Ries' Pieces

Visual Hammers speak to consumers

   A visual hammer is so effective because it says something about your brand. The “lime” that says Corona is the authentic Mexican beer. The “contour bottle” that says Coca-Cola is the original cola. The “cowboy” that says Marlboro is the masculine cigarette.

   A company makes a major mistake when it develops a verbal strategy without considering what visual hammer might help hammer that idea into consumers' minds. 

   In the year 2010, General Motors spent $1.1 billion advertising its Chevrolet brand. The verbal strategy? "Chevrolet runs deep."

   But how do you visualize an abstract idea like that?

   Most advertising slogans are abstractions impossible to visualize. To turn them into "nails," they need to be brought down to earth.

   Years ago, BMW could have used "performance," a typical automotive theme, to position its brand. Instead, it called its brand, "The ultimate driving machine."

   "Performance" can't be visualized, but "driving" can. So BMW ran television commercials with happy owners driving their BMWs over winding roads. A great hammer and a great marketing success. Today, BMW is the world's best-selling luxury vehicle brand, outselling Mercedes-Benz, Audi and Lexus.

   Look at the problems Brand Atlanta has had in trying to create a memorable slogan for the city. Created by Mayor Shirley Franklin in 2005, Brand Atlanta has the task of trying to make the city more of a visitor and business destination. (Trying to do both was its first mistake.)

   "Every day is an opening day" was the first slogan that quickly ran out of steam. My complaint, Where's the visual that could reinforce an opening day idea?

   "City lights, Southern nights" fared no better. (It was another slogan that couldn't be visualized.) At the launch of this backup campaign, the executive director of Brand Atlanta said, "I went to New York last weekend and it wasn't because of I love New York." Maybe she should have paid attention to the best-known city slogan in the world.

   It's the "heart" hammer that makes all the difference. Ironically, Atlanta also has two well-known verbal ideas that do suggest visual hammers.

   Atlanta is a fast-growing community because it's the transportation hub of the Southeast and home of the world's largest airport. Locals often call their city "Hotlanta," a verbal idea that suggests many possible visual hammers.

   The second idea has to do the environment. Compare Dallas, the city's only serious competitor in the South, with Atlanta. Compared to Atlanta, Dallas looks like a desert and Atlanta is loaded with trees. "City in a forest" is what people often say about Atlanta.

   If there is one case history that demonstrates the power of a visual hammer, it can be found just 145 miles east of the city.

   In the world of professional golf, there are four major championships: (1) The U.S. Open, (2) The British Open, (3) The PGA Championship and (4) The Masters.

  The first three are hosted by major golf organizations, but the Masters is hosted by a private club, the Augusta National Golf Club. Guess which tournament draws the most attention? The Masters, of course.

   If you want to make your brand famous, give your brand a green jacket.

 

Visual Hammer is on sale now at Amazon and iTunes.

Audi's Visual Hammer. An opportunity missed.

                In 1986, CBS broadcast a 60 Minutes segment about Audi entitled "Out of Control." The show chronicled the tendency of the Audi 5000 model to suffer from "unintended acceleration."

                (Three years later, the culprit was discovered. “The major cause," according to The National Highway Traffic Safety Administration, "appears to have been drivers unknowingly stepping on the accelerator instead of the brake pedal.")

                Consumers, however, blamed the car instead of the driver. Audi sales in the American market plummeted. From 74,061 vehicles in 1985 to 12,283 vehicles in 1991.

                In 1990, Audi hired my Dad to help them revive the brand following the crisis and downfall. I remember the case well and was curious about what his exact ideas for Audi were so I dug up a copy of his report. Al’s advice: "Don't try to fight a bad perception. Just change the name."

                Not a bad idea. It has taken Audi another 20 years of struggling to finally get where it is today. Enthusiasts speak to the quality of the cars, but for decades the brand suffered from the crisis and a weak sounding name.

                What if they had listened to Al’s advice? What if they changed the name? What could they change it to? Sometimes there are no good alternatives.

                But in the case of Audi, they had something right under their noses. Audi had introduced a four-wheel-drive model called "Quattro" which Al thought was a good automobile name. And it is! It also focused the brand on a key feature: four-wheel drive.

                The Ries advice: change the Audi brand name to Quattro and import only four-wheel-drive vehicles to the United States.

                What was even more interesting was a single line buried in report: "Interestingly, the four-circle Audi symbol is a natural extension of the Quattro four-wheel-drive concept.”

                Too bad Al didn’t have me and a copy of my new Visual Hammer book to help him sell that idea to Audi. He could have made the point that four circles are a powerful visual hammer for a four-wheel-drive vehicle with a four-wheel-drive name. It would have been brilliant!

NEW BOOK: Visual Hammer

    Forty years ago, Advertising Age published a series of articles by my father, Al Ries, and Jack Trout titled "The Positioning Era Cometh."

    Nine years later, McGraw-Hill published their book "Positioning: The Battle for Your Mind." In the years that followed, "positioning" became one of the most talked-about concepts in the marketing community. In its 75th anniversary edition, Advertising Age selected positioning as one of its 75 “top ad moments.”

    But as revolutionary as positioning was, it had a weakness. Invariably, positioning strategy was expressed verbally. You looked for a verbal hole in the mind and then you filled that hole with your brand name.

