those pants really do make our bums look big. And if we do actually venture into a store, RFID tags on items will enable in-store personalized commentary to be displayed about the products we are looking at. Checkout lines nonexistent because we are there either for a pickup, self checkout or even to buy items with our cellphones whilst browsing the store. If we’re signed up to the our local malls, retailers will already know our interests and text-message or bluetooth us personalized coupons and offers as we walk through their doors.

It is a view that has the backing of global technology research firm Gartner, identifying two new groups of emerging online shoppers, what it calls the "solo hunter" and the "social gatherer" in its report Social Shopping Will Shape the Future of E-Commerce released in May this year.

"Online vendors of goods and services that ignore the social dimension, as exemplified by the 'social gatherer' archetype, are ignoring a potentially large revenue component," said Ray Valdes, author of the report.

"These vendors are, in a substantial sense, 'leaving money on the table'.

"Social shoppers seek not just artifacts or information for future use but also an enhanced emotional connection to other participants in the shopping experience.

"Despite a seeming lack of preoccupation with purchasing a particular item," the report continued, "it is possible that the total transaction amount in a social-shopping journey will exceed that of a solo foray; therefore, e-commerce vendors that ignore this dimension are leaving money on the table."

The Gartner report concluded that immersive virtual environments like Second Life and social networking sites like Facebook and MySpace have both an advantage and DIFFUSION notes the opportunity in “supporting peer-to-peer interaction across multiple vendor locations and in enabling spontaneous human social engagement at varying levels of intimacy, allowing collaborative purchases to occur,"

But as we noted in (see DIFFUSIONblog Minority Vision 18 March 2005) some aspects of social retailing are being hampered by the limits of the current technology. As Valdes notes "The limitations of technology on the Web today allow only indirect support for social shopping," he maintained. "The technology platform needs to evolve for more direct support in a more integrated manner."

And this is the immediate opportunity for a whole group of stakeholders including media owners, retailers and advertisers (check brand owners) to start to develop real social communities of interest beyond the solo hunter. Australian companies like Westfield, the world’s largest mall owner, could combine with a social networking site like Facebook or social shopping site Kaboodle to develop a social retailing property for it’s own global portfolio.

05 October 2007

Abercrombie to launch Gilly Hicks Sydney but it won't be in Sydney.

American clothing brand Abercrombie & Fitch (A&F) is set to launch what is being described as an “Australian-themed“ lingerie concept store, but not in Sydney.

The eponymously named Gilly Hicks Sydney, or Concept 5 as it is known internally, is set to open its first store on January 2008 in Natick, Massachusetts along with other stores in Connecticut and New York. A quick scan through CraigsList this week and we found they are also advertising for staff in the help wanted section locations at both Smith Haven Mall Long Island and Westfarms Mall New Haven.

A&F specialises in what it calls “casual luxury" apparel for college students ages 18 through 22. The company already operates four brands throughout the US: Abercrombie & Fitch, abercrombie, Hollister Co. and RUEHL No.925.

What the allusions of the new brand to Sydney are, we can only guess. Perhaps it's to do with sun, surf and a great outdoors lifestyle or perhaps even a long lost Sydney relative, though anyone with the name will be laying claim to this title.

What is known is that A&F has secured trademarks for the Gilly Hicks name and a set of beach-oriented symbols in the United States and the UK (it was registered in June) in recent months, documents shows. Insiders report that Gilly Hicks will include underwear, loungewear and a personal-care division.

According to the August Trademarks Journal, the UK trademarking was in four classes including footwear, headgear, intimate apparel and intimate apparel accessories, athletic wear and athletic wear accessories, swimwear and swim wear accessories, fashion accessories, bags, fragrances and jewellery

A&F has already filed for trademark protection for both the "Gilly Hicks" and "Gilly Hicks Sydney" names, along with symbols including conch shells, nautilus, scallops and sand dollars. The shell logo is believed to be part of the main brand identity.

The company has filed similar applications in Arizona and Hong Kong, according to public documents. DIFFUSION understands A&F will open up to 100 stores but there is no word on how the stores actually relate to Australia or whether they will borrow from similar “Australian” themed stores here in Australia such as Beach, RMWilliams and Rodd and Gunn. Maybe it's more Outback Steakhouse than Bondi Icebergs. In the end Australians may still be holding their collective breaths for word of any of A&F branded store in this country. Or for that matter, A&F at all.

03 October 2007

Mass luxury is just another takeout.

Earlier this year DIFFUSION (DIFFUSIONblog 7 May Status Abandonment) wrote about how the democratization of luxury brands seems to be destroying those aspects of a luxury brand (exclusivity, price, access, aesthetic) that denote them.

Now Newsweek fashion writer Dana Thomas's new book Deluxe:How Luxury Lost Its Luster serves to reinforce our belief that the pursuit of massive profit by the world's corpratised luxury goods conglomerates is truely blurring the distinction between luxury items and soap powder.

The gist of Thomas' book is that this pursuit of profit has only served to rob luxury brands of their essence. This is very much reflected in a recent report on the mass luxury market which told how LVMH's Bernard Arnault's decision in 1996 to take the company into the mass luxury market was really a question of both survival and growth.

Arnault argued that like haute couture, which has been static or in decline since the 50s, many of LVMH's luxury brands would eventually go the same way unless it embraced a form of market democratisation.

