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Brands and regulators: rethinking compliance

By Mark Di Somma

Competing within the rules

It’s easy to see recent surges in regulation as a reaction to the corporate scandals of previous years and to characterise the return to a much more compliant environment as one of bureaucracy on a roll (and a role for that matter).

But one of the reasons re-regulation is back, surely, is that the world is moving away from a pure market forces model (driven by business) towards a marketplace model that incorporates drivers such as consumer rights, environmental concerns, ethics and responsibility. Whether you agree with the politics of this or not, that new marketplace model is much more sympathetic to a regulatory approach.

It’s also a sign of a shifting sense of consequences. The former model left it to the market within reason to decide what would and would not happen, pretty much relying on efficiency to sort out what needed to be rectified. The GFC proved that the market wasn’t the world’s greatest policeman and that sectors on a roll aren’t necessarily all that thorough about a whole bunch of things. This re-regulating marketplace model is much more determined to see consequences surveyed and if necessary handled by a third party – presumably so they’ll be more objective.

There’s a number of points here for marketers. The shift in the regulatory ground reveals two key transfers in attitude: a wish for action in key areas of societal concern; and a fundamental belief that companies require prompting in order for such actions to occur. The opportunity to address the first and correct the second of these attitudes is obvious.

There’s a lot at stake here potentally. Industries across the world, including sectors as diverse as telecommunications, food (particularly food safety), property, energy, transport, insurance, gaming, finance and agriculture, face mounting local and global marketplace regulation that could significantly impact revenue. The traditional approach has been adversarial: send in the lobbyists, play for time, negotiate for dispensations, redefine the language so that it’s meaningless – whilst all the time proclaiming the good works being done in CSR.

On reflection, both CSR and regulation are, at least nominally, focused on making the world a better place to live and trade in. Perhaps then, given how much is at stake (some estimates put revenue at risk potentially at up to 50%) if we were to re-read regulation as a signal for safeguards rather than just as constriction, there are opportunities for brands to re-rout their reputational objectives so that they are best aligned with the times and to merge stakeholder relations, innovation and marketing in order to identify and reinforce future economic value in this morphing marketplace landscape. Treat regulation and re-regulation in other words as another macro dynamic, with all the accompanying opportunities and challenges, rather than as just “the rules”. After all, regulation applies to everyone, including competitors.

That adjustment, it seems to me, requires an outreach programme that engages not just the board and investors but also regulators themselves, NGOs, industry associations, consumer groups and other influencers, and calls for converged conversations internally between top decision makers, legal, comms, products, R&D and marketers. New rules in the marketplace require new approaches and attitudes – moving from “What are they doing, and how can we stop them?” to “Where’s the world going, when can we get there first and how can we claim the high ground?”

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Photo of “Ruler” taken by Scott Akerman, sourced from Flickr

Expanding the brand experience: one question looms large

By Mark Di Somma

Expanding the brand experience

Relationships are becoming more one on one; communications are becoming faster and more frequent; customer loyalty cycles are becoming shorter – and yet organisations, returning to merger mode after the GFC, are scaling to breathtaking size. The dichotomy between the intimacy customers are looking for and the footprint that companies are generating in order to, supposedly, reach those individuals more efficiently is glaring.

This incongruity came up in conversation recently during a discussion about the mega merger of Omnicom and Publicis. We were talking through how such a merger would probably be great for the agencies’ biggest clients but might read as a signal to depart for those that could now fall below the horizon of attention. Imagine how much clout you’re going to have as a marketing client with even a few million to spend in a Group that will be billing around $23 billion? Imagine how difficult it is for a company of that scale to deliver communications that feel one on one?

I’ve seen and heard a number of reasons for why this merger makes good business sense:

•  The new Group is now bigger than WPP;
•  Consolidation diversifies risk;
•  Media buying becomes more efficient;
•  The shift to digital advertising, and the proliferation of channels, makes               scale the only way to combat declining margins; and
•  The agencies are now facing competition from the channels – Facebook,         Google etc – which now fulfil the function of digital mega-shops in their own     right. Mega-mergers are an effective counter-measure.

There’s nothing new here. These reasons, or sector-appropriate equivalents, get rolled out every time expansion looms. They place significant emphasis on how the business benefits. And it may well be that they are right, and this particular M&A works. But if it does, it will be the exception, and Bain & Co have done some interesting work to explain not just why, but also how disappointment can be averted.