    The best way into the mind is not with words. It’s with visuals. They can play a more important role in marketing than words because visuals hold emotional power that words alone do not. Emotion is the glue that sticks memories and brands into the mind.

    Consider what the pink ribbon has done for Nancy Brinker. In 1982, Ms. Brinker started a foundation to fight breast cancer in memory of her sister, Susan G. Komen. Since then, the foundation has raised nearly $2 billion. Today, Susan G. Komen for the Cure is the world’s-largest non-profit source of money to combat breast cancer. 

    The American Cancer Society was founded in 1913, yet most people have no idea what visual symbol the society uses. 

    Here’s the difference: The Cancer Society has a trademark that is almost impossible to verbalize while Susan G. Komen has a visual hammer that is easy to verbalize.

    Then there’s Aflac, the company that brought us the duck. In 2000, the first year the duck was advertised, sales went up 29%. The second year, 28%. The third year, 18%.

    Before the duck, Aflac had a name recognition of 12%. Today, it’s 94%. (The duck is the hammer and the “quack” is the verbal nail. It’s the integration of the two that makes the brand so memorable.) 

    The advertising industry is hung up on trademarks and logotypes, but in reality they account for only a small percentage of visual hammers. Anything associated with a brand can become a hammer. Color, packaging, demonstrations, founders, celebrities. Even the product itself.

    In 2010, Coca-Cola spent $267 million advertising its brand in the U.S. What was Coke's slogan? Most people don’t remember. What they do remember is the “contour” bottle. 

    The contour bottle is not just a bottle—it’s a visual hammer that hammers in the idea that Coke is the original, the authentic cola, the real thing. Even though Coca-Cola sells very little cola in contour bottles, the visual is strongly identified with the brand. And they reinforce the visual hammer by using the bottle image on its cans, cups, billboards, trucks and even business cards. 

    If Coke’s contour bottle says "the authentic cola," what does Pepsi's "smiley-face" trademark, introduced in 2008 to much fanfare, say? Pepsi's new smiley-face trademark says "Pepsi." In essence, it's a rebus, a visual symbol that’s a substitute for a brand name.

    In fact, almost all trademarks are rebuses. After years of constant use, they can be recognized as symbols that stand for brand names. But trademarks don’t have to be meaningless.

    Nike, for example, has the Swoosh, a powerful visual hammer. The Swoosh doesn’t just say "Nike." The Swoosh says "leadership." Nike was first in its category, giving it permission to create a visual hammer out of a rather mundane checkmark that has been streamlined. Today, everybody knows what a Swoosh looks like, but how many people can rattle off a description of Reebok’s trademark?

    If you’re not first in a category, you need a hammer, not a trademark.

    Not every brand gets it right. Take Red Bull. Despite $5.1 billion in annual sales, Red Bull doesn’t own a visual hammer. It had the opportunity, but its visual is too complicated for a small energy-drink can. "Two bulls and a sun" make a weak hammer. Furthermore, its blue cans undermine the Red Bull name.

    In spite of these examples, why do many marketing people work exclusively with words, when the real power is with visuals? Don’t get me wrong—words are important, too. The objective of a marketing program is to "own a word in the mind” and visuals shouldn’t come before some well-thought positioning planning. But to consider words independent of how they might relate to a visual would be a mistake.

    The interplay between words and images is like a nail and a hammer. If the objective is to nail two pieces of wood together, why fool around with a hammer? Why not just focus all of your efforts on putting the pieces of wood together with a nail?

    That's the problem of marketing. Your most useful tool is a visual hammer, but the nail comes first. Unless you pick the right nail, all the creative hammers in the world are not going to help very much.

    For decades, marketers have sat in meetings developing positioning statements for their brands. But sorry Dad, today that’s not enough. Today, marketers also need a visual hammer to build their brands. A visual hammer that connects emotionally, authentically and credibly with consumers.

This post is an except of a longer article that was published in Advertising Age on March 12, 2012 entitled: Repositioning 'Positioning': Connect with Consumers with a Visual Hammer; Not Verbal Nails. Laura Ries Uncovers the 'Weakness' in her father Al's famed theory on Postioning. Read the Ad Age article here.

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Super Bowl of Advertising - 2012

While the gridiron battle between the New York Giants and the New England Patriots was close, the advertising battle on the tube was not.

The Super Bowl battle for commercial success might better be described as a mixture of the old classics, the new stuff, the overly sexy and the over the top.

Here is my brief recap on the best/worst ads of the night.

 

The Old Classics

The Super Bowl isn’t for also-rans. The big game is best served by big brands that are category leaders and that support the game year after year with consistent themes.

 

Coca-Cola

The three polar bear ads delivered. The ads were classic storytelling for the whole family from the world’s most valuable brand. Coke combined its well-known Polar Bears with a football theme and its iconic bottle to produce a series of commercials that were both entertaining and memorable.