Thomas' book seems to confirm this, arguing that luxury brand owners like LVMH are well aware that their products have been so conflicted by this change that the drive for both profit and growth will mean it is going to be virtually impossible for them to turn around their vast behemoths and return to what is for many, a somewhat richer past.

02 October 2007

Brisvegas! nothing is better than a strategy.

DIFFUSION recently spent the weekend in Brisbane, Australia's fastest growing capital city. Often referred to as BrisVegas by locals and visitors alike, the city is now seeking to rid itself of the moniker.

Tired of what they describe as a now "hackneyed" tag, Brisbane Marketing's David Regan and Tourism Queensland's CEO Anthony Hayes have set themselves the (un)enviable task of "discovering" the "essence of Brisbane".

"We are going to try to distil the essence of Brisbane . . . find out what is it that makes Brisbane so special," they said in a weekend Courier Mail article.

According to the article, the pair want to "find" a new slogan (the current is "Not Just a Sleepy Town") and branding that can be used to promote Brisbane at home and and overseas in much the same way "I ♥ NY" is associated with the Big Apple, New Zealand's "100% Pure" and Victoria's Jigsaw and romantic Melbourne campaigns, both of which have been running since the the early to mid 90s.

What's interesting about the announcement is that these pair ARE actually charged with marketing the city, but their expertise is seemingly being challenged by their inability to "discover" or even distil the brand essence of the city themselves or through their organisations. A task that DIFFUSION would consider would be an essential part of their roles.

They said the first stage of their work would include a "slogan search" which would involve focus groups and which would be used to gauge interest and knowledge of Brisbane businesses and attractions.

The problem with approaches like these rather than focussing on a long term brand strategy like Melbourne has done (they are currently up to phase 8 of a campaign which commenced in 1992/3) and then developing a series of campaigns from this, they appear to be going the way of advertising agencies looking for big ideas in the short-term fix of a nifty slogan or tagline.

Both Brisbane Marketing and Tourism Queensland would do well to read something like Richard Florida's The Rise of the Creative Class and focus on urban renewal and how the city is once again encouraging the inward flow of creative talent, just two of the big positive impacts coming from its mercurial growth.

The need to develop alternative monikers to BrisVegas, love it or hate it, is just a diversion from really understanding and building on the brand essence of a city or any product for that matter (see DIFFUSIONblog 10 October 2005 Place Branding), something that requires both time and a real sustained strategy.

20 August 2007

Schrager and Marriott to create new boutique hotel group.

According to an article in this weekend's New York Times and by a blog by Marriott CEO Bill Marriott, the boutique hotel owner and luxury property developer Ian Schrager is set to partner with Marriott International.

"We're really excited about this because Ian obviously invented the boutique hotel concept and is certainly one of the most creative forces in the hotel industry today," said Marriott.

Schrager is to work with Marriott to design 100 boutique hotels for an as-yet-unnamed brand (we'd like this gig) in major cities across the United States, South America, Europe and Asia.

By tapping a range of renowned architects and designers, Schrager plans to give each property a distinct character (this is not unlike what he has done with the Gramercy Park Hotel and we hope he doesn't repeat what he did at the Hudson).

The hotels will be operated by Marriott and it hopes Schrager will lend what they describe as his "aesthetic ingenuity and cachet" with its own marketing and organizational muscle to gain entry into the boutique market, still regarded as the fastest-growing in the hotel industry.

DIFFUSION wonders whether the name, brand and experience will be distinctive enough to separate it from Marriott's other properties. Unlike Starwood's boutique W hotel group, which seem to have lost a lot of their shine and business, Schrager has continued to innovate with the properties like the recently opened Gramercy Park Hotel in New York.

Indeed, it seems was this hotel (see pic) that inspired Marriott to finally make the move into the boutique market.

Nestle not quite everyone's cup.

Australia's coffee industry is getting itself into a froth at international ffood company Nestle's attempts to trademark images of coffee in a coffee mug.

According to IP Australia, Nestle's application is for two images of coffee - a cup of black coffee in a white cup viewed from above and a red coffee mug, viewed from the front.

"We were convinced in the end and we were convinced by evidence of use that the company was able to supply, which demonstrated they had used that particular image repeatedly over a number of years, and that people in fact recognised it and associated it with their goods and services," the registrar for trademarks in Australia Ruth Mackie is reported to have said.

According to Mackie the image is visibly distinctive. In both cases, we assume the image is not generic as has been claimed by the Australian Coffee Association but is associated with Nestle's logo as in the Blend 43 pic above.

The normal approval process used by IP Australia involves an opposition period of three months, a review and then a final ruling made by the office.

What's most interesting is that opponents of the move seemed to have fogetten that Nestle has also been successful in registering the word "Decaf" in Australia without the level of opposition this latest application is enjoying.

A similar image dispute has opened between car maker Toyota and Qantas' Jetstar over the "jumping people" image. Toyota's claims copyright of the image through its long association with the O, What a Feeling campaign developed by Saatchi and Saatchi but there is no evidence that any trademark application has been lodgeed by Toyota or Jetstar for the image.

DIFFUSION assumes that any claim Toyota would make would rest on fair use evidence.

30 July 2007

Is Virgin's new airline V and an old V?

What's in a name when you already use it?

Certainly it seems a case of recycling, a name when Virgin Airlines Australia announced the name of it's new US/Australia long haul airline last week.

V Australia is the official name of Virgin Blue's new long haul carrier, but a visit to parent company Virgin's website already lists Virgin Vie (pronounced V) and the V Festival (recently launched in Australia) as company sub-brands. So DIFFUSION really wonders if the airline has really thought through the whole naming and sub-brand process.

But what should we expect when the name came as a result of a two week competition ran by a radio station which attracted a total of 5942 entries, which included some what the airlines desscribes as "creative suggrestions" like "Randy Roo Airlines", "Choo Choo Flying Big Blue" and "Pineapple Airlines". Among the finalists were: Matilda Blue, V Australia Airlines, Australia Blue, Virgin Pacific, Amelia Blue, Didgeree Blue, Liberty Blue and Virgin Australia.

Here at DIFFUSION either Virgin Pacific or Virgin Australia would seem to fit with current nomenclature.

The company says the decision was unanimous but we're not sure if that was because Virgin Blue CEO Brett Godfrey really didn't have to pay any of the fees associated with a real name and branding project of this status, or just like Virgin CEO Richard Branson was more interested in the PR value.

Certainly it doesn't fit into any of the British namesake's nomenclature and is remarkably similar to Virgin's cosmetics company Virgin Vie, which DIFFUSION director Stephen Byrne worked on, or to the eponymously named V Festival.

But Godfrey claimed the new name was "nice and simple, easily recognised, both understated and obvious and has a clear Australian identity" (does he mean brand identity?)

Even more interesting was the inclusion of the Southern Cross in the new livery for the airline, yet another swipe at rival Qantas.

The livery, closer to former Qantas rival Ansett, features a smart silver fuselage with a red tail including the stars of the Southern Cross, elements of the Australian flag and the distinctive Virgin red.

"It is important for us to use the Southern Cross not only for its geographic connotations, but also for its place in Australian aviation folklore," said Godfrey.

When DIFFUSION checked, the name wasn't even associated with a local website or the huge Virgin.com portal.

Not much to notice in the Qantas rebrand.

As DIFFUSION mentioned in our 21 July blog Qantas needs more than a logo makeover the world's most profitable airline unveiled a new version of the iconic flying kangaroo last week.

In a company annoucement, Qantas Executive General Manager John Borghetti claimed the new design was part of Qantas' "increasing focus on contemporary design for its in-flight and on-the-ground products" but DIFFUSION accepts that the logo change was more to do with the requirement that the new logo fit the new A380s it will start taking delivery of this time next year.

Qantas went to Sydney based design company Hulsbosch for the work, rather than to a specialist brand agency.

Accompanying the logo redesign, is a change in the corporate typeface to a more modern grey sans serif for the airline.

What's most interesting will be to see whether customers will see any real benefit from the rebrand. In visual theory, it just registers against the Difference Threshold (or what is also known as "Just Noticeable Difference") under the widely regarded Weber's Law, which determines the minimum amount by which stimulus intensity must be changed in order to produce a noticeable variation in sensory experience. So the more sleeker, angular kangaroo is a slight variation on the 1984 rebrand.

Ernst Weber, a 19th century experimental psychologist, observed that the size of the difference threshold appeared to be lawfully related to initial stimulus magnitude. This relationship has since been known as Weber's Law.

We're not sure if either Hulsbosch or Mark Newson know about Weber's law, but certainly Qantas going to have to go a lot further to deliver tangible benefits to both customers and shareholder. Focussing on the perceptible physical displays (brand marks, livery, seating, cabin design) is far easier than looking at the more underlying brand problems than can cause sudden unexplainable shifts in brand perception. With a six year time frame to repaint the entire fleet with the new logo, they certainly have some time to get things right.

21 July 2007

QANTAS needs more than a logo makeover.

Reports that Qantas is considering plans to "kill off" the bid red kangaroo logo, serves merely to sensationalise and simplify the debate on the process of rebranding.

Here at DIFFUSION, rebranding is more than just a tweak of the logo or change in the colour palette and if Qantas' latest remodelling of both its first and business class service is anything to go by, brand management is something that Qantas is not good at.

DIFFUSION recently flew business class to Los Angeles (at last on points) and was interested to see if the much lauded makeover by Australian designer Mark Newson has really made an impact.

Now Qantas business class is widely regarded as one of the world's best and sure, the flat seats were Newson's design as was the new Noritake crockery and the Alessi cutlery (even the plastic Alessi knife). But branding is in the detail and this seemed to lack.

The much vaunted Marc Newson designed amenities kit was merely a grey plastic shell box with Newson's signature embossed on the front with some in-flight men's cosmetics thrown in. All of this was in a grey cloth bag that also contained socks, a mask and a toothbrush - none of which fitted in the Mark Newson amenties box.

Nor was there any sign of the also announced Peter Morrissey pyjamas with the smart flying kangaroo logo on the front featured in the full colour campaign the airline had been running.. No, these were for "available on selected routes*" and the Sydney/LA route was obviously not one of them, despite the announcement by Qantas Executive General Manager John Borghetti that the collection would be offered to First and Business customers travelling on Qantas international services from 25 March.

So here goes the lesson. International business is an important part of the company's business and more particularly on the protected and coveted US route.

So with Qantas controlling more than two-thirds of the capacity on direct flights to the United States and now under threat from a new Virgin yet unnamed Australia/US carrier (for which DIFFUSION puts it's hand up to work on), so much so that the airline announced this month it would also be creating a premium economy section to sit alongside the revamped business class and to match Virgin's offering.

It would seem of some import that any brand decisions the airline makes, however small, will have a significant impact on future revenues. Those per kilometre revenues, according to Qantas' last Australian Stock Exchange announcement, rose by 1.6% on international routes this year against a 4.7% increase in revenues per seat.

And for Mark Newson, the company's unofficial "creative director", there are some salient lessons. Either manage the process well enough to know everything a customer wants will go into the amenities kit or make sure that Qantas delivers on the design experience you envisaged. Execution is always core of any re-branding exercise.

The future of the media agency.

DIFFUSION was recently asked by a London based agency to look at how media agencies build new business and access clients.

Here's our response.

Media agencies, like all within their category, need to re-examine how they engage with client’s brands and what their roles are in this process. Increasingly media agencies will need to take more of a stewardship role, rather than continue to adopt what I call the agent or carrier role. They will need to go beyond simple single channel thinking, creative responses and one-dimensional strategy and work more closely with client brands at much higher levels.

Agencies need to build excitement, momentum, loyalty, equity and, most importantly, business for their brands and those of their clients. Agencies will need to look at more complete brand portfolio approaches, where they look to work with clients to develop real brand management strategies that embrace every customer touch point; they need to conceive and develop differentiating ideas (for the most part they create non-differentiating ones); and execute with both creativity and thus daring media planning.

Agencies need to really understand the consumer experience – both how people interact with the brand online and offline – as well as how they consume and define the brands they use – will succeed.

Agencies will need to move beyond the idea of "campaign" or the success of campaigns, replacing this with a series of what I call client interactions or engagements within the development of the brand. They should be using all available data driven insights to inform the development of strategic brand portfolio (media) planning across the wide arc of a customer’s interaction with the brand, rather than those interactions which are linked to limited tactical assignments agencies are used to. Furher, agencies will need to create scaled solutions in specific emerging media channels, rather than continuing to cling to those compensations models that are unscaleable.

Increasingly media agencies must embrace those compensation mechanisms that reward the quality of the idea (and here I don’t just mean the advertising idea but a brand one), rather than simply the media idea itself, its execution and tailoring fees to the needs, circumstances and culture of each individual client, rather than a one-size fits all approach. For example, not charging clients fees upfront for any creative work, or charging only for data analysis. All of this needs to be addressed.

My experience with the now defunct 360 agency here in Sydney demonstrates the need for agencies to break down those internal silo approaches that effectively work against widening new business and start doing what they tell their clients to do, provide true integration rather than simply department-to-department billing in the guise of an integrated model. Silos don’t work simply because they foster inwardness and comfort and neither will the agencies that continue to embrace this. This includes media agencies. Welcome to the network. Where increasingly agencies will work within micro-network models to best meet client needs rather than continue to propound the full-service models, which most people will acknowledge are more puffery than reality.

Finally, media agencies need to concentrate on their chief differentiator – their people. In the end this is how businesses win business.

25 May 2007

Cadbury's purple passage.

Cadbury Schweppes is enjoying a purple passage after the Australian Federal Court this week handed it a win over some allegedly deceptive pratices by competitor Darrell Lea (see DIFFUSIONblog:Cadbury appeal short of a glass and a half 20/7/06).

Cadbury accused Darrell Lea of misleading and deceptive conduct by using a shade of purple which it claims bears "a striking and obvious" resemblance to its own "Cadbury Purple". All very strange because when DIFFUSION walked past the store on Thursday it seemed decidedly blue in colour.

In the original April 2006 hearing, a Federal Court judge dismissed Cadbury's claim, probably because it was more reliant on Cadbury’s claim of ownership of Pantone 2685C and Pantones that are very close to it.

In the disputed hearing the court ruled Cadbury did not “own” the colour purple and that Darrell Lea's use was not likely to convey to a” reasonable consumer” that it was associated with its rival.

However, three Federal Court justices disagreed with the previous finding and allowed Cadbury's appeal, ordering a new trial at the same court to be set (see: http://www.austlii.edu.au/au/cases/cth/FCAFC/2007/70.html)

The Court ruled that in dismissing expert evidence from three witnesses presented by Cadbury, the trial judge had erred.

Interestingly the three experts, Brian Gibbs, an Associate Professor of Marketing and Behavioural Science in the Melbourne Business School at the University of Melbourne, Constantino Stavros, a Senior Lecturer in the School of Economics, Finance and Marketing of RMIT University, Melbourne; and Timothy Riches, the managing director of FutureBrand were all called by Cadbury and presented with photo evidence it had accumulated on it's competitor's activites (let's also note that Cadbury operates no retail stores in Australia, while Darrel Lea has done so since 1927 with more than 1000 stores).

In particular, weight was attached to Gibbs’ evidence which drew attention to such factors as brand concept and brand equity, the nature and storage of brand associations in memory, the role of packaging in marketing communication and the importance and impact of colour in brand.

"It cannot be said that the disputed evidence is of so little weight that it could not influence the result of a new trial, so as to produce a different result," they said in their judgment.

Cadbury claims that since 1995 it has achieved a substantial, exclusive and valuable reputation and goodwill throughout Australia through the colour purple.

It alleges that since 2001, Darrell Lea has consistently used a colour bearing a "striking and obvious" likeness to Cadbury's purple in its signage, badging, wrapping, store fit-out and point of sale facilities.

Cadbury also claimed that Darrell Lea’s conduct constitutes passing off of its chocolate confectionary business and products as a business or products of, or connected or associated with, Cadbury.

DIFFUSION believes Cadbury has taken the route of attempting to prove passing off and by dint of this assume ownership of colour Pantone 2685C, something which it has up to now failed to do.

10 May 2007

IPTV, is it "better TV" or just "more TV"?

TV is dead, long live TV.

Certainly, that's the view of Microsoft founder Bill Gates, when he delivered the keynote address to Microsoft's yearly gathering of its advertising partners from around the world at the company's eighth annual Strategic Account Summit, early this month.

And strangely Gates might be right.

According to Nielsen Media Research what is called prime-time "viewership" for the four biggest broadcast US networks, fell from 40.3 million to 37.6 million people.

What this means is that people seem no longer beholden to network television to determine both the time, programs and place of viewing. Soon it will also be about the the media they use to view TV.

And Gates, who's been catching up on his more visionary outpourings ever since he missed the initial internet bubble, sees a new media landscape dominated by internet protocol TV (IPTV), where people will own single, high-performance wireless devices, download high definition television from anywhere in the world (but using Microsoft middleware) and viewing becomes more social and personalized.

The sorts of macro changes he predicts includes portable computing devices (we're thinking something not unlike Apple's iPhone with huge amounts of storable memory pluggable into home networks), which work anywhere and in any environment on any platform.

"We need to make things more user-centric", said Gates.

He thinks too much of digital media is designed on a per-device basis and he sees that changing, both in terms of the development of single devices that DIFFUSION believes can be used in all environments - home, office, play - as well as in all contexts while running on seamless various Web-based communication platforms.

Gates is obviously an avatar for IPTV, which Microsoft has made significant investments in. Microsoft is working with 16 customers in 15 countries on four continents around the world with nine of those customers commercially deploying IPTV services including AT&T U-verse, BT Vision, T-Home from Deutsche Telecom and Bluewin TV from SwissCom

"There's no way broadcast infrastructure over these next five years will not be viewed as competitive. The end-user experience, and the creativity, the new content that will emerge using the capabilities of this environment will be so much dramatically better, that broadcast TV will not be competitive, " he said.

"In this environment, the ads will be targeted, not just targeted to the neighborhood level, but targeted to the viewer. And more and more as the viewer is coming to a TV set, either through just choosing off a menu, or recognizing voice, or some video type thing, it will actually not just know the household that that viewing is taking place in, but will actually know who the viewers of that show are."

Microsoft demonstrated how IPTV worked at the presentation, including its capacity for virtual tuning, instantaneous recording of up to four programs from a digital EPG, true video on demand, high definition display and recording. They wrapped it in the moniker of "better TV".

Gates made similar bold predictions for the future of gaming, which is already seeing the Xbox combine with a set top box to enable new forms of social gaming.

So what will happen? When will we really see what Gates calls "better TV"?

Most people, in Australia and the rest of the world, still receive traditional broadcast TV. IPTV and on-demand video won’t change typical viewing behavior for some time (only because we're never going to get it real soon) but TV is changing and will continue to change, because the Internet is forcing it to. However, we're more likely to see a more cumulative change, as is being reported by Neilsen, rather than massive, dramatic change.

Certainly Australia hasn't been very exposed to the joy of TiVo and Foxtel's IQ is limited to subscribers and companies like ICTV has struggled, but programming, the product and carefully synced ad placement is something the networks in Australia have already started toying with.

However, three strands of broadcasting will emerge - traditional network broadcasting, subscription TV and narrowcasting using IPTV, the last we believe will become the most dominant. Companies like YouTube and Google Video will embrace IPTV and start to mimic traditional network programming in much the way Pay TV channels do but with more user centric programming. In addition, new companies like Vquence will provide the kinds of advertising solutions which allow narrowcasters to integrate real clickable advertising into programming.

Gates is right when he says that convergence is a key area driver for future television. IPTV will be broadcast across all types of devices but via a single platform (something he's hoping that XBox is a harbinger of). But it's also going to be influenced by digital rights management and the whole IP debate around content ownership. And that's a very fluid area right now, particularly on the heels of YouTube's capitulation to US content owners (the networks and studios). While we're not likely to see a repeat of Napster, we are likely to see IPTV circumventing the four/five channel monopolies in this country.

While there certainly is demand for IPTV services in Australia. In 2005 Australia, the second biggest group of TV downloaders in the world, was responsible for 15.6 per cent of illegal downloads of mainly US content.

But we're not likely to see a commercial IPTV platform in Australia until the kind of broadband networks with fibre to the node and in the home is a reality. And that seems to be what some of the argument between Telstra, the G9, the Australian Government and the ACCC is really about. The reality is we need to be able to get speeds up to 26 megabits per second, when most home systems run at 256 kilobits and therefore unable to support three high definition channels, VOD, VOIP and full internet access.

