Which half is being wasted – branded vs non-branded keywords
We all know the 19th century adage “I know half the money I spend on advertising is wasted; I just don’t know which half.” Online click trackable advertising promised to change that. It seems it has. It turns out that “branded keyword” advertising is not effective for well-known companies. Companies with known brand names would do well to re-allocate the money they are spending on search engine marketing to other areas. In a recent HBR blog, Professor Fisman referred to a preliminary study by eBay that calls into question the effectiveness of Google advertising for big well-known brand names. In an elaborate and controlled experiment conducted by eBay, its researchers found that when Google (or Yahoo! or Bing) search advertising was discontinued for a sample of its potential audience, traffic to the site continued to perform as well as it did in areas in which Google “brand keyword” (defined as any keyword that is simply the company or product name or includes the name of the company such as “eBay shoes”) advertising was still being used. This study underlines
Category: Marketing Strategy
Which half is being wasted – branded vs non-branded keywords
Businesses continue to think of the funnel as a sales funnel with leads entering and being qualified, and hopefully reaching the end-point of becoming a customer. A recent study shows that this process is changing. Companies need to change their perspective because it is the potential customers that are qualifying suppliers. So, are you in the “Customer’s Buyer Funnel?”
Starbucks is going super-premium. The company that got people to pay $4 for a product they had paid less than a dollar for is adopting a new long-term strategy. It has introduced a $7 cup of coffee in 50 of its Northwest stores made from a hard to grow coffee bean -the Costa Rica Finca Palmilara. It plans to roll out this product nationally next year. Starbucks might be on to something here again!
Using Gamification to Build Digital Loyalty
ENGAGE2012 is a conference hosted by Badgeville, the company that provides a solution for behavior gaming. It was a great conference with some interesting perspectives. Most CEOs today acknowledge the importance of social in their overall strategy even as the world seems to be taken over by social fatigue. Badgeville’s conference hinged on the next step of increasing social engagement. As Chris Lynch, Director of Product Marketing at Badgeville said – the intersection of social plus gamification is a powerful combination.
What is Gamification
Social media has become popular as a communication channel for companies partly because of its low barriers to entry, along with its popularity among target customers. Social media channels are free to enter, but associated costs and problems become apparent later. That is also one of the reasons why the return on investment is hard to measure. To download the article, please login.
How Chobani Got its Start
When I saw the television advertisement for Chobani yogurt, I thought to myself – who needs one more yogurt and that too with a silly name? The name did stick in my mind though, and the advertisement did leave its mark on me. Chobani’s rise to fame before I caught its name on television advertising happened through social media – through blogs and more; through its customers who tasted it and vouched for it. The reason it got stocked on retail shelves was the taste test. Once retailers tasted it, they found it hard to refuse to stock. Its taste was great because, its founder and CEO Hamdi Ulukaya, Turkish by origin, spent a lot of time perfecting it. He felt the US could do with a better tasting yogurt. I have to admit here that I am partial to European yogurts myself (in Europe though, where I have found them tasting a lot better, so much that I actually looked forward to eating it every day!).
Chobani’s Taste and Social Media
Chobani’s taste was slowly derived through focus, use of more milk than its competitors, and hiring a yogurt expert from Greece. The success of this new entrant in a mature market dominated by big names such as Yoplait and Dannon was because of two reasons – making a better product than its competition and pleasing its customers so much that they would be your product spokespeople. The third reason that helped Chobani’s rise to success is the access to “free” social media channels that makes its easier to scale word of mouth. For a young and unknown company with few resources it evens the playing field (somewhat) to go up against its behemoth competitors who had grown comfortable with their success despite a weakness – not such great taste in the Greek yogurt category. See Figure below.
Chobani’s Socially Savvy Strategy
Chobani’s website is quite social savvy. Their social strategy is well integrated with a community oriented marketing strategy that involves sponsorship of fitness events in which they are using their product and Chobani branded t-shirts for additional name recognition. Their website features a series of “guest bloggers.” These are other bloggers who write about nutrition and fitness, again using this as a way to engage influencers and their prospects/customers directly. For its Facebook page, the company uses mostly delectable photographs of Chobani yogurt infused end-products that are hard not to “like” and thus spread the word. The sentiment is generally positive with people from U.S. west coast to Brazil wondering where or when they can get their product closer to home.
Chobani and Competition
Ironically enough, Chobani’s well entrenched and incumbent competitors have European origins as well. Dannon yogurt is owned by a Spanish-French multinational based in France. Yoplait which also has a French origin is actually owned by General Mills with a 51% controlling stake in it. Social media mentions of Chobani compared to the leading competitors Dannon and Yoplait should be a cause for concern for these other well known brands.