 

Budweiser

When Budweiser does it right, it gets it really right. The “Return of the King” and “Eternal Optimism” delivered on a recurring theme of the night. Times are tough, but Americans pull through so why not celebrate with a Bud? On the funny side, Bud also delivered with a Weego  rescue dog that fetches beers. An overused gag, but Bud found a way to make it fresh and fun. The misses came for the new brand called Bud Light Platinum. Nobody has heard of it and nobody knew they needed another line-extension of Bud. But when they find out that Bud Light Platinum has a higher alcohol than regular beer, the brand could have legs with young adults.

 

E*Trade

The talking baby is now a classic for the brand. Consumers love the creative which conveys the message that E*Trade is so easy a baby can do it. The brand has nicely evolved and continues to introduce fresh, new ideas. This ad talking about “Fatherhood” had a nice connection with the Super Bowl and family time.

 

Doritos

Getting customers to create winning commercials has turning into a successful Super Bowl strategy for the chip maker.  The Doritos contest has become a classic and much anticipated part of Super Bowl Sunday. As in years past, amateurs turned in some of the funniest laughs of the night. Man’s Best Friend involves a cat-murder, a cover-up and bribery. And Sling Baby, has granny using a baby slingshot to get some Doritos. I love the creativity and fun these ads deliver for a brand that is addictive with bold flavors.

 

The New Stuff

The Super Bowl can be an excellent place to launch a new brand. Apple famously did that with its Macintosh ad in 1984.

 

Skechers

Dogs and kids always attract attention in advertising. In this commercial, a cute little French bulldog takes to the greyhound track and wins thanks to his new Skechers Go Run shoes. The line promotes a more-natural running experience that is all the rage these days. The spot was particularly good as compared with last year’s revolting Skechers commercial featuring Kim Kardashian rolling around with a personal trainer.

 

Acura

Since 2005, car enthusiasts have been mourning the end of the NSX supercar. So Honda’s plan to return with a new generation of the NSX has gotten a lot of gearheads excited. This spot nicely uses Jerry Seinfeld and Jay Leno in an over-the-top story line about bribing the guy who is first line to get the NSX. The only problem is the car won’t be in production until 2015.

 

M&Ms

This spot introduced the new brown-color M&M character. Ms. Brown is smart and sassy. And using humor and a killer song makes this ad melt in your mouth not in your hands.

 

The Overly Sexy

Using hot girls to sell everything from boats to beer is taken right out of advertising 101. But several ads crossed the line and were more repulsive than seductive. When it comes to the Super Bowl and sex, there really can be too much of a good thing.

 

Teleflora

The oh-so-subtle “give her flowers on Valentine’s day and you shall receive” pitch. I’m sure guys would send that Victoria Secret model anything for a peck on the cheek. But as a women, I cringe at the transactional tone of the commercial. But I am looking forward to seeing what they are going to do for Mother’s Day.

 

GoDaddy

The entire marketing plan for this Internet registration site is creating a “too sexy” Super Bowl ad that will hopefully get banned, thereby generating a lot of publicity. This approach has gotten stale. Body paint? There is way too much porn on the Internet already, nobody needs to go to Go Daddy to see more of it.

 

H&M

Equal-opportunity nudity alert: David Beckham in his underwear! Goes to show you, naked men can flop just as easily as naked women. He is beautiful, but fast-fashion retailer H&M needs more than a naked Beckham to run a successful Super Bowl spot. How about an idea?

 

Oikos Yogurt

Full House hunk John Stamos eating Greek yogurt “9 ½ weeks style.” There is so much good to say about the sky-rocketing Greek yogurt category. Too bad they resorted to sex to sell it.

 

 

The Over the Top

Too many superbowl ads try too hard and do too much. More often than not it falls flat.

 

Century 21

Smarter, bolder, faster might be the name of the commercial, but it fails to deliver on any of those traits. The real estate company selected celebrities they felt embodied these traits. Smarter: Donald Trump, Deion Sanders. Bolder: Apolo Ohno. But where is the connection to selling houses? And “smarter, bolder, faster” is the last thing people say or think about after a visit with a Century 21 agent. They should stick to the Gold Jacket.

 

Kia

Over the top and loving it. This testosterone-fueled ad has a little of everything, hot girls, fast cars, cool bands. It is turbo-charged and might appeal to the young men in its demographic but the brand would have been better off if the commercial had first provided an understanding what a Kia is.

 

Pepsi

Pepsi was once the choice of a new generation. But with Coca-Cola beating them up and bumping Pepsi down to 3^rd place behind Coca-Cola and Diet Coke, this spot doesn’t ring true. The cruel King Elton John isn’t keeping anybody from Pepsi. Kids just don’t want to drink it as much as they once did. They are drinking Monster and Red Bull instead.

 

Volkswagen

You know when the sequel goes right to video. Well this commercial is like that. After last year’s success with Star Wars’ themed The Force, Volkswagen this time mixed dogs, weight loss and some weird Star Wars stuff at the end. It wasn’t a cohesive story and didn’t ever connect to the brand. It was just Volkswagen trying too hard to make a Super Bowl commercial and it shows. Simple stories that relate to the brand work much better.

 

Chrysler

Chrysler gave us an inspirational, gritty, 2 minute mini-movie – Half-Time in America with tough guy Clint Eastwood. But what are they selling? Detroit? Obama? I don’t get the connection to Chrysler, who promotes all the Dodge, Ram, Jeep and Chrysler brands at the end.  My problem is not with the production or sentiment; both are over the top and terrifically powerful. But Chrysler is the weakest of the big 3 and only survived because it sold a 53% percent stake to Fiat an Italian company. More like imported and paid for by Italy.