First of all, the explanation for what goes wrong. “Numerous studies have found that more than half of all mergers fail to deliver the intended improvement in shareholder value. Customer defections contribute to that high failure rate.” I’ve seen figures that are a lot higher than 50%, but let’s put that aside, and focus on what Bain believe can be done to avert mass exodus.

The secret to a successful merger, they say, lies in five key initiatives:

1.  Set ambitious goals for customer retention, and track performance.
2.  Prioritise what customers will experience in the merger planning.
3.  Take actions that improve the experience for customers or                                   increase the value of your offering to them.
4.  Keep customers in the loop about changes, good and bad, that will affect         them
5.  Give employees the tools and information they need to respond to                     customers caught up in the change.

These are sound and robust strategies from a management point of view. But, you know what, they still strike me as the ambulance of the bottom of the cliff. Because the question that should have been asked, and never seems to be, is the one that would truly make the customer the centre of attention.

And that question is this: “In what ways will each of our customers directly benefit from this merger that they would not benefit if we did not merge?” That, to borrow from the lexicon of Don Peppers and Martha Rogers, is the real “Return on Customer” question. That’s the nitty-gritty, relationship-focused, outcome-specific enquiry that never seems to get raised.

If it were, that one question could well generate some very different strategies to help cut the huge wasteage in human capital and organisational potential that M&As seem to have largely accepted as a cost of business:

  1. Expand to the size you should be, not the size you could be, and make your acquisition decisions accordingly.
  2. Directly align the extent of growth with the extent of the benefit that      customers will receive from that growth.
  3. Acquire companies that you can learn from, not just take from.
  4. Make your customers proud of what they are newly part of, rather than     force-feeding them credentials by way of justification.
  5. Give employees access to new opportunities that they had previously not enjoyed. In other words, expand the loyalty of staff to fill the new footprint.

And in response to all the PR that merging companies always distribute about what the new entity will “mean” for customers, here’s something I wrote eight years ago about the futility of credentials as a marketing strategy. It’s still true. In fact, given the huge emergence of social media, it’s even more relevant. In this particular case, I was talking about the merger of two airlines, but the arguments are applicable universally.

“Credentials are much over-used and much over-rated, especially in businesses that deal with consumers. It might have been important for investors to know they were going to be part of another scale-driven entity, but as a passenger, I just presumed things were going to become more impersonal …

As a consumer, why should I take any comfort from the fact that two airlines that presumably are finding things as tough as other carriers are now joining forces to combat a market that only looks like it’s going to get harder? When you’re telling me that the key reason you’re doing this is to set up the largest airline of its type in the world, all I see is the potential for an even bigger mess …

I have a suggestion therefore for all companies contemplating credential-driven marketing, especially in major media. What difference does what you’re saying actually make for your customers? I don’t pack my bags to travel on the biggest budget airline in the world. Contrary to what the guys might like to believe, not everything in this world is about size.”

Simple test. Take a look around the next time your brand makes a significant acquisition/merger announcement. Who’s smiling? Chances are they’re the ones getting the real return.

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Photo of “Big Beautiful Face Statue in Tenerife” taken by epSos.de, sourced from Flickr

When other brands attack: 5 reasons to defend yourself

By Mark Di Somma

Defending your brand when others attackIs there any reason why you wouldn’t defend yourself in the face of an attack on your market share or reputation? None that I can think of off-hand. Because to do so is to simply hand hard-earned loyalty and turnover to someone else on a plate. Nevertheless, faced with a concerted effort to take market share from them, too many brands defy rational behaviour and either carry on with business as usual or simply ignore what is going on in front of them.

Here are my five reasons why you shouldn’t behave that way:

It telegraphs weakness or at least vulnerability: Failure to respond decisively and aggressively tells your competitor(s) that you are not in a position, physically or emotionally, to do so. As such, it simply encourages greater activity on their part.

It tells your customers you don’t care: When you fail to fight for your customers, it tells the people who buy from you that you either take their loyalty for granted or that you don’t care if they leave.

Delays push you into taking more drastic actions later: If you don’t respond quickly and with determination, allowing your competitor(s) to build momentum, the investment and effort required to win back ground later will be much harder and probably more expensive.

It compromises your reputation: Depending on what is being brought into question (your pricing, quality, dominance, commitment or competitiveness), you can be a less trusted and trustworthy brand. