12 December 2008

AusSports viral video has a lend of Brits.

After being trounced by the British at the Olympics, the Australian Sport’s Commission's new viral campaign to attract rising Australian sports stars for 2012 Games has caused a bit of a stir back in the Mother Country.

AuSports “Let's rip those Brits to bits” campaign has caused a minor furore, with the Pommy press unsure whether to take the portrayal as a national insult or a bit of a lark with even the Sunday Times drawn into the debate asking if “the Aussies have lost the plot?”.

“It reflects the depth of feeling among Australians that Britain finished above them in the Beijing medals table last summer and the determination of the Canberra government to redress the balance in four years’ time,” said the Times on the weekend.

The AusSports viral video campaign, developed by Sydney digital agency Bullseye, features a London chav in a hoodie, taunting young Australians about our low Beijing medal count and baiting them to stand up and be counted for the 2012 Olympics in London.

AuSports’ National Talent Identification and Development Program senior manager Morag Croser said it was anticipating a return serve from the British as a result of the campaign, despite the fact it’s not even the target.

She said AuSports expected British indignation would “be forthcoming" and I think retaliation even swifter.

The Poms took bragging to a whole new level after it finished with 19 gold medals to our 14 in China as it looks to cement a place in the pantheon. spending US$375m on its elite athletes in the London Olympics run-up compared to Australia’s US$140m.

AuSports said sporting superpowers America and China have talent pools in excess of four and 22 million respectively; the campaign is designed to increase the size of Australia’s pool, which AusSports puts at only 280,000 people.

It’s a point of national pride that we see ourselves as one of world’s leading sporting countries punching well above weight in Olympics since 1988. But being beaten by the Brits in the medal tally or, for that matter, being beaten by them in any sport is seen as somewhat of a national disgrace.

This blog originally appeared in AdAge on 17 December.

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04 December 2008

Questionable identity: what General Motors can learn from adaptive instability.

Anticipating and mitigating the dramatic impact of organisational inertia on transformational brand programs can help companies better cope with a constantly shifting economic environment. Just ask US car makers.

It’s a key finding from a recent study by Harvard Business School’s Mary Tripsas on the interplay of “Technology, Identity and Inertia” within a new technology company.

While there is a wealth of knowledge around the brand dynamics that contribute to forming identity, Tripsas believes the specific relationships between brand, change and technology and the impact of inertia remain unexplored.

Tripsas’ study challenges the existing zeitgeist by arguing broader brand identities impose fewer constraints on how people view organisations. She believes those with more generic brands are better able to weather a range of changing external conditions because they can align with our wider expectations of what their brands mean.

Broader brand identities and brand architecture create flexibility for a company since they enable a form of adaptive instability.

Adaptive instability works when the external labelling of a company’s brand is fairly constant but enables an internal self label which can reflect internal shifts in a brand. BHP Billiton might be “a mining company” to all of us but it currently self identifies as “a global leader in the resources industry”, reflecting a dynamic strategy. Often it is no more than rhetoric but if a brand is internally viewed as both instable and adaptive, it is able to better respond and adapt to external environmental shifts without having to make major brand changes.

While Tripsas doesn’t say how this can be achieved, there’s been plenty of evidence to support how I believe a robustly formed brand identity supported by broader purpose and positioning statements can. For example, News Corporation has been able to better adapt to the changes wrought by the internet by positioning itself as “a diversified global media company”, rather than as a single media source company.
The same approach has been taken by oil companies such as BP and Chevron in the past few years as they moved away from external “oil company” to more generic “energy company” labels. Conversely, the American car makers such as General Motors (self label: the world's largest automaker) and Chrysler (self label: we build cars and trucks) would have done well to think about how they could be morphing their brands from their focus on pure manufacturing labels to offering broader “transport” options. The prescient Honda already self labels itself as a "mobility" company.

However, Tripsas warns if a brand is too diverse it also runs the risk of not aligning with external stakeholder understanding. It’s why the UK’s EasyGroup is such a great example of what NOT to do. Unlike the diverse Virgin group of companies, which operates against well articulated brand values and personality, I struggle to understand the fundamentals of the Easy brand beyond its ability to apply an Easy prefix to any business category from rental cars to pizza. Does anyone think Coles’ owner Wesfarmers actually has a brand? As an agricultural company it probably did but now its ambit stretches from retail supermarkets to coal mines, its even rendered label-less by its own description as “a diversified corporation”.

Even the brand essence of a company can direct and constrain action and generate inertia. Tripsas defines essence as a company’s “routines, procedures, information filters, capabilities, knowledge base and beliefs” but I call it core self belief. So when an economic downturn challenges an organisation and when pursuing change to meet that challenge violates core brand beliefs, organisations often pull up short rather than face the need for what Tripsas calls “systemic, major reorientations”. You only need to look at Woolworths bungled rebranding to see this in action.

But brand and strategy are not mutually exclusive. Unfortunately most firms have aligned brand to their marketing rather than to their strategy and subsequently ahve limited capacity for change. If a firm’s brand is expressed through elements of its strategy, does this mean a change in strategy necessarily then implies a change in brand and vice versa?

Tripsas concludes brand is not just one more factor to consider when unravelling sources of internal inertia during changing circumstances. A brand is a guidepost. Where a new dynamic such a global recession requires changes to the brand, simply altering routines, capabilities or beliefs without acknowledging the broader implications can be problematic and, in some cases (back to the US car makers), devastating.

This blog was also published in Marketing Magazine Australia on 8 December 2009.

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24 November 2008

It's about face: has David Jones given Miranda Kerr the flick?

Has Miranda Kerr, the new face of Australia’s oldest department store brand David Jones (DJs) been quietly replaced? So what happens when you realise your brand face doesn’t quite match the company it keeps?

Earlier this year DJs face supermodel Megan Gale stepped aside for lesser mortal and fellow model Kerr to be annoited the new face of DJs brand. Kerr did figure prominently in DJs Summer 2008 launch but since then has been a negligible presence in its national advertising and promotion.

DJs originally hired New York based Kerr to replace Gale on the catwalk for its bi-annual season collection launches in February and August as well as be its face in catalogues and advertising campaigns. Gale, it said, would continue in the lesser brand ambassador role.

But it’s Gale not Kerr who figures prominently in DJs major media campaigns, dominates its online presence and is widely featured in a national launch of a new American Express branded store card.

During the April baton change DJs pointedly said customers would undoubtedly embrace Brisbane born Kerr’s “warm and engaging nature." A direct link was made to her “Australian attributes”, describing her as a “ natural beauty with great sense of humour, a down-to-earth attitude and a love for Australia”.

Brushing away criticism Kerr was an unknown, DJs CEO Mark McInnes said her personality type could easily represent the brand, describing her as fashionable, approachable and aspirational.

“We want fun, fashionable and aspiring women representing our brand who are definitely not the Lindsay Lohans of the world," McInnes decried.

Yet, like Lancome’s sacking of Isabella Rosellini, L’Oreal telling Natalie Imbruglia she was no longer “worth it” and Versace’s disastrous hire of Madonna in 2005, doing good face doesn’t necessarily translate to sales if the fit isn’t right.

Kerr seemed to me to come across as neither a sophisticate nor particularly alluring in the Summer 2008 campaign; her self consciousness almost like that of a gawky teenager. More Hannah Montana than Lindsay Lohan.

Rather than adding to DJ’s brand equity and increasing it’s appeal, Kerr appears to have done neither.

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17 November 2008

Death of Print 2: Sensis and the final days of the phone book.

When did you last use the print edition of a phone directory?