 

Tim Tebow, the brand

Tim Tebow is the hottest story in sports. While the Green Bay Packers are charging ahead with an undefeated record, everybody is talking about the Mile High Messiah and Tebowing.

How did this happen? What can you learn from it?

 

The Keys to Tebow’s brand success:

 

1. Be Different.

While there is nothing new about the collision of faith and football, Tim Tebow went out of his way to show PDF – public displays of faith. He also lives the life of a church going goodie-goodie. No alcohol, no smoking, no drugs, no sex (he is staying celibate til marriage.) His outspoken and open faith made him different, and different gets attention, and attention gets people talking and people talking builds a brand. Everybody knows Tebow.

 

2. A bit of controversy.

What really put Tebow on the map was his highly controversial 2011 Super Bowl anti-abortion ad. He was heading to the draft, he was lining up sponsors, but he went ahead and did the ad anyway. It wasn’t wise in terms of his marketability, but the controversy generated a lot of publicity. His decision also showed his strength of character to do what he believed in no matter what others said.

 

3. Be the underdog.

If you can't be Goliath, then David is the next best thing. There is nothing that fans love more than cheering for an underdog and seeing him win. Sure Tebow was a national college champion and Heisman trophy winner, but most pundits gave him little chance in the NFL. With a weird throwing motion, he was the 4^th string quarterback at the Denver training camp. But Tebow worked really hard, proved himself to his team and finally got the starting job.

 

4. Love or Hate me.

Being boring doesn’t make you famous. Having people love you or hate you is much more effective. Tebow is very loveable, humble and honest. His teammates love and respect him. And he has shown great leadership skills by inspiring other players to pull together and achieve beyond their limits. To some he is too perfect and too likable. But that is ok too, extremes are what get people talking. Being perfect is great (advertisers love it) as long as you don’t fall off the pedestal like Tiger Woods or Martha Stewart. But once build even brands like Tigers and Martha's survive.

 

5. Winning.

Nothing succeeds like success. What has cemented the Tebow brand is his unbelievable recent winning streak. Winning is the best fuel to ignite any brand. Mix Tebow’s faith, personality, and his winning streak and you have what we have today, the hottest brand in football. Tebow’s leadership and 7 game winning streaks has taken a once lame Broncos to the most talked about team in the NFC. Aaron Rogers should take some notes, his Green Bay Packers team is famous, but his personal brand is lacking.

 

Tebow’s faith has been a mixed blessing when it comes to his marketability with advertisers. In general, advertisers want to stay as far away from controversy as possible. Look at the craziness over Lowe’s running ads in All-American Muslim. But advertisers also want to attach their brands to the most talked about players that fans love. That is why Tebow has been contracted by Nike, Jockey and others. And if Tebow continues to win, advertisers will continue to knock down his door.

 

Tebow's image as a clean cut, all-American, winning quarterback is irresistible to corporations. However, if Tebow appears in more anti-abortion ads, gets into drugs or hookers. Well, it is all over. At least in the short term. Like it or not people always love a comeback and story of redemption. Winning makes people forget even the worst offenses. Just ask Michael Vick.

The Secret of Steve Jobs

    Steve Jobs was a rebel who didn’t go about life or work in the normal way. He dropped out of college, was a fruitarian for a time and was often called an arrogant, obnoxious, weirdo.

    Being a rebel, however, wasn’t the secret of Steve Jobs. In our youth-obsessed culture, rebels are a dime a dozen.

    Steve Jobs was a technology genius. From an early age, he was fascinated by electronics. He tinkered at his father’s workbench and joined his high-school electronics club. Jobs was so gifted that Atari's chief technology engineer gave him a job as a game designer even though he had no formal technical training.

    But being a technology nerd wasn’t Job’s secret either. Silicon Valley is filled with brilliant technology nerds.

    Steve Jobs was a design genius.  He was obsessed with creating tools that were not just good but beautiful. And his aesthetic sense didn’t just apply to the outside of things; even the inside of things had to be beautiful. On the Apple II, for example, Jobs insisted that the circuits be redone to make the lines straighter.

    But being a design genius wasn’t the secret of Steve Jobs either. Check out your local Ikea; it is filled with wonderful designs.

    The world has many great rebels, great technology geeks and great designers. What made Steve Jobs so unique was his supremely-gifted marketing ability.

    Here are some examples of the marketing decisions made by Steve Jobs. Decisions that put Apple on the path to becoming  the world’s most valuable company.

 

The power of a simple brand name.

    In the 1970s and 1980s, there were hundreds of brands of personal computers on the market. Many of these brands were line extensions of existing brands: AT&T, Burroughs, Dictaphone, Digital, ITT, Memorex, Motorola, NCR, Radio Shack, Smith Corona, Siemens, Xerox and many others.

     Many of these brands were new brands with strange names: Osborne, Commodore, Micro Pro and dozens of others.

    The difference between Apple and the other brands wasn’t in the hardware. It was in the name. Apple was a simple name consumers could instantly associate with the home market. The name also allowed a simple "apple" visual which hammered the name into prospects' minds. (How would you visualize Micro Pro?)

    Furthermore, Jobs resisted the path that many entrepreneurs take. That is, giving the brand his own name. Would Jobs Corporation have become the world's most-valuable company? Or even worse, how about Jobs & Wozniak Corporation?

 

The power of a second brand.

    During a 1979 visit to Xerox’s Palo Alto Research Center, Jobs saw a prototype of a computer with a graphical user interface. Rather than typing commands, users rolled a mouse and clicked on menus. This technology fit with Jobs' philosophy of making computers that were dead simple to use. He immediately started working on replicating the technology.

    On January 24, 1984, Apple released the Macintosh. Previously, the product line included such names as Apple I, Apple II and Apple IIe. But this new computer got its own name and thereby created its own new category. Most companies would have called it the Apple III, but not Steve Jobs.

 

The power of an enemy.

    Sometimes the best way to position a brand is by figuring out who your enemy is and then being the opposite. Apple's obvious enemy was IBM which had about 50 percent of the PC market.

    That is exactly what Jobs did with the famous 1984 Super Bowl commercial announcing the launch of the Macintosh. What made the commercial so powerful was that almost everybody instantly recognized Big Brother, who represented "conformity," as a stand-in for IBM. He repeated the same strategy later with the Mac vs. PC guy ads.

 

The power of being first.

    In his career at Apple, Steve Jobs did this over and over again. Launching a new product that was the first brand in a new category.

    Pixar's Toy Story. The first feature-length animated movie done entirely on computers.

    Apple's iPod – the first hard-drive music player.

    Apple's iPhone – the first touchscreen smartphone.

    Apple's iPad – the first tablet computer.

 

The power of a diverging category.

    Initially we were skeptical of the iPhone. Jobs had described his new brand as a combination iPod, cellphone,  email-and-internet device, all rolled into one. A red flag went up in our head since convergence devices are typically flawed.

    The Nokia Communicator had been on the market for a number of years, it was a combination personal digital assistant and cellphone and it was a total loser. But in reality, the iPhone was not a convergence device. Jobs may not have explained it correctly initially, but no matter. The iPhone exploited the divergence phenomenon by becoming the first “touchscreen” phone.

    But it wasn’t just the touchscreen that would be the iPhone's greatest achievement. It was the way the iPhone handled the many hundreds of thousands of apps created for the new device.  What email did for BlackBerry, Apps did for iPhone. Apps made the iPhone more than a cellphone, more than a music player, more than an email device, more than a web device. iPhone was a totally new touchscreen App device.

 

The power of the verbal.

    When you are the first brand in a new category, consumers need extra help in understanding what you are selling. Steve Jobs had an amazing ability to simplify not just his products but his product messages as well.

    With two words, “Think Different,” Jobs communicated the essential difference between the Macintosh and every other PC.

    With five words, “1,000 songs in your pocket,” Jobs communicated the essential difference between the iPod and the other MP3 players that could only hold 30 songs.

 

The power of the visual.

    Words can communicate a message, but visuals can reach consumers emotionally in a way that words cannot. Jobs understood the power of visuals like no other CEO on the planet and effectively used simple visuals to build his brands.

    The rainbow apple for Apple.

    The white ear buds for iPod.

    The even better white apple for Apple Inc.

    Job's presentations were also powerful visually. First was his consistency of dress. From 1998 to 2011 (the era of his return to Apple), he always wore a black turtleneck and jeans for his presentations. Even more impressive were the slides he used during his famed presentations. No text-filled PowerPoints for Steve. Nothing but a huge screen with just a single image and a few words on each slide.

    A picture is worth a thousand words.

 

The power of multiple brands.

    Apple didn't get to be the most valuable company in the world by expanding one brand into multiple businesses.  Apple launched multiple brands.

    In the beginning, Apple Inc. made the Apple computer. But no longer. The Apple computer died along with the home-computer category.

    Today, Apple is a company name, not a brand name. And a good one at that. Apple Inc. owns the brands: Macintosh, iPod, iPhone and iPad.

 

    No CEOs make decisions and follow the principles of branding the way Steve Jobs did. He has left us an amazing legacy.

    Future leaders should study Steve Jobs and his accomplishments so that they too can build brands the way Jobs did. If you build brands like Jobs, you can build the next most valuable company in the world.

 

Netflix Strategy is Right and Wrong

There are several important lessons to be learned from the Netflix brand story. In recent days, the story has heated up after CEO Reed Hasting’s Sunday night email blast and blog post.

In his email, Hasting apologized profusely, then turned around and further enraged his loyal 23-million subscriber base by taking the Netflix brand away from its red envelopes. Let me break down the good, the bad and the ugly of this classic story.

In the beginning.

Netflix was founded in 1997 and two years later it became the subscription-based DVD-by-mail service millions of customers in the United States and around the world were incredibly passionate about.

Netflix turned the Blockbuster model on its head. With its strict and steep late fees, Blockbuster created a lot of unhappy customers. So Netflix did the opposite and let consumers keep a movie as long as they wanted. When they returned one movie, they got another one.

It wasn’t as fast as Blockbuster; customers had to wait to get their DVDs in the mail. But no late fees, the fun of picking out your own movies, and the excitement of seeing the red package in the mail built a powerful Netflex brand.