As the Figure above shows, Chobani’s competitors have cause for concern, Dannon more so than Yoplait, for its share of mind among consumers. Granted, social media research reveals that not everyone likes the tangy taste of Greek yogurt. I tasted Chobani myself and have to say that Greek yogurt is not for me, although I love yogurt in France. However, I could tell that Chobani’s yogurt has great taste and texture for those who love slightly tangy yogurt. So it is no surprise that those who do are passionate about it. Add to that the fact that this is a segment of young, well-heeled, and educated and a cup of Chobani as one of the tweets put it “has 16 grams of protein and its like 6 oz holy cow #mindblown,”…packing a protein punch and low calories with taste.
Lessons from Chobani’s Success
There are several lessons for companies around Chobani’s success:
• Social media evens the playing field a lot more for smaller competitors – provided they have a superior product (Chobani is only five years old)
• Chobani’s use of social media is very effective – using mostly fantastic photographs on Facebook, Instagram, and community engaging and oriented blogging.
• Social media metrics can tell you a lot more about the competition quite quickly. Chobani’s competitors have cause for concern when they are losing share of mind in a category that is growing – Greek yogurt.
•While Chobani might have got its start and acceleration from social media, its television advertising led to so much demand that it had to stop advertising. That says how much television too still has a role to play.
Many customers today depend on their smartphones heavily for local shopping decisions. As of January 2012, 29% of U.S. consumers own an iPad or an e-reader and 46% own a smart phone. Some retailers have stepped in to cater to this trend by providing personal touches using technology rather than humans. As Apple
pushes into the retail industry, retailers are responding by offering iPad stations for consumers to research and
compare the products they are shopping for. Nordstrom has found itself surprised to find that customers are using its app inside its store to do research. It introduced the app to help customers shop online and order online while they were watching television. Based on my research using Social Media, customers have become disappointed with customer service and salespeople that are not knowledgeable about products. They have also become extremely comfortable with doing their own research online, interacting with computers that seem more knowledgeable than the salespeople at stores. Many of these customers do not want to be approached by a salesperson, however they all would like to find one when needed. That is not the case as many of their experiences and my own illustrate. I was at Orchard Supply Store over the weekend looking for a particular Hibiscus plant. First of all it was difficult to locate someone to help me. Finally when I did, all the person could do was to say he does not know what color the flower was going to be. I finally took out my iphone to do my research.
Young and old, have both become accustomed to having their smartphones and tablets answer their questions through web pages and customer commentaries. Many also still like to experience the touch and feel of products. Retail stores are in fact becoming the showroom for many products that are bought online. The things that will help them survive are:
1. Providing smart technology that is currently helping better than salespeople
2. Recognizing that they are acting as showrooms for their Manufacturer’s products and asking the Manufacturer for a higher fee to stock in return for offering the product at the same price as the online price
3. Changing the product in some way so direct comparison is made more difficult for the consumer
4. Having a few salespeople that are knowledgeable, trained, and ready to help when needed as a way to differentiate
5. Train salespeople to arm themselves with online intelligence on products so they can counter negative, biased, or inaccurate reviews. Equip them with ipads if they cannot answer the question themselves. An in-store app on products is another way to help customers, whether it is used by the customers or the salespeople or just placed within the stores as help stations.
6. Loyalty awards for repeat purchases. Even membership cards that gives them discounts and free shipping on
Zappos is an online store. However, it does not have shoddy customer service. Its customer service is always
accessible on the phone for questions without being put on hold. Based on all the negative comments about unhelpful and ignorant salespeople at retail, it seems that retail could use investing in a few good accessible salespeople as a differentiator. After all Apple stores did make retailing cool using its cool products, great looking store focused on design, and knowledgeable and helpful salespeople (although that has received mixed reviews). Use technology itself to help customers let salespeople know that they are needed. After all what use is location based technology if you cannot locate a salesperson when needed within a store. With point of purchase payment systems such as Square attached to an iPad, scannable coupons on cell phones, the role of salespeople as mere cashiers is also getting moot. Similar to how social media is being used to connect consumers and give them something of value that represents the brand personality, brick and mortar retailers need to find their own way to connect with their customers through the feeling of community. For brands like Nike, it has been through the online communities it has built around sports categories such as running. For bookstores, its the story reading or author signing events. Wholefoods does a wonderful job both online and offline in personifying its brand around the themes of sustainability, organic and local focus, and demanding a higher price for its products. All retail stores need the equivalent of these events to build their brand around such events that are useful to their customers. I have yet to see a clothing retail store partner with a fashion show or a designer. These are things that online stores can emulate (or already do through reviews) but cannot come close to as in a live setting.
Recently, a New York Times Columnist, Tim Egan, wrote an article titled “Please Stop Sharing,” in which he lamented the proclivity to over-share the banal and trivial on Social Networks and the negative consequences of saying something that lives forever in cyberspace. What was interesting was the number and variety of comments it generated. I examined 113 of those comments that were available online (as of December 16, 2011) doing a content and sentiment analysis. The results reveal there are at least five different segments based on perceptions of Social Networks, with a sizable segment of non-users that see Social Networks as unproductive, degenerate, or encroaching on privacy. More details about each of the segments and implications for Marketers follow.
