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.