In Australia the first directory was on a single sheet and listed just 44 numbers, now more than 100 years later it’s still in print but looks likely to go the way of the rotary dial phone. Here’s a couple of recent and related events that suggest publisher Sensis needs to prepare for the inevitable:

• Print company PMP’s contract with Sensis for production of Australian White Pages and Yellow Page directories expires on 30 June 2009;
• A new GPY&R Yellow campaign for Yellow Pages announces the release of a handy sized print version for use in the car;
Google and Telstra subsidiary Sensis announce they have signed a deal to integrate the data from Yellow Pages business listings into Google Maps Australia;
• Total worldwide smart phone shipments hit new peak of 39.9 million in Q3 2008 while in Europe almost 40% are GPS enabled. In Australia, 3m will ship constituting 30% of all mobile phone sales.
• Google announce a new iPhone application that runs a voice translation service which enables users to speak and ask for the name of a service or store near their location and have it sent to their phones.

According to Sensis, its Yellow Pages print version does AUD$1 billion in advertising annually and the Yellow Pages Online a further $100 million. Last year more than nine million print copies of its White Pages were distributed in Australia with Sensis claiming a 99% penetration rate into Australian households. But the events above threaten these brands’ relevance and could convey them to the dustbin of history.

The long decline in landline connections can be linked to falls in use of both print editions. In February Sensis parent Telstra announced, somewhat half heartedly, that it had arrested some of the decline in its fixed line services. In fact, the decline was just 2.1 % against a 2.5 % decline in the previous six months to June, the annual decline still around four or five per cent.

But there maybe something more significant going on with Sensis’ so-called Yellow and White Pages Networks, with both registering significant online declines in viewership this year. Alexa data puts Yellowpages.com.au views of its online edition down a massive 10% for the last quarter and Whitepages.com.au down 3%. This contrasts with White Pages’ claim in March it was number one for business search and Yelllow Pages announcement in November that more 11 million Australians used its service every month.

While competitive intelligence service Hitwise’s latest figures has White Pages with an increased market share of 10.89% for the same period but this is only 0.19% of all use across the entire online market with Google’s Australian operation dominating the market with 8.38%. White Pages is not even a top 20 site in Australia. Similarly, Hitwise has Yellow Pages increase market share by 7.25% for the period for a total share of only 0.11%. Up against Google, Microsoft and Yahoo, it is a minnow.

Sensis’ deal with Google Australia seems to at least acknowledge that its market share is close to a fiction and it needs to better position its brand to take advantage of the much anticipated growth in location-based services coming from the explosion in smart phone use.

By year’s end around three million smart phones will have shipped in Australia, most with built-in GPS such as the iPhone and Nokia Navigator. Portable navigation devices like Mio and TomTom, primarily used in cars, seem already to have been sidelined as carmakers increasingly include it as standard and users opt for more personal technologies. Already Nokia is the third largest provider of mobile navigation across all platforms in Europe. In this scenario, the release of the new Sensis Yellow Pages directory for car use seems both archaic and a folly.

Sensis says 25% of all phone books don’t get recycled but end up as doorstops or propping up computers. Perhaps these users are the only demographic that’s going to find it hard to lose the phone book. Regardless, PMP might want to check its contract when it comes up next year. My feeling is Sensis is losing its way and needs a better strategy that increases relevance, brand visibility and usability for a complete multiplatform environment, otherwise it might see more of its brands (think Trading Post!) analogous to a doorstop.

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13 November 2008

Brand Australia, I've seen the trailer.

The Country Brand Index (CBI) now ranks Australia as the top country brand in the world. While it may suggest some homogeneity around our identity, I’m wondering whether the latest Tourism Australia (TA) campaign is made disingenuous by its link to Baz Luhrmann’s depiction of Australia in his eponymous period epic.

A plethora of film tie-ins and promos: from a range of smartly designed but nostalgic Australiana homewares from production designer Catherine Martin right through to the much vaunted TA hook-up, serve to present an identity now blurred by brand and film image.

The Luhrmann/TA TV and cinema ads opportunistically piggy back on Australia-the-film and add confusion to Australia-the-country’s identity. It’s a marked contrast to TA’s previous prognostications that it would shift perception of Australia-the-country-the brand away from a focus on natural scenic beauty. While subsequent brand refreshes in 2003 and 2004 were designed to emphasise a broader cultural context, its 2007 campaign again refocussed on natural beauty but the earthy humour was considered derisory.

Now TA’s back to Australia-the-country-the-brand filled with natural beauty and an invitation to go walkabout. This time they’ve added Luhrmann’s beautifully shot sunburnt country but the only real difference is a whitewashed Aboriginal narrative borrowed heavily from a couple of Nic Roeg and Peter Weir films. Let’s not overlook the fact the message is delivered by a character featured in both Australia-the-film and the campaign.

Australia-the-country-the-brand’s number one ranking might have everything and nothing to do with the success of TA’s campaigns. Last year visitor numbers to Australia-the-country fell by between 4-5 per cent and so has the TA's inclination to link this to their campaigns. CBI’s international travellers might indeed love Australia-the-country-the-brand-the-film, but I’m not sure which version they think they’ll see next time they visit.

This blog was also published in AdAge's Global Idea Network.

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04 November 2008

Beyond Seiko. Defining emotional technology.

There isn't a definition for emotional technology, despite it being used as a band name and some scant references to the term in post-modern discourse.

Yet in 2007 Japanese watchmaker Seiko began referring to its watches as using emotional technology. Since then press releases and advertising clips from the company have described how:

SEIKO believes that the wristwatch is, above all, an intimate accessory. The best watches live in harmony, and interact, with the wearer and its functions offer the user a re-assuring and emotionally satisfying bond.

SEIKO's technological development is focused on the creation of 'emotional technologies'. Emotional technology creates the interaction between the wearer and the product.

From here it’s easy to deconstruct a definition from Seiko's text, set it within a meaningful context and even go beyond. First, technology is the product, not the mechanical or electronic drivers used to build or drive it. Second, emotional technology is defined by the creation of emotional intimacy between a user and the technology. Finally, this is measured by the level of comfort and efficacy derived from the technology and from the experience of closeness with it. For Seiko or any other technology brand, this occurs on between user and brand as well as on a collective basis.

Intimate engagement with technology is gauged by both degree of closeness and time. Technology needs to meet user expectations across the full span of a relationship, not just at purchase. Apple’s high rate of product innovation is not only the commercial imperative of in-built obsolescence but also the emotional commitment by users to its product. There is no better confirmation than hysteria surrounding the iPhone release or the opening of a new Apple Store (see below). Each demonstrate how Apple has a much better understanding of its users than most technology makers (think Sony’s Walkman failure and more recently, Motorola’s struggles) and has constructed this with real purpose.

The level of association between user and technology requires constant and increasingly intimate communication. Overt and expressive it includes visual branding, general advertising, promotion and communication. It also occurs by non-direct forms via personal proximity, audio and kinetic branding and technology design. While most technology branding does the former well and most do some form of the latter - the visual ubiquity of Apple’s white iPod headset, audio branding by Sony Ericsson or the distinctive design of a Dyson, all come to mind - few are exemplary in generating a high degree of intimacy.

Like all good relationships the success or failure of an emotional technology is affected by its nature, trust and the culture in which it operates. Mobile phones are more able to build trust and therefore a higher degree of intimacy than a washing machine, simply because the level, degree and type of relationship is different. Culturally, as Seiko notes, this "reassuring and emotionally satisfying bond" with a mobile phone is also going to be different for the 14 year old Gothic Lolita in Tokyo and the Gossip Girl fan in Manhattan. For each the basis of a more intimate engagement is determined by both usage and degree of customisation.

Importantly, emotional technologies need to ensure brand and product attributes are clearly defined, understood and shared. To see this is linked to brand success take a look at Saatchi’s Love Marks top 50. Without spelling out the obvious, the idiosyncrasy of this list is almost wholly dependent on the degree of intimacy and identification people feel between themselves and brands. Apple, the iPod and Google all occupy top 10 positions, while the Technology top 50 has Sony, TiVo and Sonar top 10 followed by Atari, Nokia, Nintendo, Canon, Blackberry and Nikon.

Seiko, for all its investment in its ownership of "emotional technology” is yet to make the list. Ironically it’s an old technology watch brand that does. No surprises, its Rolex.

This is an alternative version of a blog which originally appeared in Marketing Magazine on November 10. http://www.marketingmag.com.au/blogs

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03 November 2008

Brand priming or why Reidel glasses make wine taste better.

What makes wine in a Reidel glass taste better? Is it because Reidel is called “The Wine Glass Company” and it claims its glasses make wine taste all the more better than any other? How come a Tiffany diamond engagement ring set the benchmark for all others? And why do people queue for the latest release of the Apple iPhone, when they wouldn’t for any other phone? Does brand exposure influence a wider range of behaviours than we previously thought? Can exposure to specific types of brands and their associate brand messages really unconsciously influence our behaviour?

That’s the inference from a Canadian study Automatic Effects of Brand Exposure on Motivated Behaviour: How Apple Makes You "Think Different", which explored whether our unconscious can be so primed by exposure to certain brands they can create automatic and predictable behaviours and performance.

Published early this year by the University of Waterloo in Ontario Canada and Duke University in the US, the study looked at whether the generally accepted priming effects applied to our social behaviours can be applied to consumer behaviour and how brands can influence this. If so, can so-called brand primes shape our behaviour and how do they does this happen?

Priming occurs when mental constructs are created around or by a particular situation. For example, it’s been well documented that exposure to the “elderly” can often cause behaviour we have already hard wired around this stereotype: so people who have been primed “elderly” may walk more slowly and display poorer memory than those who haven’t primed. Traditionally Most behavioural priming research hasfocussed on activating such these constructs via exposure to related words. If you prime someone with words related to “rudeness” they’ll probably behave rudely.

It is already accepted that exposure to brands can shape consumer decision-making. One US study found that consumers exposed to low-end brand names such as Wal-Mart chose products of higher value but lower prestige in contrast to those people who have been exposed to high-end brand names such as Barneys New York. Another found that as the frequency of exposure to a brand increases, so too does our tendency to choose that brand (this is not the same as frequency of message or frequency of advertising). Yet most research has been limited to exploring the consequences of brand exposure for subsequent brand or product choice. Does the impact of brand exposure end with purchasing decisions or can it actually extend to behaviours unrelated to the products the brand represents? In other words, so if words and exposure to certain people can cause people to behave rudely or walk more slowly, can brands also evoke both cognitive and motivational effects?

Much of the psychological value we get from brands appears to come from their ability to help fulfill our personality and identity. In representing desired personal qualities such as sophistication or manliness, brands such as Tiffany's or Jeep are goal-relevant in nature, symbolizing our aspirations and unattained goals. In particular, some brands may come to represent "be" or ideal-self goals (e.g., to be sophisticated), which describe people's aims to improve themselves. Just as exposure to certain role models such as people who represent success can inspire certain goal-directed actions, so too should exposure to brands that symbolise success at a given goal. Through associations with desired human qualities, goal-relevant brands can trigger these ideal-self goals and shape behaviour. For example, Nike is associated with traits such as 'active' and 'confident.' These characteristics are generally seen as positive, so the brand plays a motivational role, symbolising a desirable future and an ideal self.

Brands are often linked to our personality traits in the same way symbols or representations of people can (i.e.Virgin is a young, fun out-there brand and if we use a Virgin product therefore it may represent who we think we are). Brands can also be symbols of aspiration, representing desired personal qualities such as sophistication or power (Bentley versus Maserati) and brand-priming may well motivate performance-based behaviour. The study wanted to know whether these types of behaviours actually do result from priming by brands.

In a series of lab experiments, the researchers had subjects look at a screen that displayed a series of flashing numbers and kept a running tally of the results. Interspersed between the numbers were subliminal flashes of Apple or IBM logos. The same subject group was then asked to perform a creativity-measurement task, in which they were asked to come up with as many uses as they could for the common house brick. In many replications of the experiment as well as with control groups, the researchers found that people exposed to the Apple brand not only came up with more uses for the brick but that these were also more creative than those exposed to the IBM logo or no logo at all. In effect, Apple made you more behave and think more creatively.

These experiments measured and manipulated qualities of priming but this new research demonstrates that brands can also serve as sources of unconscious performance-based behaviour. Recent theory has it that brand primes initiated goal-directed behaviour only when those brands were associated with qualities desired by the individual i.e. I want to be more creative (Apple) or I want to be more active (Nike) Meaning a brand can affect your output and, in the case of Apple’s brand, it may make you think and work more creatively What these findings may also enable us to predict is when the various types of priming effects occur and what the behaviours are likely to be.

In blind taste tests even the best Reidel glasses, as well as they are made, don’t actually make your wine taste any better than say a $10 glass from Target. Apple’s iPhone looks and performs well but it does is no better on a benchmarked performance basis than a Blackberry Bold or a HTC Touch Diamond. What these brands and so few others have has been able to achieve is what these researchers do indeed prove – regardless of the efficacy of a product or its service attributes, the prospect of superior performance can be primed and can directly our purchase decisions.

Brand priming might help to explain why brand promise is no longer going to be enough; the point of difference is going to have to be buried deep in a brand’s DNA. The saliency of a brand can no longer just be determined by more dominant operational and visual attributes but by triggers that prime our unconscious.

This is a longer version of a blog which originally appeared in Marketing Magazine on November 5. http://www.marketingmag.com.au/blogs

23 October 2008

Why companies need to rethink rebranding: Research International's new logo.

One of the most important things a global rebrand has to offer a company is the chance to both refocus organisational culture and change market perception.

The effort behind a brand rollout should be commensurate with both the quality of the strategy and the design output behind it, so when global research firm Research International (RI) recently launched a new logo and strapline, it again drew attention to these issues.

This is something I touched on when I looked at Australian supermarket giant Woolworths and the glacial speed of its recent rebranding effort (DIFFUSIONblog 7/9/08). While Woolworths might have some trouble convincing people the new logo looks like either an unpeeling apple or a man with upraised arms but the new RI's logo is so over rationalised as to strip it of any real meaning.

It's yet another example of both poorly differentiated design (think of a hundred other company logo designs that use interwining strands on a globe eg. News Limited), capitalised sans serif type all of it rendered in trusty blue and orange accompanied by an equally generic tagline. The problem with this kind of rebranding is that it challenges the authenticity of a company's brand meaning and restricts the effectiveness of the messages it creates to back rebranding efforts.

That RI even bothered to trademark its new 3I (Insight.Inspiration.Innovation.) sphere logo and strapline seems ironic when you consider, as one of the world's largest research companies, it has built a major value proposition around the kind of insight its research can provide on global brand strategy. From the new website they describe how they are:

Insightful: when a major brand wants to rethink the entire global brand marketing strategy, they come to RI. We've been tying consumer motivations and behaviors to the bottom line for major manufacturers for many years.

But they are so far from it. Even from the press release that accompanied last month's launch, goes on to both deconstruct the meaning of the sphere and then destroy it all in the same breadth:

All this is represented by Research International's new Global Innovation Sphere TM logo, which symbolizes RI's status as a trusted global advisor, particularly in the innovation research sector. It is comprised of three key components: the globe, the interweaving bands, and expanding arrows. The globe symbolizes Research International's belief in the power of global marketing as RI boasts one of the largest research networks in the world. The interweaving bands symbolize RI's belief in the power of teamwork and the sharing of knowledge around the world. It includes RI's dedication to working in tandem with its clients, advising them throughout their marketing processes. The arrows symbolize RI's commitment to growth through innovation for our client's biggest brands. Collectively, the new logo aptly portrays the company's mission and ongoing commitment to helping clients find innovative solutions to their business issues.

Design rationalisation is important and few companies bother to make it public as part of the rebranding process, instead relying on one liners and leaving their agencies and other interpreters to do the explaining. But I mean really, why write this stuff?

How many times can the word "innovation" or any of its derivations be used in a single paragraph? What are RI's proofs for its use of the 3Is? What kind of changes in client motivation and behaviour do they think this will create? Why are they any different to any other of its other competitors who all claim similar innovation in their research methodology, insight into their client's business and who can also provide similar inspiration from their research results?

More than ever companies need differentiated propositions and positioning supported by simple brand messages, distinctive logos and wordmarks that are not restrained by epistolary explanation and an anemic strapline.

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15 October 2008

When brand value turns to zero.

Amidst the escalating world economic turmoil the world's most well known and successful financial brands have stared down possible dissolution, others simply disappeared and most lost substantial economic and subsequent brand value. Is brand value relevant?

On the back of the disappearance of Bear Sterns and Lehman Brothers, the takeovers of Wachovia, Washington Mutual, Northern Rock, Bradford and Bingley there is plenty of evidence there is evidence to suggest that the concept of brand value is being questioned.

Take Lehman Brothers as an example. In 2007 it had an estimated brand value of $8 billion, by September 2008 it had lost close to 78% of its brand value and when it filed for bankruptcy it still had $639 billion in assets under management before it was broken up and sold to UK bank Barclays (who basically bought the building for under $1b!) and Japanese brokerage firm Nomura but little brand value.

While conventional thinking has it that in either a merger or acquisition, brands and their equity come with the entity being bought, the Lehman Brothers example serves to challenge this thinking.

As financial markets have dried up, banks and other financial institutions have had no reference point against which to set the value of their investment assets. Between January and September this year brand valuation agency Brand Finance estimated the brand value of the 100 most valuable globally branded businesses had decreased by 4.2 percent, a drop of US$67 billion. Brand value is going to continue to decline as prices fall and markets become mere ciphers of liquidity.

While brands continue to remain quantifiable assets, their contribution to the equation of a takeover or merger price is now more difficult to extract.

In a takeover or merger brands are among the costs CFOs and their audit firms identify that contribute to any premium paid which exceeds net asset value (NAV) or, what used to be known as goodwill. Under current international accounting standards as much as possible of that margin must be explained by listing, along with their values, such intangibles as can be identified and which meet the standards' criteria. Residual amounts (brand value) that cannot be reliably explained remain goodwill. As such brand value is dumped into a bucket along with a whole lot of other assets that have been subsequently dramatically reduced. And as was the case with Lehmann's, their New York headquarters was worth more than their brand.

So what happens now?

Brands are assets in that they conform to accounting standards. As these standards develop and are refined, it's likely that in the future all brands will need be properly valued on the balance sheet. As far as consumer contribution and preference go towards a contribution to brand value, this is an issue as I pointed out in DIFFUSIONblog 22/9/08 The battle of the brands 2 that is still to be dealt with and that the value and return on marketing investment is required to provide for. And as consumer sentiment and therefore confidence in brands waxes and wanes, we are likely to see continued fluctuations in brand value that take no account of the balance sheet. It is clear that Alan Greenspan's idea of irrational exhubrance cannot exist in a whirpool.

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13 October 2008

It's just bad timing for Baz Luhrmann's Australia tourism campaign.

The launch of Australian director Baz Lurhmann's $40m advertising campaign for Tourism Australia might just suffer from a case of bad timing.

Two new film advertisements ("Come Walkabout" and "Boabs") have so far been produced which will screen in 22 countries, with the first ad shown in cinema's in the UK last week. It's hard to understand the logic of this media planning decision when none of the advertisements begin in London. The first two film ads featuring the bustling metropoli of New York and Shanghai, before moving to feature the Australian outback.

Altogether 11 different ads are to be shot in all Australian states and territories but it is not clear whether these will be Luhrmann produced film advertisements or a combination of online and print ads.

Each ad is to feature the keywords "arrived" and "departed", with the emphasis on replacing a stressful everyday life with a holiday that promises a traveller will return home a new person.

I wonder what kind of segmentation study, if any, was conducted by the agency for this new campaign and what input Tourism Australia had into both the content and timing of the launch, which seems more aligned with the much slated November release of Luhrmann's film Australia.

On the basis of the the "Come Walkabout" and "Boabs" film advertisements, did Luhrmann have exposure to Nic Roeg's Walkabout and Peter Weir's The Last Wave, as both seem very much in this tradition.

DIFFUSION understood Tourism Australia's strategy was to move away from the standard iconic images of brand Australia into a broader expression of the sum total of an Australia experience. On this basis, while the film ads are beautifully shot and produced there is no real movement away from what is already regarded as an atypical set of images of Australia.

Further, both ads appear targetted at highly paid DINK couples. I was in New York late last week and given that this segment is the one going to be most exposed to the global financial meltdown it seems a rather cruel and ingenuous campaign.

Put simply, bad and unfortunate timing and more of the same against a segment who may very well be concerned about their jobs and financial security than with a holiday in Australia.

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24 September 2008

Is $130m the only cost to Fonterra's brand?

New Zealand dairy cooperative Fonterra has been forced to write down $130 million this week as it's global brand reputation increasingly comes under attack.

The write down comes in the wake of the everwidening Chinese milk tampering scandal, which could result in one of the largest food recalls in the Asia-Pacific region.

One of the largest dairy companies in the world, Fonterra was widely regarded as a "clean and green" brand. Not only does the company own a 43 per cent stake in San Lu, the Chinese firm that sold the poisonous milk formula, but it seems on the face of it, the company's directors had prior to knowledge of the tampering but seemed unable to act on it.

A carefully stage managed press conference in Auckland New Zealand this week saw executives once again running for cover as they fended off press accusations that the company could have done more to avoid the scandal, which so far has claimed lives and hospitalised thousands of children in China.

Despite a presence on the San Lu board, who may have known about the introduction of the contaminant as far back February this year, Fonterra CEO Andrew Ferrier insisted their lack of knowledge of Mandarin hadn't have hampered their efforts to understand the extent of the tampering and in interviews said he "was appalled that this could go on."

Fonterra claims they first knew of the contamination in early August and took what it regarded as the best course of action, which was to work with the Chinese government on a product recall.

However, the depth of problem is demonstrated by the extent of the write down, as the company paid $100m for a 42% stake in San Lu, which is now valued at $62m and with some reports suggesting that San Lu's brand is now virtually worthless. It also seems likely to anticipate a much more substantial write down on Fonterra's brand value.

Fonterra appears to have stumbled at the farmgate - first denying knowledge of the scandal, failing to achieve a product recall and now having to admit it had knowledge of the tampering prior to it going public.

Fonterra would do well to have learnt a lesson from Perrier, once the leading brand of sparkling water in the US and the world.

In 1990 benzene contamination was found in bottles of its popular sparking water leading to a complete global recall of more than 160 million bottles which, like Fonterra, was also similarly poorly handled by its executives. The result was an overnight collapse in market share and a takeover by Nestlé in 1992. Perrier is yet to regain its pre-1990 marketshare.