The readers commenting could be segmented into five different groups as shown in the Figure below. There are those who defended over-sharing as not banal but as freedom of speech, or as what makes life. This constituted 16% of the sample of commenters. Here I could identify a couple of different segments. There was a second group of users of social networks that I term “Pragmatists,” who saw the benefits of social networks and felt it was up to you how you used it or how you reacted to the banal, trivial, or “over-sharing.” There was a larger segment of non-users of social networks. These constituted those who had tried it and decided it was not for them and those who did not want to use it. Again this group could be segmented into those who would not use it because they were concerned about privacy (Privacy aware). The second segment of non-users felt that social networks were either unproductive or represented degeneration of social and cultural values.
For more details and marketing recommendations, please click on my full article published at MarketingProfs.com – “Meh! Not Everyone ‘s Into Social Networks.”
- I have always admired Netflix for its attention to detail when it came to pleasing its customers. Yet, despite being so customer oriented, recently Netflix took a double turn changing its pricing and offerings and becoming the household and Saturday Night Live joke of the year. Our analysis shows that a different strategy could have increased Netflix’s revenues without alienating its current customer base.
Netflix’s New Pricing
In July 2011, Netflix changed its pricing from $ 7.99 a month for unlimited streaming and DVD rentals to a choice of options as follows:
- o $7.99 for unlimited 1 DVD (DVDs only plan) a month
- o $11.99 for unlimited 2 DVDs (DVDs only plan) a month
- o $7.99 for unlimited streaming only a month
- o $15.98 for unlimited streaming and DVDs a month
At the time of the announcement, Netflix had 24.59 million subscribers in the U.S. Since the unpopular announcement, the company has lost almost a million subscribers and now stands at 23.79 million subscribers domestically. After the pricing changes, it has 21.45 million subscribed for streaming and 13.93 million subscribed for DVDs. That reflects the current preference for streaming while there is still an existing need among its customers for DVDs.
What to learn from Netflix’s mistake about Pricing and Strategy
As Hasting recently suggested, streaming is where the future is with consumers shifting to broadband and mobile devices. Operational costs are also less for streaming, presumably since there are no handling and mailing costs. Assuming that Netflix wanted its customers to move to the streaming only format or a way to get people to switch in such a way as to increase its profits and revenues, this is what Netflix should have done.
The first mistake Netflix made was in not having differentiated pricing when it started offering streaming as an option to DVD rentals. The possibility of customers opting for the hybrid option is because of lack of availability of their choices in both formats and not because they would like to receive their movies both as a DVD and in streaming. After all, who would not want the convenience of streaming their choice of movie when they want it as opposed to planning ahead for a DVD to watch.
Research shows that consumers are predictably irrational and need to feel that they are making a better choice and getting a better return. This does not happen when a clearly inferior option is priced the same as the somewhat superior option. Netflix ‘s thinking that maybe it should reduce the price on its streaming only option is likely to leave money on the table. Your pricing strategy should always include an inferior decoy or an unwanted option. Netflix currently thinks that its unwanted option is DVDs and its preferred option is streaming only.
What Netflix should have done is to make an offer that is attractive and is the company’s preferred option while making the customer feel happy that they were getting a good deal. This typically would happen when you offer an inferior choice (which also coincides with the company’s least preferred option strategically, in this case the DVDs only option). This needed to be coupled with an attractive choice that makes the customer feel that they are getting a really good deal for the price paid (For Netflix this would translate into the DVD+Streaming option).
In an alternative scenario, Netflix could have offered a different pricing alternative as follows:
- o Unlimited DVD only per month at $7.99 (least attractive for customer, least attractive for Netflix strategically
- o Unlimited streaming plus DVD at $11.99 a month (most attractive to consumer and OK option for Netflix)
- o Unlimited Streaming Only at $14.99 a month (Not as attractive to consumer, most attractive to Netflix)
Our analysis shows that this hypothetical scenario with an inferior decoy would have increased Netflix’s revenues without alienating its base. The problem with Netflix’s current new pricing is that its decoy does not appear inferior as it does in this alternative scenario. The decoy is the option that Netflix really does not want. Ideally, Netflix would like to see more customers switch to streaming and have its revenues and profits increase. Ideally, customers would like the streaming option to DVD. However, they have constraints – not enough choices from Netflix, or not streaming ready at home.
The fact is that the most desirable option for Netflix today should be subscribers subscribing to both. Eventually we know that we will all switch to the streaming only option given the choice of content and easy broadband to TV access. By forcing consumers to switch to a less preferred option in terms of value (pricing wise, content wise, or a combination thereof), Netflix made a mistake. It is only a matter of time before its DVD only base and its combination base switch to the streaming only option. Netflix would be wise to consider this when pricing for the future. For more detailed analysis, you can request a report here.