For the time being we're going to see viewers struggle along with video over the internet (JumpTV or iTunes, for example) and more makeshift offerings from Telstra and Foxtel, who initially promised IPTV in 2005. In the meantime, the traditional networks, both in the US and Australia, will continue to see the kinds of change Neilsen has begun to report.

07 May 2007

Prada at Kmart: luxury brands and status abandonment.

It's only a small thing. But as we all know small things can lead to big things.

But the release of a new Prada fragrance, Tendre (selling for $79.00) in the Sydney Mother's Day catalogue for Kmart Australia, certainly signals to DIFFUSION that Prada seems to be heading down the same road of luxury brand dilution that destroyed the once great Pierre Cardin, nearly brought down the house of Calvin Klein and which threatens so many brands in this market.

Sure you might argue that it's only perfume and for this brand a cheaply priced one at that, but the democratization of luxury brands seems to be destroying those aspects of a luxury brand (exclusivity, price, access, aeesthetic) that denote these brands.

It's fact we noted in our blog The Defining Essence 20 October 2005 and one that seems to have escaped Prada's owners as they take the brand into the mass luxury market.

Perhaps the Prada licensees haven't read the definition of luxury that in 2000 the European Commission used to review Prada's role in the market as part of a ruling on it and LVMH's acquisition of Fendi. What's important about this ruling is that it is one of the few non-academic reviews of the operation of luxury goods.

The Commission described "luxury products" as "high quality articles with a relatively high price, marketed under a prestige trademark". As such luxury goods were considered to operate in a single product market because of two factors "substitutability from the demand side: the idea of acquiring a luxury good is linked to prestige rather than consumption of a precise item" and "substitutability from the supply side" or where most of the producers of luxury goods manufacture a broad range of products such as ready to wear, leather goods, fashion or, in this case, perfume.

This definition fits in comfortably with our understanding of both the pricing and accessibility attributes of luxury brands. More importantly, the definition attaches the generally accepted idea that prestige is also linked to acquisition and not the actual consumption of the item. Which is probably to say that a lot of women will see the Kmart catalogue and think "I have to have this Prada perfume because it is a such a luxe brand".

What's also interesting from this ruling is the Commission also connects both the transactive distance of luxury brands and the aesthetic of their environmental setting to their definition, noting that Prada itself indicated that "the common denominator is the importance of qualitative requirements designed to maintain the image of prestige, exclusivity and the high quality of the brand (e.g. location, the nature of the external appearance of neighbouring shops, decoration and fittings of the outlet which should reflect the prestige of the brand)."

This hardly sits well with my knowledge of my local Kmart located in a suburban shopping mall which hosts a Baker's' Delight, Go-lo and a Wendys and where Prada perfume is likely to sit alongside the latest offering from Paris Hilton in aisle six.

So, by their own definition Prada not only seem to be falling out of the luxury goods market in their attempts to market mass luxury but also are defying some of the basic principles of luxury brand management. These are:

1. creating distance, a no-mix area or barriers to entry for those who are not invited and by necessity of protecting clients from non-clients;

2. selective pricing and and exclusive distribution as well as the aesthetic dimension of the products; and,

3. the recognition and acknowledgement of its luxury status by all.

By all three counts Prada is failing. First, by not maintaining and enforcing these barriers to entry and allowing their licensee to flout it. Second, by using a selective pricing model more recognisable as that of a democratic, basic brand model (other brands of perfume can sell at Kmart at similar prices) and finally, there appears to be both an acknowledgement of its luxury status by very inclusion on the front page of the catalogue, and also an argument for a case of status abandonment by Prada's Australian licensee and, I suspect, its international license holders, for this latest distribution deal. I'm sure it won't be first such breach.

03 May 2007

Ford and Rip Curl go beyond the wave.

Is Ford’s Ripcurl XR8 Ute Australia’s first co-branded car? It could be. Already a co-sponsor of a major Australian surfing title, the US manufacturer is doing some serious stretching in Australia alongside surfboard and clothing company Rip Curl.

While car manufacturers can piggyback on a large, loyal and extremely well profiled audience (think Ford vs General Motors Holden), it might also work if only to a niche market.

Hitching up with an existing youth brand seems like a good idea, especially if it’s an iconic Australian surf sport brand, like Rip Curl. And co-branding is useful as it helps reinforce the lifestyle image of the cars (how Australian is a ute after all, unless it's a panel van?) by linking in to an existing group of customers with similar tastes, lifestyle, or age. So it must be something that Ford has been missing out on as it seeks to bolster sales in a flagging demographic with the tie-in.

But it’s not Ford’s first foray into co-branding arrangements with clothing companies. Ford USA already produces SUV’s with lifestyle and clothing retailer Eddie Bauer (there’s a range of two and 4WDs in the 2007 series) and Subaru has teamed up with US outdoor clothing catalogue company L.L. Bean to produce the Subaru Gear range of outdoor apparel.

And there’s similar examples of between sports shoe and sports vehicle think Porsche and Puma, Adidas and Porsche, Ducati and Adidas, but mostly it’s been one way co-branding.

The most important thing for Ford is to make sure that the brand association works both ways, so that the target market segments don’t start to see it a just another multinational muscling in on a cool brand. Beyond the Rip Curl extras, what really makes this is a true Ford brand experience? What preserves brand attributes?

Importantly for Rip Curl, they should be wary that there is no diminution of their own brand by the target segment (as seen in the current Australian television advertising) but also by future target segments and this will require some strong brand management.