As the scandal widens to Australia, HongKong and other Asian countries it seems that in this escalating attack on its brand reputation is likely to result in a significant drop in its share price, market share decline and community disquiet in its respective markets.

All of this could and should have been avoided if the company had some proper risk assessment and crisis planning in place. In short, this would involve training for its key executives so they can plan responses and ensure various constituencies are actively tracked. For a company of this size I would have expected this was mandatory. However, Fonterra appears to have already broken one of the cardinal rules for protecting brand reputation and ensuring trust - when in a crisis provide as much certainty as possible around how you are dealing with the problem. They haven't and now it's too late.

I wonder if this is going to be a long, slow debilitating drip.

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22 September 2008

The battle of the brands 2: new global brand survey just more deck shuffling.

There's nothing very surprising in BusinessWeek's annual survey of the 100 Best Global Brands, just that Google isn't already closer to the top of the pack and that it pre-empts the rapid decline of some world's major financial brands.

In its latest and eigth iteration, the brand rankings compiled from data from JPMorgan Chase, Citigroup and Morgan Stanley, see little shift in the dominance of global brands with the exception of Disney's failure to grow, Mercedes-Benz departure (down to 11) replaced by Google's (10) much anticipated entry into the top ten.

What's most interesting in this list is the fact that $157 billion Google hasn't already surpassed Microsoft (ranked 3) and that Swedish megaclothing retailer H&M is rocketing up the charts(22) while Thomson Reuters (44), Blackberry (73), Ferrari (93), Armani (94), FedEx (99) and Visa (100) are all marked as new entrants to the pantheon.

Behind Google, Apple (24, up from 33), Sap (31, from 34), Nintendo (40, from 44) and Amazon (50, up 62) all signalled significant growth off the back of strong sales and increasingly focussed efforts of true and marked differentiation via technology.

In what must have anticipated the seismic shocks in financial markets, big value declines were posted by Merril Lynch (-12%) Citi (-14%) and Morgan Stanley (-16%), while old school brands such as Ford (-12%), Gap (-20%) and Motorola (-10%) all struggled to hold onto their market and customer relevance.

Outside of the financial giants, Ford, Gap and Motorola have all been characterised as so bogged down in moribund cultures that their ability to innovate has had significant effects on their share price and caused subsequent declines in brand value.

Indeed for Ford, Gap and Motorola it must signal that lessons can be learnt, not from big ticket investing in advertising but in building cultures that are imbued by technological and design innovation, which big risers Google, H&M, Amazon and Zara already know.

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15 September 2008

The battle of the brands: the contest for the best brand surveys in the world.

Dr Hunter S Thompson must be smiling. The Hells Angels are Australia's number one brand, if yet another brand popularity survey is to be believed.

Brand rankings, brand affinity, brand preference, brand valuation studies - dress them up as global and national rankings and name them the World's Best Brands, the World's Most Valuable Brands, the World's Most Recognised Brands, the World's Most Powerful Brands, the World's Most Loved Brands and you get some sense of the beauty contest that is going on for companies claiming authority in battle of brands.

Advertising agency the Belong Group's Australian study of national brand awareness, appears just another example of yet another advertising agency trying to climb onto the brand popularity surveys bandwagon, with what can best be described as a very "independent" study.

According to Belong, the top five brands in Australia are the Hells Angels, Apple, Star Wars and the diary and stationery manufacturer, Moleskine!

While there is little detail on the study methodology, it seems that a 1000 consumers were polled on the basis of what a brand stood for, if there was a clearly articulated belief and whether the brand elucidated a particular type of behaviour in people. A panel of, what Belong describes as, "industry experts" then ranked and shortlisted 20 brands.

It's not too dissimilar to advertising agency Saatchi and Saatchi's Lovemarks project.

A love mark is a product, service, person or place a consumer can’t imagine living without, has a specific name that is identifiable by others and is based on a personal experience.

is about consumer's identifying a small, everyday product or brand that embraces and infuses people's live to make them a little better via the Lovemarks' website listing.

Interestingly there is some affinity with Belong top 20, Lovemarks contributors rank Apple at 4 and Moleskine at 6 among their top 200 and also Nike at 87 and Star Wars at 148.

Belong's top five of the top 20 brands (Alannah Hill, Free Hugs, Peter Alexander, T2 and the Bra Boys) are Sydney based, would suggest that either Belong are looking for new clients (Saatchi and Saatchi reportedly won US$430 million JC Penney contract because of Lovemarks) or that the brand menu was very selective and the research net wasn't cast too widely outside of Sydney.

Compare this to the top five in last years The World's Best Brands, an annual global study published Business Week for the last seven years, which lists CocaCola, Microsoft, IBM, General Electric and Nokia and you'll see why things must have gone a little awry over at Belong.

In the Business Week study, Nike which ranked 12th on Belong's list slips in at 29th, Harley Davidson motors in at 45th and Apple manages to get 33rd. No mention of Smiggle, The Body Shop and shoe brand, Ecko.

Unlike the Belong study, this ranking uses a combination of analysts’ projections, company financial documents, and own qualitative and quantitative analysis to arrive at a net present value of company earnings to establish the brand value.

To even qualify for this list, brands must make at least a third of their earnings outside the home country, be recognisable outside of its customer base and have publicly available marketing and financial information.

Global brand valuation agency Brand Finance's Top 100 Australian Brands, published in June this year, lists National Australia Bank, Woolworths, Commonwealth Bank, Telstra and the Foster's Group in the top five. Coca Cola is listed at number seven.

Happily for Belong - Seven Network, which screens Sunrise (ranked 18th) is ranked 28th by Brand Finance and one of the licensees of the Virgin brand (ranked eight by Belong) Virgin Blue scrapes in at 45.

Brand Finance's rankings are based on the brand portfolios of Australian Stock Exchange listed companies, in terms of their absolute dollar value, and also the percentage contribution that the brands make to enterprise value.

Brand Finance defines a brand portfolio as the value of trade marks and trade mark licenses, together with associated goodwill.

Global marketing research agency Millward Brown's World's Most Powerful Brands or BrandZ Study published in April this year lists Google, General Electric, Microsoft, Coca Cola and China Mobile in their top five.

In their list Apple comes in at seven, Nike at 53 and Harley Davidson at 72. No listing for Dove or Star Wars here though surprisingly Unilever, which does own the Dove brand, (perhaps no one knows who they are in Australia) is unranked but McDonalds ranking eigth and Subway (73) are.

Millward Brown's annual BrandZ Study measures the brand equity of 50,000 global “consumer facing” brands and interviews over 1 million consumers globally (though this is probably across numerous studies of unspecified nature). The Top 100 ranking assesses brand value using market and consumer research, in combination with financial data from Bloomberg and Datamonitor, to calculate and break-down intangible earnings), brand contribution (the brand’s effectiveness in driving business earnings and what they call Brand Momentum (an index of expected short-term brand growth).

The Millward Brown ranking takes into account regional variations since even for truly global brands measures of brand contribution might differ substantially across countries.

The Belong study is based on consumer sentiment with an "expert" filter and provides a simplistic but popularist ranking of the "top" brands in Australia. Alongside Lovemarks, it proves there's a long way to go before we get a more accurate measure of the relevance and influence these brands have on consumers. While the global brand ranking studies do provide a substantial degree of homogeneity in their brand rankings because of common financial inputs, the degree to which they measure power and recognition is something recognisable consumer input could make a significant contribution to.

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07 September 2008

Is Woolworths rebrand a failure to launch?

Two weeks after Australian supermarket giant Woolworths launched a fresh new look, the old logo is still being prominently featured in both advertising and the launch of its new credit card.

