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The Quandary in TV’s Advertising Evolution

“There are two kinds of fools. One says ‘This is old, therefore it is good’; the other says ‘This is new, therefore it is better.’” Dean Inge Nowhere in business is it harder to walk Dean Inge’s fine line than with TV. So here’s a quick snapshot on where TV stands in all its forms: old and new. Traditional TV and DRTV. In today’s market, standard TV advertising continues to be the most effective – and cost effective — means for making big things happen in omnichannel markets. And while there has been some erosion in TV viewers, the majority lost are not TV’s core audience. Most cord cutters are young and have struggled to afford basic cable or, if older, are those who watched the least TV. What about new advertising options? New video advertising media and formats are abundant, but  how do each perform? Online Video. Online video isn’t a game changer because even after making the video you are faced with the challenge of getting viewers to see it. And that takes advertising, viral campaigns, or something else. So while online video can deliver CPOs, it won’t drive national results at retail. YouTube: YouTube pre-roll ads are a staple for many DRTV companies. They deliver decent CPOs but anyone using them needs to be prepared for low conversion numbers. Social Media Video Ads: Social media doesn’t offer lots of options. Google and Facebook get roughly 75% of online dollars and account for ALL recent online spending growth. Still, DRTV marketers have been […]

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2016’s Lessons: TV is as Strong as Ever

With the new year we thought it useful to look back at advertising lessons learned during 2016. A Rosy Forecast for TV. You’ve probably seen plenty of summary articles. So let’s start with something unique – what we can learn from the effectiveness of Atomic’s campaigns at driving sales impact. After all, we do a bit of a rare thing for advertising – we evaluate our work for it’s ability to drive sales at the store. Crunching the numbers, we found something that many might find surprising: Looking at store sales, our 2016 campaigns delivered as much impact per dollar spent on TV advertising as they ever have. Let me repeat that: TV was as effective as ever in 2016. This might come as a surprise to those confronted by all the hype about new digital baubles. But 2016 was also a year for re-setting things based on marketing truth. Some key examples: Few “innovations” around advertising turn out to live up to the hype. For example, remember the headlines about streaming the Olympics? Well, it confused “stream” with “average viewers per minute”. Once adjusted to compare with traditional TV, it turns out the streaming numbers were not very significant. Here is an article by Mark Ritson working through the numbers. Bob Hoffman (the AdContrarian) has played a pivotal role digging into the fraud that plagues digital advertising. It’s at incredible levels for ALL types of digital work, including digital video. Here are a couple of good links about online ad fraud AND about video fraud. Mark Ritson is a marketing professor from Australia who has done some excellent […]

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“Barnes & Amazon” Coming Soon to a Mall Near You (Thoughts from a Store Visit)

The following relies on thinking outlined in my posts on Amazon’s overall finances, their retail reality, and the latest Amazon Q3 results. I’m fortunate to live within a couple of miles of the new Amazon bookstore at Washington Square (just outside Portland, Oregon). I recently visited to see if it matched the hype. I expected the store to take cues from Amazon.com’s shopping experience with different efficiency, purchase transactions, or some insightfully unusual product mix. And since this is only their second bookstore, it’s reasonable to assume it is set up using best practices, learned in Amazon’s first wave of stores. Remarkably the store in Oregon lacks any sense of Amazon that fits with their online activities. Rather, it seems they learned they’re most successful with bookstores that are, well, corporate-type mall bookstores. Some observations: The store was BUSY. Washington Square hasn’t had a bookstore inside for years, so Amazon was filled with people. Customers were all browsing in ways they can’t online. They were standing in the aisles, opening and searching books to find something of interest. The store is smaller than a typical mall bookstore – I assume this is a strategic choice by Amazon to limit inventory and lease costs. Watching shopper behavior and the store setup, it reminded me of Barnes & Noble. Sure, the Nook display was replaced by Amazon’s Echo and Kindles, but there was nothing else significantly “Amazon” about it. After several visits and watching Amazon announcements, I think there’s a very good chance Amazon’s end game is brick and mortar retail. Of course, they aren’t going to let us in on that secret, because Amazon’s strategy is more like […]

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Update: Q3 Results Again Indicate Amazon Loses Money on Retail Equivalent Selling

Amazon has published their Q3 results and the headline was either “Amazon Misses Q3 Profit” or “Amazon Sees Continued Growth and Profitability”. In the case of the later title, it leads the Amazon release leads with good news (cash flow) so that the bad news is buried, and then gives us a huge list of bullet point accomplishments (Q3 Financial Results can be found here.). Both of the headlines are factually accurate. But what’s really going on? Amazon reports revenue in three categories designed to push their narrative. (All companies do this – nothing new here.) But digging deeper here’s what we see: 75% of the Amazon profit was from cloud services; which grew to nearly 10% of their revenue. (Sweet margins!). The other 25% of their profit came from the incredibly huge and vague “everything else” (aka “North American”) category. This includes content, Amazon brand devices, books and music, and all their retail-like sales. This 60% of revenue drove 25% of profits… Not such sweet overall margins. Their international operation lost money. What should we think? Profit from “everything else” is most likely from content and Amazon brand devices – not their retail equivalent business. This seems confirmed in their press release via the long lists of all new TV content they’re creating, and the success of their new devices. In fact, the press release says nothing about retail-like sales. Out of a massive list of bullet points, there’s nothing. Except that they’ll hire some seasonal people. My bottom line: Looks like Amazon is losing money on their retail-equivalent sales. For every dollar they take from a traditional retailer, they lose […]

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6 Reasons Innovative Consumer Products Need Longer Forms of Television

Companies spend millions creating innovative products hoping to build a secure future. Then most often they introduce those products to market…with ineffective communication. These days “digital” seems to be the go-to approach everyone chooses. Yet taking your innovative product to market with a digital release is the equivalent of whispering in Grand Central station. You think you did something – but nobody who would care about your product is going to hear you. That’s why Atomic specializes in using TV to drive success for innovative consumer products introduced at retail. We prefer longer forms of TV (60 and 120 second spots – or even half hours) for six reasons: TV Drives Demand for New Products… Longer forms of TV dramatically shorten the time it takes for a product to be a sales hit. Why? Message, demonstration and communication, along with a call to take action, ensure that consumers go to the store asking for the product. TV Increases Margins… A product on a shelf doesn’t add value to itself. So, with too many releases, lacking communication, retailers have to rely on price cuts to drive sales volume (price cuts they ask the manufacturer to pay for or share). TV can change this situation. A well demonstrated product demands a higher price – often as much as double or triple the price without TV. TV Builds Brand while Driving Demand… In our work, we find that consumers retain the most powerful brand messages when they are seen through a meaningful product. Crafted carefully, a smart television campaign will drive demand and also build powerful long-term brand value. TV Brings Shelf Potatoes to Life… There’s a special type of product […]

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Walgreens, Campbell’s Law, and Deming: The Dark Side of Customer Surveys

A few years ago I wrote “At Walgreens: An Amazing Abuse of the Customer Satisfaction Survey” based on my experience as a customer with their survey. The post attracted quite a few comments and they paint a picture of some highly dysfunctional HR amid the retail world, and not just at Walgreens. In fact, I’ve personally encountered “seek and punish” surveys at Volvo, Ford, and Volkswagen where sales managers are reduced to pleading with customers to fill out surveys AND to give them 9’s. I’ve also encountered it at Target, Einstein’s Bagels and even a whiff of it at Starbucks. While you can read the original post with FULL comments here, I thought I’d pull together a sampling of the comments into a single post. As a disclaimer, I do not have first hand knowledge of these situations. And it makes sense that my post critical of surveys drew comments that were also negative on surveys. Nonetheless, the comments consistently reflect important issues for retail management. “The same thing is done with the Mazda store where I purchased my vehicle. If the dealer who sells you the car doesn’t get a 10, it doesn’t count for them… The distress the system causes employees seems to be substantial–though the enthusiasm of my dealer was not in question. Very odd to hear that Walgreen’s does the same thing.”…Dawn AbusedEmployee@WAG added:  “It is worse than you think. Employees have been written up and fired for poor responses other than 9s. The scale is skewed… say out of 10 ratings, nine of which the respondent gives 9s and the tenth is a 7 (still a good rating) […]

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The Year Some Digital Emperors Lost Their Clothes

It’s been an eventful year in digital – with a string of writers and speakers pointing out where Regal Attire is missing among the Emperors. Because of this, I thought I’d pull together a brief list of links to some of the most interesting revelations of undress: Dan Lyons published his book “Disrupted: My Misadventure in the Startup Bubble”. This  book offers an insider’s view of HubSpot – but it takes on a much bigger topic. Essentially, it shows how easily digital ventures (like AdTech and marketing automation) become games dedicated to driving up share price without delivering value to the customer (those companies who use their services). In the next year, we’ll discover this is true of the online video marketing business – but that emperor hasn’t yet been called out. (Check out Dan Lyons’ book here.) The Digital Fraud Debacle. AdContrarian Bob Hoffman has extensively covered incredible fraud in the digital marketing business. (Sample of Bob’s postings here. You can find another one here.) Media Fraud in General. A new ANA report reveals how some agencies drive their own profits at the expense of making good choices for their clients. While it’s a good first step, some felt that it was an inadequate report attempting to just “get by”. The AdContrarian has discussed the ANA report. And I’ve written about the conflict agencies find balancing their profits with client success. Television has been rediscovered. Okay, it never went away. But this year recognition has been clear that smart advertising for mass market leverages TV. A key part of TV’s value is its incredible reach. As Byron Sharp has shown in his books How Brands Grow & How Brands Grow, Part 2, the […]

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AMAZON – Retail’s 800-Pound Gorilla…or Crafty Coyote?