Intense consumer loyalty and unbelievable word-of-mouth helped the Netflix brand took off like a rocket. Ten years later, Netflix had a library of 100,000 titles and 10 million subscribers.

Today, Netflix has 23 million subscribers, a high-flying stock and is very profitable. Last year its stock increased over 200%. Revenue in 2010 jumped 29% to $2.16 billion and net income was up 39% to $161 million. But with profits sometimes comes arrogance.

 

What’s next

One thing is always certain with technology: change is coming. In music, we went from record, to tape, to CD to digital. In video rental, we went from Betamax, to VHS, to DVD, to pay-per-view, to digital streaming.

Yet, it takes time for a new technology to completely replace an old one. This leaves existing brands in a bind. Do we stick with our profitable bread-and-butter product or do we move to the new technology? It might be small now but one day will probably take over the industry? How do we cross the chasm?

Netflix owns movies-by-mail. They might make a lot of money today, but are not the future. Netflix has wisely bet on streaming as its future. And they have wisely made an aggressive move to be first in the mind in order to dominate the new streaming-video industry. Currently, Netflix is the leader in the category.

But Netflix made a critical error by using the same name on its new streaming business as it does on its existing mail business. It might be logical to take a trusted and loved brand name and extend it from one business to the next. But it doesn’t make marketing sense. As time goes, each business will compete and clash with each other. Having the same name on both businesses is confusing from both a product and especially a pricing stand-point.

What Netflix needed was a new brand name. In his email to subscribers,  Reed Hastings eloquently points this out. Except there is one huge problem. Netflix needed the new name for the streaming business and not the mail business.

Netflix means mail. You can’t move a brand so strongly held in the mind into a new position, especially one that is more technologically sophisticated. It is the same reason Barnes & Noble had trouble moving online for books (with the B&N name.) Or Blockbuster had trouble moving from stores to mail or streaming with the Blockbuster name. Both Barnes & Noble and Blockbuster needed new brand names for their online businesses. Now Blockbuster is bankrupt and Barnes & Noble is in trouble. They lost $74 million on sales of $7 billion last year.

Too late

Netflix also made a huge error by doing the name change now. The time for the new streaming brand name was when it launched its streaming business. Not several years later.

Netflix should have launched the new brand using its strong Netflix brand as the endorser. Never underestimate the power of a second brand. Especially when it is launched by a leader. Toyota successfully used this strategy when it launched Lexus, Scion and Prius.

You can’t change the past, but this summer Netflix had much better options than the ones it chose. In July, the company announced price hikes and new separate streaming plans. Almost two months later, it took the Netflix brand away from the 23-million loyal subscribers who love it and slapped it on its streaming service.

To add insult to injury, Netflix will give its movies-by-mail customers a new brand name, Qwikster. Why not just throw your customers down and stomp on their faces?

This summer, the better alternative would have been to buy Hulu. Netflex could then have used Hulu as its streaming TV/movie brand. Netflix, of course, would remain as the mail brand.

When you need a better name, buying a company to use its name can be a great strategy. Chemical Bank bought Chase. And ValueJet brought Airtran.

And if the rumors are right, and a spin-off is in the process, leaving the Netflix name with the mail business would make it more desirable to potential investors. Who wants to own Qwikster? The value of a business has a lot to do with a strong brand name.

For Netflix the future is uncertain. They have created a mess of their own making which has gotten customers extremely angry. The strategy of keeping up with a rapidly-changing technology by launching a second brand was an astute one. Unfortunately they fell down on the branding part and got it all backwards. Netflix is mail and the new brand should have been streaming. Sad to see it happen to such a nice company. Reed, next time call me first.

Walmarts needs to stop being so cheap. At least when it comes to advertising.

Published by AdAge.com, August 22

            In a down economy with consumers pinching every penny, you would think that sales at a retailer synonymous with "cheap" would be up, not down. Yet sales at Walmart have been down for two years in a row. Actually, that's nine straight quarters of decline.

            The only good news at Walmart is profits rose this quarter 5.7%, but that was mostly due to cost cutting and international growth.

            The really bad news is that Walmart's core U.S. business, which accounts for 62% of sales, is in a seemingly irreversible slump with fewer consumers coming into stores. How can this be? And what can Walmart possibly do to reverse it?

            The answer has nothing to do with better-looking clothes, smaller stores or launching a Facebook page. The answer is all about reinforcing and defending the Walmart brand in the mind.

            So how does the world's largest retailer defend its position in the mind?

            Advertising. Massive advertising that reminds consumers in a memorable way what the Walmart brand stands for. But here is where Walmart is making three classic mistakes.

1. Walmart isn't spending enough money on advertising.

            Unless you spend enough to get above the noise level, money spent on advertising can be extremely wasteful. That's why mass-media advertising for a brand that isn't well known or doesn't have enough money to spend is ill advised. A brand like this is better off doing PR, social media and anything else it can think of.

            For big brands, there is little PR potential, unless it is bad news or an earnings statement. Nobody covers burgers at McDonald's or how real Coca-Cola tastes or how exciting cellphone plans are. For big brands, most other tactics like social media, when taken by themselves, are too small in comparison to the size of the company and number of consumers.