One of the best ways to kill the momentum of a rebrand is to execute poorly and hesitantly - and Woolworths seems to be on a similar track.

At launch Woolworths promised that the rebrand would take place slowly and steadily and that only a small number of stores would be rebranded with the new look and the rest would come on stream as they joined a refurbishment program or new stores were opened.

However, since the launch Woolworths seems to be exhibiting all the hallmarks of poor brand management.

On August 22, Woolworths announced the launch of a general all purpose, all singing and dancing credit card that can be used for purchases both within and outside Woolworths outlets and at group stores such as Dick Smith, Dan Murphys and Big W.

While a joint venture with global banking group HSBC and Mastercard, the Everyday Moneycard proudly carries the Mastercard mark but also the OLD Woolworths logo as does the Woolworths website, where you sign up for the card and the in-store and other advertising for the card.

And no one seems to have told Woolworths' advertising and media agencies. A similar story was repeated in newspaper and television advertising - the old logo continues to blaze in full colour.

None of this seems to make sense when in the same week Woolworths shrugged off the ACCC report into supermarket competition and announced the fresh new look would, as its head of marketing Luke Dunkerley is quoted as saying, "be instantly recognisable as Woolworths and be associated with the word fresh within a short time".

Here at DIFFUSION we wonder what Woolworths thinks is a "short time" and whether perhaps the flurry of announcements were designed to draw interest away from some of the more adverse findings in ACCC's supermarket competition report released on August 5.

More importantly, it demonstrates that large scale rebranding projects such as this are critical to Woolworths' long term strategy and require far more than a marketing department's control. A concentrated and well executed timetable, that is both realistic and cost effective, would forestall the impression that this is a hamfisted exercise. We wondering whether Woolworths' CEO Michael Luscombe isn't about to repeat some of the disasters from competitor Coles' rebranding efforts, which resulted in successive profit write downs from the botched Bi-Lo merger and John Fletcher's downfall.

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31 August 2008

Woolworths unpeels its new logo and kills off the Safeway brand.

Australia's largest supermarket retailer Woolworths has unveiled what the company describes as a "fresh new look" for its 780 stores, a harmonisation for the parent brand and the closure of the Safeway brand in Australia.

The new logo and word mark revamp, by Sydney based design agency Hulsbosch, came after a two way pitch against one of the doyens of Australian graphic design, Ken Cato.

It's the first visual makeover for Woolworths' stores in 21 years after it introduced the slogan “The Fresh Food People”.

While the logo has been designed to reflect what the compay calls "its strong commitment to fresh food, convenience and value for customers", customers won't be seeing the new mark on stores in most stores with a staged rollout planned only for those that have recently been refurbished.

The first store destined to carry the new branding is the company's Mona Vale store in Sydney’s Northern Beaches, with a selection of other stores to be rebranded over the coming months.

More controversially customers of the Woolworths' Safeway stores in Victoria are going to see the loss of their much loved brand as Woolworths' completely rebadges all 189 stores. Woolworths has owned the brand since 1985, prior to this it had been operating in three Australian states since 1962.

The parent brand mark now looks closer to the US Woolworth's logo, a brand that closed in 1997.

Woolworths' management have gone in early to fend off criticism of the new mark by describing the design as symbolising several aspects of the Woolworths brand including the use of an abstract leaf symbol to represent fresh food, a connection to one of the Woolworths logos of the 1970s and the idea that it somehow represents a person with their arms up in the are - meaning that Woolworths focuses in on its customers.

While we think the old mark needed a freshening up, we're struggling to see how it is a leaf symbol and that it somehow represents a person. It's more closely aligned to a symbolic apple peel and to the 70s double chevron.

According to a Food Week interview with design head Hans Hulsbosch, the logo was benchmarked overseas and there was extensive consultation with both Woolworths' staff and senior management.

Hulsbosch said the logo was then tested in focus groups, though the size and scale of the testing is unknown.

“The reaction from those groups across a wide range of demographics and regions was so positive it confirmed our belief that we had found the right solution for the retailer. The test showed that the new identity successfully communicates positive values to customers," he said.

Despite the announcement, Woolworths' website was still sporting brand guidelines for both the old retail and company logos, a seemingly significant oversight in brand implementation. And Hulsbosch Communications media link to the new brand was also empty.

The logo announcement comes on the back of rival Coles' recent brand harmonisation and new nationalism and heritage tagline "Proudly Australian since 1914" unveiled during Olympics' television advertising.

Woolworths is Australia's leading supermarket retailer with revenues of $45 billion and is ranked 23rd among the world's leading supermarket brands. It was recently subject to an Australian Competition Commission investigation into supermarket dominance in Australia.

15 July 2008

What drives Booz's brand analytics tool?

Booz&co have ventured into the small but under-estimated brand valuation market with the launch of a brand vitality assessment tool designed to help failing brands redefine themselves..

The announcement comes off the back of Millward Brown's recent alliance with Brazil’s leading brand valuation consultancy, Brand Analytics, designed to complement its Optimor evaluation and measurement products in the South America market.

It also signals the tendency for global brand and business consultancies to merge strategy and engagement with valuation and analytics off the back of increasing client demands for transparency and justification in spend.

In the latest issue of Strategy and Business, Booz&co cite the success of revitalized brands like Abercrombie & Fitch, Johnnie Walker, Olay, and Ford’s Mustang as evidence that the success or otherwise of brand revitalisation and brand extension has been traditionally driven by "instinct and an appetite for risk".

Booz claims its new tool kit provides "data-driven analytics" to minimize the risk associated with these kinds of decisions. Called the Brand Vitality Assessment (BVA) and sounding much like Y&R's Brand Asset Valuation (BAV), it says it examines every aspect of a brand including communications strategy, pricing and the state of its competitors to reveal how much life is left in the name.

Booz's BVA is supposed to help companies "identify latent value — or the lack thereof — in their product portfolios before deciding what to do" or in other words, what the brand equity is. No surprises here and hardly different from their competitors.

Booz's BVA process is based on a brand having what they describe as "residual strengths" such as brand associations, the potential for or meaningful differentiation on at least one purchase driver and basic distribution infrastructure to support the revitalization.

It uses four related evaluations that incorporate consumer (where hoping that B2B hasn't been ignored here) research to create a holistic and data-driven view of how the brand is currently performing in the marketplace.

The evaluations seem fairly qualitative rather than quantitative and Booz is unable to cite any examples of what kind of measures are actually made and what kind of data is produced. Further, they don't provide any evidence of any brands they have worked with that have employed quantitative measures but apply only market share figures as demonstrations of how the process works.

The four evaluations appear almost entirely qualitative. They are:

1. The Purchase Funnel Assessment (PFA) is just another way to evaluate the purchase decision process and from DIFFUSION's experience this is generally qualitative as it relies on customer assessment from awareness to point of purchase.

2. The Brand Equity Review (BER) is designed measure residual brand equity and loyalty within the target customer segment. While it might identify the brand’s attributes, one would think these would be known and those attributes which have been eroded or been rendered irrelevant by competitors, again this seems more qualitative measure.

3. Competitive Dynamics Assessment (CDA) is a look at which competitors are taking away market share, why, and how easily the problems could be rectified.

4. Value Proposition Check (VPC, I suppose) analyses the brand’s benefits including marketing communications and pricing. It includes standard brand attributes and benefits check built around the functional, emotional and expressive against consumer, competitor, and internal perspectives. Nothing new here.

Booz's so-called Brand Vitality Potential (let's call it BVP and not sure how it snuck in) is the final evaluation, where the "cold hard facts, as uncovered by the previous four analyses, come into play". I guess this is where we might see some numbers.