Australian wine is a glass half full.

Australia’s wine industry recognises it's glass is half full and now wants to reposition Australian wine at the premium end of the market.

This week the Australian Wine and Brandy Corporation and the Winemakers Federation of Australia unveiled their Wine Australia: Directions to 2025. The Directions paper, which in a rare case of both industry cooperation and speed of report writing, was commissioned in 2006 and recommends 46 directions to be adopted by winemakers and marketers in coming months.

According to the report, Australia’s wine industry must” focus on strengthening sector structures, directly influencing domestic and export markets and gearing up for sustainable success.”

“The Australian wine sector needs to re-evaluate its current approach towards export markets. It needs to identify new and sustainable market opportunities through detailed market intelligence, and turn consumer interest into aspiration through segmented marketing strategies. In particular, this only can be achieved by raising awareness and expectation of an Australian wine story founded on an international reputation for regionally distinct and fine wine production. Further, it also needs to refocus its expectations in the domestic Australian market and introduce new strategies to encourage more Australians to drink better wine more frequently while still observing sensible and moderate consumption patterns.”

In developing the strategic responses (tactics) for the report, Wine Australia identified three megatrends and eight inter-related sub-trends, which it believes will influence consumer buying behaviours.

They followed this with a brand segementation strategy based around four levels or “personalities” for Australian wine. The four personalities - Brand Champions, Regional Heroes, Generation Next and Landmark Australia – equate to four value creations respectively: accessibility, interest, innovation and aspiration.

The segmentation strategy is followed by a number of strategic responses, some of which require further elaboration and some of which DIFFUSION believes are unlikely to change perception in overseas markets.

These include the development of a Wine Australia Trust Mark , a global communication plan and changes to to the exiting Wine Australia web site to better target user groups as well a brand health check to continually research and measurement of consumer perceptions of brand/country (Wine Australia) in key markets.

While the responses only address one of the directions in the paper and in themselves are unable to achieve both the desired repositioning and opening up of new markets for “fine” or premium Australian wine. What’s refreshing is that Wine Australia at least understands and acknowledges the importance of global brand propositions and positioning, something similar Australian government strategy papers have failed to understand (think Wool Australia or anything in ICT).

On the ground and particularly in lucrative US market, fine Australian wine lacks any great penetration.

The US market tends to operate as a multiple market. Step into any liquor store in New York and try and find a premium Australian wine. Sure you get Casella and a host of renamed Australian wines but it’s rare to find anything outside of the specialist wine stores. It’s a similar case in the UK, where Australian wine’s dominate the market but not at the premium end.

Firstly, the brand check should come first. Any one who understands the importance of brand will acknowledge this as should brand tracking and real research be a constant part of any good brand strategy. So many organisations and business shy away from real tracking or put this in the hands of their ad agencies.

Any communications strategy then should focus on making sure that the tactical responses (and they are tactical) are going to achieve the desired targets and are not something that came through an ideation workshop run by an agency.

So a Wine Australia trust mark is an interesting concept but it needs to get around the diminution of Australian wines by companies like South Corp, Beringer Bass and Fosters. Australian wines, regardless of what part of the market they have been developed for, already enjoy high trust status ..it’s just that there is no real brand recognition for labels called “Two Sheds”.

Similarly, redeveloping the Wine Australia website has to also go hand in hand with some real ecommerce initiatives mainly around tracking wine brands and enabling greater accessibility and visibility to the small regional labels and the landmark wines the paper identifies as part of the strategy.

What’s important about the Wine Australia directions paper is that it is so forward looking about the idea of strategic brand marketing. It's good news for marketers and brand agencies and that in itself is a rare drop.

Commbank takes its brand offshore.

In a move not reminiscent of the Coles Group (see DIFFUSIONblog 4 September 06: Is McCann set to give Coles a Walmart?) Australia's Commonwealth Bank has abandoned the creative work of its traditional Australian agencies and moved to US west coast agency, Goody Silverstein.

The move, reported this week in the Sydney Morning Herald, is certain to raise the hackles of incumbents STW and probably most other agencies in Australia.

More interestingly was the Herald columnists' assertion that "Australian companies (spell A_D_V_E_R_T_I_S_I_N_G) have for so long lacked any imagination or will to back interesting and engaging advertising and the ability of the communications sector to propose anything marginally outside of the predictable is remote."

Certainly that's been DIFFUSION's recent experience of adland as it seeks to perpetuate a mythic status as marginal thinkers and strategists. In fact, what we have seen is that most agencies seem content to rest on poor stale concepts and ideas and will not look for people outside the industry to change this. So, who can blame Commbank?

Just ask Optus, Singtel's Australian telecomms arm. There about to do the same thing to their Australian agencies for much the same reason. M and C Saatchi is likely to get the shove, and not without reason. Optus' "animals" were being used when I worked for Cable and Wireless in London, which dates from the time when Optus was owned by the former global carrier. So perhaps they need to be looking further afield or agencies in Australia need to work a lot harder?

The SMH doesn't let matters rest there. They put the boot in, describing senior marketing staff in Australia as "creatively retarded marketing managers". There's something in that as the dearth of great creative and well thought out brand strategy in this country is much the fault of clients as it is of agencies. Have a good look around at how they recruit senior marketing appointments. It's all through, in most cases, headhunters who work to set formulas and like their clients, rarely go outside the "predictable".