            The most effective way to protect a well-known brand with mass appeal is with mass advertising. If you can afford it, nothing is more powerful than mass advertising to protect and defend your position in the marketplace and in the mind. That's how leaders manage to stay leaders for long periods of time. By spending only a few percentage points of sales, they can dominate the media and outspend their competition. AT&T spends $2.9 billion on advertising. American Express, $2.2 billion. Walt Disney, $1.9 billion. Comcast, $1.8 billion. Toyota, $1.7 billion. Anheuser-Busch, $1.3 billion. McDonald's, $1.2 billion.

            The leader has the ability to way outspend the competition. Look at McDonald's vs. Burger King. Most consumers think Burger King's burgers taste better, but it doesn't matter. McDonald's dominates the category by spending $1.29 billion on advertising. Burger King spends almost $400 million, which buys a lot of advertising. But since McDonald's outspends them three-fold, Burger King's message gets lost and the brand suffers.

            Walmart spends $2.1 billion a year on advertising. But compared to other retailers, Walmart is underspending in relation to its sales. Walmart spends 0.8% compared to Target at 2.2% and Sears at 4.7%.

            Walmart should be way outspending Target. If Walmart spent 2.2% of sales on advertising, that would be a $5.72 billion budget, which would be almost four times that of Target's and make Walmart the biggest U.S. advertiser.

            That's what leaders do. And that's what keeps leaders more dominant, more profitable and faster-growing than their competition.

2. Walmart doesn't spend its advertising money in the right medium.

            Out of a $2.1 billion budget, Walmart spends only $524 million on TV advertising. While Walmart is a top 10 overall advertiser, it doesn't make the list of the top 10 TV advertisers. AT&T spends $1.5 billion on TV alone.

            Instead of TV, more than half of Walmart's budget is spent on unmeasured media, presumably newspaper inserts and shopper marketing.

            Can you name the last time you saw a Walmart commercial? I watch a lot of TV and I can't. But I do remember lots of Target ads. And a ton of AT&T ads.

            For most brands, TV is the place to avoid. But not for Walmart. The world's largest retailer needs to have a dominant presence on the world's largest advertising medium: TV.

3. Walmart doesn't use the right message.

What is a Walmart?

            Most consumers would answer "low prices." Many people say cheap, but Walmart didn't build its brand on cheap stuff, it built it on selling brand names for the cheapest prices. Which is why the "Always low prices. Always" tagline did such a good job of reinforcing the brand position.

            Why change a good thing? Marketing isn't about tinkering. It is about finding what works and sticking to that. Sure, some minor tweaks are needed over the decades but major change should be avoided.

            So what did Walmart do? It scraped its logo for a wimpier-looking font and sunburst trademark. Then it changed its tagline to the unmemorable, undistinguished "Save money. Live better."

            Everybody says they save you money. And who advertises they are making your life worse?

            What makes Walmart a powerful brand is the guarantee inherent in the name that it has the lowest prices. Always.

            So what is Walmart doing now? Advertising a "guarantee to match competitor's prices." Wait a minute, I thought the low-price guarantee was met by just walking in the door? Advertising that you will match prices is the same as admitting you might not always have the lowest price. Not a good direction for a brand like Walmart.

            Sam Walton might be proud of the meager 0.8% of sales that his Walmart is spending on advertising. But today Walmart isn't a handful of stores in a couple of small towns. Walmart is the world's largest retailer and it need to start acting like one.

Google Today, Gone Tomorrow?

    What’s a Google? It’s a search engine. Want to find something online, you Google it.

    Advertising, the money making machine for Google, accounts for practically all of its revenue. Google also depends mostly on the English-speaking market in the United States and the U.K. for 59% of its revenue.

    After domination of a category like search, the question business leaders and investors always have is, What's next?

    What's next is usually taking the incredible success of the mother brand and extending it into new areas. As well as gobbling up lots of other companies and rebranding them with the same brand name.

    This is exactly Google's pattern today. And it's exactly the pattern of many companies yesterday. Companies like Microsoft, AOL and Yahoo.

    If you know me, you know what I’m going to say next. It is a mistake.

    The power of a brand comes from its ability to own a word in the mind. The more things you put your brand name on, the weaker that name becomes in the mind.

    Say Yahoo to somebody today and they yawn. It means nothing because it over-extended and over-expanded its brand, leaving itself vulnerable to competition.

    Say AOL and you think dial-up and failed mergers and expansions.

    In the short term, it is hard to see the dangers of expansion. The "Let’s Google everything" strategy gives a boost to the company and more importantly the stock. While consumers and investors get fooled into thinking the strategy is sound, it is not.

    (Company leaders who think in the short term are likely to run their companies into the ground.)

    Yesterday, Google announced it was going to rename several non-Google brands as Google products. So say goodbye to Picasa and Blogger. Hello Google Photos and Google Blogs.

    This is on top of the other Google brands such as: Google Alerts, Google Earth, Google Image Search, Google Labs, Google Local, Google Mobile, Google News, Google Video, Gmail, Google Analytics (Web traffic measurement), Google Chrome (Web browser), Google Desktop Search, Google Language Tools (translation tools), Google Talk (instant messaging), Google Toolbar.