Booz says the BVA is "not a panacea for tired brands" but that it offers is "a rigorous, data-driven approach to deciding a brand’s future" except we don't know what the real data is except it's all qualitative.

Booz could do well to state whether any other quantitative measurements are being used such as total market shares, sales by segment against overall PE ratios and how these are applied by the BVA. What scoring tools will be used? How will one tool be used against another? What are the weightings? If any?

More importantly, how will the assessment be reported and by whom and within what framework, particularly from the point of view of brand stretch and brand extension.

Then there are the issues of brand redefinition, activation and engagement, which follow on from such work. Booz and for that matter few other consultancies, have little capability or experience doing this kind of work despite talking about it and claiming it. The article cites no projects they have worked on this area, just suppose sos.

That there are so few consultancies and their clients who have undertaken these kind of complete lifecycle projects following a brand valuation, says much about the the general market wlllingness to understand the process behind brand creation and to make the actual investment required to revitalise dormant brands as it does about the abilities of the consultancies they use. The one's who have done it and been successful have obviously understood this from the outset.

Image courtesy of Chronicle Books.

25 June 2008

Kluster's crowd naming rights and wrongs.

In naming a product or service, it's great to have the benefits of a large focus group, but everyone who works in naming knows that it's even better to have a focussed outcome based on a good brief.

So when US based crowd sourcing company Kluster launched their recent Namethis service, DIFFUSION was both interested and abhorred all at the same time.

Kluster philosophy is based on crowdsourcing, meaning if you can get a group of passionate people working together you can get better solutions for almost any decision-making problem than with a single person. Whether its writing an online encyclopedia like Wikipedia, designing a new logo, or creating a new product or a new name, the people at Kluster think the power of the crowd is a better way to do it. They may be a little off the mark.

While there is much debate about the ethical, social, and economic implications of crowdsourcing, it's a popular outcome of Web 2.0 but not without it's detractors. I'm going to join the critics.

Firstly, what's interesting about the whole naming proposition, is the idea that naming can be made simple and the result usable. It's a very clear three phase process that includes a company or individual paying the $99 fee, posting it up for 48 hours and letting people put their suggestions and then what is described a ssome" fancy math machine" makes some decisions (?) and payment is apportioned out to the crowd.

Sure, there's some good names in some of the suggestions but the outcomes seem bizarre and, in many cases, unusable. A case in point. An organic skincare company gets the name Altitude. The brief:

A unique combination of pure, natural and organic ingredients from the Swiss Alps that is USDA and ECOCERT certified natural and organic skin care. Rare medicinal plants plants found at very high elevations are combined with essential oils to nourish and protect the skin from losing moisture and keep the skin beautiful and healthy. The high elevations and exposure to extreme temperature and humidity changes and high UV has resulted in plants that have developed protective factors that have proven to be beneficial to our skin.

The result is 275 names including Altitude, of which 12,523 watts of power were invested in the project to come up with the name. Or by my calculations 576kWH. or around $172, depending on how much energy costs per kWH where you live.

Now the energy usage is all very well for green credibility, but the actual cumulative time taken by the 275 respondents could be something close to something like 91 hours, if we say that each individual spent on average 20mins on this project within the 48 hour deadline

Now if you want to attach a real monetary value for the project, it's close to three working weeks for a single individual. Or approximately $31,000 worth of value on global brand consulting naming rates (yes, I know what the rates are!) for a single consultant without any add on rates or taxes.

While it looks like incredible value and it is, what's troubling about social media being used as product naming avenue is the fact that the process, intellectual and economic value is being completely undermined.

In the case of Altitude, there's no real attempt to validate the name beyond possible domain name registration. I did a quick Whois.net check and the name Altitude is registered for the major TLDs. Forget any trademark or company name checks and any other legals registrations in whatever territory or country you wish to operate in.

With a single search engine check and I can come up with at least two global companies (Napoleon Perdis and Swiss Army) using the name Altitude as a product name. And I'm not even sure whether they have registered this name.

The likelihood of its use by the project sponsor is subsequently likely to be low, because really the exercise is just that..a exercise. Even the "winning graduate" as they are described, is unlikely to have any rights to the name if there annexure has been buried in the fine print. Sure there might be the opportunity to come up with some great names but really, Kluster proves crowdsourcing works but it doesn't prove that it's right for everyone. So far the Kluster people have come up with 10 names. The value of this $999. And to Kluster, $200.

So you see what the value is.

03 June 2008

See this is the future of television. So why haven't the networks seen it?

Three events in the past two weeks have convinced me traditional television and traditional television viewing is being e radically transformed.

On Friday German publishing giant Axel Springer and Dutch consumer electronics producer Philips announced they had developed a system that will make it possible for television viewers to create personalized channels from their favorite TV and Internet video content.

And last Tuesday Sony, along with six of the biggest US cable operators Comcast Corp, Time Warner Cable, Cox Communications, Charter Communications, Cablevision Systems Corp and Bright House Networks, signed a deal that enables US consumers buy digital televisions that can receive a cable service without a set-top box.

Finally, last week a syndicate of Japan's largest electronics manufacturers announced that it may have reached agreement on a standard for a new internet television and new set, which will let users browse websites and watch streaming programs at the touch of a remote control, could be on sale as early as March 2008.

In each case, the opportunity was clear to all but those in what is now called "heritage media". Traditional network based and free-to-air television is being increasingly forced into a wider choice set that sees the television screen as a portal for all content and interactivity - both linear and non-linear - global, national and local.

Add to this increasingly expanding opportunities for delivering content to mobile, laptop and gaming devices, and you can see why brand owners and television network owners are fast becoming small fish.

The new Phillips software-based system, called TV Digital Personal, will be available on Philips television sets in Europe in time for Christmas. It will also be available for free download onto personal computers and can be used on digital video recorders and mobile devices.

TV Digital Personal is based on Springer's digital TV guide, so in effect another walled garden with yet another EPG. The software called APRICO is not unlike TIVO and automatically learns viewing preferences and suggests additional programming based on what has already been chosen by the viewer enabling the viewer to build their own channel.

Advertising could possibly be microtargetted according to viewer selections with an opt out permissions. This will be in addition to the regular TV commercials already embedded in programs.

The Sony announcement establishes a new US technological standard to be adopted by 2009 that will enable a new generation of TVs to include video-on-demand, digital video recording, interactive programming guides and other services.

By adopting a Java-based application called tru2way as a US interactive standard, it will enable the adoption of new "plug-and-play" interactive devices that can be used with TV sets.

The technology will also make it easier for consumers to receive the full range of cable-based services on other devices such as laptops, MP3 players, and cell phones.

Japan's new internet television is the brainchild of the TV Portal Service Corporation founded in July 2007 by Matsushita Electric Industrial Co, Sony Corp., Sharp Corp., Toshiba Corp. and Hitachi Ltd, set up a TV Portal Service with So-net Entertainment Corp., a Sony-affiliated Internet service provider and shareholder and is backed by the Japanese Government.

The companies aim to establish a global standard for the service and its portal, operating under the name acTVila, connects TV users free of charge to various web sites that provide consumer-oriented services, such as news and shopping.

From July Sharp will also sell TVs with an additional internet portal that offers access to Yahoo! Japan - the country's most popular website - as well as digitized print magazines and high definition video-on-demand.

In the end all of these announcements are still announcements but what they signal is indefatigable - television screens can no longer be viewed as just technology but as the conduit for an increasingly complex dialogue between media and content owners, producers, users, viewers, technology makers, brand owners and their agencies. And, if all the talk is right, the traditional television industry is showing all the signs of being undone by technology and its users just as the music industry was late last century.

22 May 2008

Police halt Bill Henson opening on child sexualisation investigation.