You reap what you sew.

30 April 2007

Is Australian Fashion Week and Rosemount on the same catwalk?

This year naming rights for Australian Fashion Week have gone to Rosemount Estate Wines, but is there might be a perceived misalignment between the two brands.

With Mercedes surrendering rights to Rosemount, DIFFUSION would have thought that there would have been a natural synergy between the brands as there was with its predecessor's long association.

Sure, Rosemount positions itself in the US and other markets as "The Prestige Wine of Australia" or so it's 2006 website proclaims and Australian Fashion Week, under the aegis of Simon Lock and now IMG, has successfully grown a new fashion event brand in a highly competitive but small market.

But anyone taking a trip down to their local liquor store or bottle shop will see that the "Prestige Wine of Australia" sells for less than $10 in its country of origin.

While for some this might indicate a high level of accessibility for a great wine, "prestige" and low prices seem somewhat incongruous with an international event that has helped launched the careers of such notable Australian designers as Colette Dinnigan, Akira Isogawa, Sass and Bide and Tsubi/Ksubi.

Rosemount might be repositioning, and this is understandably a long process that requires years of work, but the Fosters' owned brand also needs to translate its brand and marketing efforts to the product side, particularly in the Australian market. Sponsorships and naming rights are usually local affairs and work best when there is a perceived and actual alignment between the brand and the sponsor, not when it's merely exercising a proposition and a tagline. Even Rosemount's website makes no mention of Australian Fashion Week, an embarrassing oversight and yet another indication that the brand doesn't appear to have its brand and marketing act together in Australia.

Locally any brand that can offer itself to consumers at a range of price points below $10 (Rosemount's Diamond Range) and up to $30 for it's sparkling is not really competing with the likes of Grange or Giaconda or estates like Cape Mentelle, Domaine Chandon or Cullen.

For IMG and Australian Fashion Week, it will need to work harder to convince people that their names are synonymous, particularly as Mercedes remains a sponsor for other international events, particularly in the US. There's no details on the monetary cost of naming rights for the even but it's obviously a lucrative arrangement as the cost of showing skyrockets and major fashion names decline to appear.

Hopefully, Australian Fashion Week invitees will be supping on some of Rosemount's more pricier vintages.

14 April 2007

Prada goes mobile.

In its latest move designed to enhance its premium portfolio, South Korean electronics company LG and Italian fashion company Prada launched their a high-end luxury handset this week.

Not to be outdone by US competitor Motorola and D&G’s take on the Razr, LG's Prada mobile phone is claimed to be designed in close co-operation with the Prada design team, with both companies teaming up to distribute and market the new handset.

The phone is really a rebadged LG KE850 model but is now officially named the Prada Phone by LG. It supports EDGE connectivity and features a fully touch screen technology, enabling advanced touch interface as well as unique pre-loaded ring tones and content. Priced at around 600 euro, the Prada handset will initially be available in the UK, Germany, France and Italy, with Asian countries to follow. There is no date for either a US or Australian launch.

DIFFUSION doesn't think the Prada phone is designed to take on Vertu’s section of the market in what is a much more differentiated offer. What’s more interesting is LG's claims that Apple swiped the cool design and buttonless features, innovations included in the iPhone, set to launch in the US in June and likely to leave most of the mobile market in its wake. In our mind the Apple and Prada brands are much more aligned by attributes such as design, style and innovation than LG. The Prada phone is at a higher price point than the Apple, though it's likely they will share similar customers. And there is also no indication of what Prada is actually bundling with the new phone (store finders?). Maybe its just content with giving it a lovely Prada gloss.

04 April 2007

Google challenges TV advertising's black art.

Google's breaking into the world of television advertising sales with a new targetted model.

Launched this week in this US, Google's TV Ads enables TV advertisers to bid for spots to more than 13 million households on US satellite TV network Echostar and only pay for what is watched.

It's a major new foray into the world's more lucrative $170 billion television advertising market, after the company's recent failed attempts to launch it's Ad Sense model into print and radio.

However, at this stage the new ad sale system won't get quite as personal as its online counterpart because of US privacy restrictions.

The system will be targeted more broadly at specific demographic groups, regions and programs on one of EchoStar Dish Network's 125 satellite channels which include Discovery, CNN and MTV.

Google will be able to do a daily analysis of anonymous data collected from Dish network subscribers and only bill advertisers for that segment of an audience that actually watched a commercial for a designated amount of time.

Former NBC executive Mike Steib, who recently joined Google as head of television advertising, said that the group was already “in active discussions” with other networks.

However, Google is also likely to meet with stiff resistance from bigger US cable TV operators like Comcast, Time Warner Cable or Cox Communications, who jealously guard the data their systems generate on customer-viewing habits.

It also must face off against ad measurement competitors like Nielsen Media Research and hot start-ups like Spot Runner.

Either way, DIFFUSION believes that if Google creates the same impact it has had on the world of online advertising effectiveness its also going to have a sudden and very measurable impact on the way TV ads are sold.

More importantly, the black art of television advertising will come under even more scrutiny from advertisers, as they start to demand their agencies provide real-time measurement of active viewers and results from campaigns.

It's yet another signal for the death knell of television advertising as we know it.