    But Google isn’t stopping there, its much-talked-about social-networking brand Google+ is coming soon. Google hopes Google+ will be a Facebook killer.

    Just like Bing was going to be a Google killer?

    The problem with Picasa won’t be solved by calling it Google Photos. The problem with Picasa is that wasn’t first and doesn’t dominate its category. Flickr does.

    Launched in 1999, Blogger was one of the first blog-publishers. But its generic name made it harder to cement the Blogger brand into the mind. In 2003, Google bought Blogger.

    Google has done better with other acquisitions that not only were pioneers in a category like Blogger, but also had superior brand names. Namely, YouTube and Android. Wisely, Google plans on changing neither of these names.

    Google is a monster today. And like most monsters, it thinks it is invincible and not subject to the laws of marketing. But nothing could be further than the truth.

    Google should study history. They don’t want to be the AOL or Yahoo of tomorrow. Google needs to surround its strong search brand with other brands and other brand names that dominate new emerging categories.

     Toyota did that with Lexus, Prius and Scion. Google that Google.

Social Media is a Tactic not a Strategy

            It’s the headline of our times “Brand X Moves to Social Media.” It’s the hottest trend in marketing with executives from the corner offices at Coca-Cola to the front lines at the local barber shop talking up Twitter, Foursquare, Groupon and Facebook.

            Since the Great Recession hit, we have been forced to do more with less and what better way to accomplish this than with social media. Compared to traditional advertising, a social media campaign is cheap. But is it effective? It all depends.

            After we wrote the 2002 book “The Fall of Advertising & the Rise of PR” a lot of companies got excited about PR. They ran out to hire PR companies and to launch PR campaigns. This resulted in a lot of lame and ineffective PR campaigns.

            Any company can run an advertisement, but with PR there are no guarantees. You can hire an agency, host an event, run a contest, pay a celebrity, launch a website, pitch reporters and bloggers alike and sometimes the media doesn’t cover it, nobody notices it, nobody tells their friends or hits the “like” button on Facebook.

            And the same is true with social media campaigns. What is social media anyway?  It is an evolutionary development of PR and word-of-mouth marketing. The internet has allowed people to interactively communicate in real-time, 24/7 on a global basis. Both PR and social media are tools but to be effective they need the right brand strategy first. That was the point of our book. We didn't talk about why "doing" PR was good for any brand, we talked about how PR gives new brands credibility and how to develop the right brand strategy to help make a PR campaign effective.

            The goal of marketing is to get your brand into the mind of the consumer. To own a word or a category in the mind. Starbucks owns high-end coffee shop. Google owns search. Twitter owns tweets. BMW owns driving.

            The first question any company must ask itself is, what does our brand stand for? Unfortunately, that question rarely gets asks. Instead, the focus is on what social media can we get into? Too many companies get PR, social media or advertising campaign all wrong. They forget that the brand strategy should come first and the execution should follow. Doing it in reverse doesn’t work.

            A typical example is a headline in today’s NYT “The Tupperware Party Moves to Social Media.” The Tupperware Brands Company has decided to greatly increase its presence in social media like Facebook and Twitter. They will have a Facebook page devoted to the theme “Chain of confidence” and feature women who will be confidence counselors. The company hopes to use social media “to reach out to a younger demographic in a more interesting and dynamic way.” The goal “is to find more disruptive methods to dispel perceptions that we are your mother’s Tupperware,” said Rick Goings chairman and chief executive of Tupperware.

            First thing first. What’s a Tupperware? It’s a party your mother bought plastic tubs at. Changing that perception in the mind is going to be difficult. A Facebook page and a few YouTube videos about confidence are unlikely to change that perception at all.

            “Chain of Confidence” what the heck is that? Since when do confidence and plastic tubs go together? Sure, I get what they are getting at: Women who work for Tupperware gain confidence and skills. But Tupperware doesn’t own confidence; it owns plastic tubs sold direct.

             Broad ideas like confidence and quality aren’t specific enough to be ownable. And even if you want own something like “great customer service,” you don’t do it with a “we love our customers Facebook page.” You do it with a specific and tangible concept like: “Free shipping. Both ways.” The concept that put Zappos in the mind and gave Tony Hsieh something to tweet about.

            What Tupperware needs to do first is focus on the idea. What idea can Tupperware own in the mind? They have to start from where they are at and slowly shift that. Plastic tubs save food. People are eating at home more, bringing lunches to work and school more. I would start with that. There is also the idea of saving the environment. Instead of throwing cheap plastic containers away, you buy Tupperware and keep them around a lot longer.

            Nothing is going to help overnight. The problems at Tupperware have been brewing for a longtime. And many of these ideas would have been better implemented years ago. Nothing works better than pioneering an idea or movement.

            Instead, most brands muddle along and introduce brand extensions like Tupperware stainless-steel pots and pans and rush to do social media not because it makes sense for the brand but because it is the trendy thing to do today.

            Marketing isn’t trendy. It’s simple.

            Focus. Own a word in the mind. Then decide the tactics.

            And if your brand is yesterday’s news, consider the possibility of launching a new brand.

            Social media actually works the best for new brands that are (1) focused (2) appeal to a new generation and (3) have news value.