NSW Police closed down the opening night of Australian and international photographer Bill Henson's new show at the Roslyn Oxley Gallery in Sydney's Paddington this evening.

I was on the scene when two NSW Police walked from the building and advised the waiting media and bemused art lovers like myself that the gallery owners and Bill Henson had halted the opening pending an investigation by the NSW Child Protection Authority. Henson was seen leaving before Police made the announcment.

Police said they would be interviewing one of the subjects of the photographs and her parents.

Henson's work is renowned for it's use of young models set against lush and often opulent settings. He featured in a major retrospective at the NSW Art Gallery in 2006.

NSW Police were reacting to a piece by Sydney Morning Herald journalist Miranda Devine in Wednesday's edition which in turn fueled Sydney's incendiary talk back radio commentators with critics describing the images as contributing to the sexualisation of children.

Expect outrage from many quarters against the conservative Devine's outpourings and a backlash from both the Australian art world and media and the start of a new round of censorship.

20 May 2008

Brand heuristics: how we have all bought into the murky world of murketing.

I was recently sent a preview of New York Times' consumer columnist Rob Walker's soon to be released book Buying In and at the same time I was looking at some recent published research on the role of heuristics in consumer choice. It was timely.

Walker's book, also subtitled The Secret Dialogue Between What We Buy and Who We Are, underlines two main ideas - what he calls murketing and the creation of a desire code - as the basis of this "secret" dialogue.

Murketing, Walker defines, in two parts. First, it refers to what he describes as the increasingly sophisticated tactics of marketers who "blur the line between branding channels and everyday life", and secondly, through the "consumer embrace of branded, commercial culture" or what I would describe as participant marketing, "the modern relationship between consumer and consumed defined not by rejection but by frank complicity".

The second part of Walker's thesis surrounds something he calls the Desire Code, "the complex of factors, rational and otherwise, that spark us to make particular purchase decisions" but what he was really doing was identifying what neuroscientists and those at the sharper end of branding already have a name for - brand heuristics.

Brand heuristics IS the basis for the creation of the desire code. Essentially, heuristics are simple, efficient rules we use which are hard-wired by evolutionary processes or are learned via experience. They explain how people make decisions, come to judgments and solve problems, typically when facing complex problems or faced with incomplete information such as when they go to buy a particular product or consider a service. Heuristic rules work well under most circumstances, but in certain cases lead to what are described as systematic cognitive biases.

It is these cognitive biases which branding trades on. For example, in his 1899 book, The Theory of the Leisure Class, economic theorist Thorstein Veblen identified a penchant for people to perceive more expensive goods as being better than inexpensive ones (providing they are of similar initial quality or lack of quality and of similar style). He found this even holds true even when prices and brands are switched; so putting the high price on the normally relatively inexpensive brand is enough to lead people to perceive it as being better than the the other product that is normally more expensive. It's the typical Pepsi vs Coke taste test, which Walker also cites in his book.

Brand heuristics (and I have struggled to find a single simple definition) so here's mine: is a system of organised and systemic visual, verbal, olfactory and emotional cues and evidence that trade on and or create cognitive biases. In effect, this is Walker's desire code.

Walker sees the goal of branding to "narrow the range of actual differences in commodity attributes" to create "a different kind of value". And he's right. Brand heuristics puts in play, for good or better, the great sleight of hand. How else do you explain the desire to buy Hermes' Birkin Bag (see pic of Roger Federer from a recent campaign) for $16000 with a waiting period of six years versus an eBay knockoff for $169.99, which you can get now. Both, as Walker acknowledges, are likely to be of similar quality with little variation. So it's back to the desire code, the brand heuristics.

Or, as I have noted in DIFFUSIONblog 14/7/05 Replacing place, the specificity of luxury brands, what happens when Prada begins manufacturing their bags in the same factories that produce bags for Target?

It is murketing, as Walker puts it, that is being used to affect a great change in how we perceive and participate in brands. He cites examples of people signing up with "word of mouth" firms to become what are commonly called "brand ambassadors" you see on CraigsList postings who can spread the news about some new product or the hundreds of thousands of people submitting their own reviews of services and product offerings in places like Yelp.com and Trip Advisor.

So while Walker doesn't present us with a lot of new ideas here and he hasn't looked around at the research, he's good at filtering the ideas and packaging them up in a readable way. While many of these same examples cultural and brand critics have been citing for some time (it's the usual suspects like Timberland, American Apparel, Red Bull and iPod), what he does do successfully is popularise the idea of what I call participant marketing and the use of "desire codes" as a simulcra for brand heuristics, the successful and perhaps somewhat accidental exploitation of these hidden biases by both brand owners and their agencies.

Walker's book is released in the United States on June 3.

09 May 2008

Coles Express and predictable irrationality.

As gas prices rise around the world, it's not hard to see why consumers and governments are getting more and more irritated with gas retailers but perhaps they only have themselves to blame.

In Australia, the dominant supermarkets chains - Woolworths and Coles - have seen spectacular revenue growth from their entry into the petrol retailing market and a major contribution to this growth has been shopping docket priced discounts, mainly available through their supermarkets and liquor stores.

So when a furore broke over Coles' petrol pricing policies this week, it best illustrated the predictable irrationality around our brand based buying decisions.

Not less than two government pricing watchdogs, the Australian Competition and Consumer Commission and the new petrol price commissioner (yes, they do have one!!), warned Australian motorists to consider alternatives to the Coles Express stores following a survey into prices paid at the pump.

According to the price commissioner, Pat Walker, motorists who regularly used Coles Express discount dockets (available only after a $30 purchase in Coles Supermarkets and other Coles Group stores and offering an intial $0.03 off the per litre price), should shop around before buying petrol at Coles Express.

The Commission identified about 30 Coles Express sites in Sydney that were selling petrol for 155.9 cents a litre, when the average price was 143.3 cents a litre.

Although differences of 15 to 20 cents a litre among service stations were typical, the Commission had issued the statement because it believed the discrepancy was significant and was worried consumers might be buying out of habit.

The Commissioner's statement illustrates the kind of irrational behaviour identified by MIT professor Dan Ariely in his recent book, Predictable Irrationality: The Hidden Forces that Shape our Decisions.

In more than 20 years researching behavioral economics, Ariely discovered that people tend to behave irrationally in a predictable fashion. Drawing on psychology, economics and behavioral economics, Ariely's book demonstrates why cautious people make poor decisions about sex when aroused, why patients get greater relief from a more expensive drug over its cheaper counterpart (a 5 cent aspirin vs a 50 cent one), why we steal hotel soap. Or, in the case of Coles Express, why consumers are willing to buy petrol at more than 12c above the market rate just because they might benefit from a 3c cent or more discount.

According to Ariely, our understanding of economics which is currently based on the assumption of a rational subject, should, in fact, also be based on our systematic, unsurprising irrationality. It's also something that quantitative analysts in the financial markets have been dealing with for years.

Ariely argues that predictable irrationality provides an opportunity to gain a greater understanding of previously ignored or misunderstood forces (emotions, relativity, social norms and dare we say, brands) that influence our economic behavior brings a variety of opportunities for both consumers and brand owners to reexamine both individual motivation and consumer choice.

What's most interesting about the Coles Express example is that Ariely's predictable irrationality is being reinforced at the brand level. The station signage, ticketing and shelf ticketing provides a strong visual reinforcement of this irrational view that the consumer is actually saving. The constant message, right down to product naming, is always "saving".

Whether people associate Coles Express with value and hence saving, or its just plain laziness, can only really be explained by this predictable irrationality. And the brand messages simply serve to reinforce the perception of saving, even if it is, as the petrol price commission and the ACCC point out, it's not the case.