An odd digital disease has run rampant among mass retailers for the last couple of decades – let’s call it “Amazon Panic”. (Professor Mark Ritson calls advertising’s version of this digital disease “morbus digitalis”>.) Amazon Panic involves falling prey to digital theories because we’re told “physical things like stores will go away and be replaced by digital”. These theories are given extra momentum because of popular mythology around disruption. And for retail, Amazon becomes the panic point because they are the biggest mostly pureplay digital retailer. (Most other pureplay eCommerce has already failed due to bad economics or morphed into something else.) Amazon.com is such a powerful distraction that a Time Magazine article recently called it the “800 pound gorilla”. A Challenging Data Point. Last year, we mounted an advertising campaign for a product that drove consumers to Amazon as well as a traditional retailer. These were tagged commercials that directed consumers to either website. Surprisingly, given the media weight and the tags, online sales at the retailer were roughly 8x the sales of the product on Amazon. So that started my team at Atomic studying the numbers – looking back at 20 years of Amazon Panic. What we find is both fascinating and quite clear:  Amazon Panic is out of proportion. Amazon’s True Size:  We’re told that Amazon is a $107b retailer. They’re not. Amazon pushes that idea (and even such respected firms as Forrester have been sucked into it). Yet only a portion of Amazon’s revenue can be considered revenue they “took away” from retailers. So we need a new term to get to Amazon’s true retail size:  Retail Equivalent Revenue. Let’s breakdown Amazon’s total […]

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New Language: Attribution or Contribution for Advertising Impact?

It’s important to be careful with language around advertising. Far too often what sounds like highly precise language includes incredible leaps of assumption. Consider the Relevance Leap. Despite incredible hype from digital teams, it turns out that online “relevance” is really based on the idea that a consumer has done something relevant to the advertiser. Relevance is in the eye of the beholder: I am bombarded by a lot of ads that someone decided were relevant to me – but aren’t. Don’t be misled by the term. Or, consider terms like “engagement” or “viewability”. Ed Papazian recently mentioned both in a MediaPost article comment (article link here), noting the numbers don’t mean what the words imply amid a digital world. Just because the digitician’s called a metric “engagement” doesn’t mean it measures when consumers are engaged. So what should we make of “Contribution” – a term being bandied about for sorting out media effectiveness. To be honest, I’m hopeful. Think of this term used in the context: “rather than focus on attribution, we are choosing to look at each type of media for its contribution”. At least that’s a good start. We Need to Replace “Attribution”. Attribution has been all the rage for few years. It arose through a combination of a desperate need to justify digital spend, an important need to sort out the best ways to spend in a complicated advertising mix, and was given an extra push with the arrival of big data (and the myth that data could tell us everything about our media impact). Except, “Attribution” has turned out to be one-dimensional. Generally, it means no more than attributing every consumer purchase to one source of media. […]

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The National Hardware Show’s Innovation Vitality

When I attended the National Hardware Show in Las Vegas recently I was hoping to find a good display of innovation along with solid mainline products. This was particularly important because my March visit to the International Housewares Show in Chicago was underwhelming when it came to innovation (see my comments here). The Hardware Show delivered. I saw a range and vitality of innovation that I hadn’t seen at Housewares. The focus at Housewares seemed to be massive volumes of minimally interesting products available in a wide range of colors. The focus at Hardwares were innovations that were valuable to consumers (although I was sad to still see a few pink things from male companies hoping to “appeal to women”). A few of the innovations I noted… …There was the ubiquitous BluFixx man strolling the aisles to lead us to their booth (where we learned about their version of the new blue LED light curable products). In the photo that’s Atomic VP of Accounts Skye Weadick with BluFixx man at the show. …It seemed like there was another Shark Tank funded product lurking around every corner. …Somehow at Hardware, the IoT was integrated into products in ways that delivered more consumer value and made better sense. …And did you see what’s happening with BBQs and smokers? In a soon to be published article I wrote that they need DRTV. With a tremendous array of newly revealed innovations (and great food), now is the time communicate! All in all it was quite fun – and reflects why hardware retail is so vital right now. Stores need innovative products because they make the stores stronger. While we’re not […]

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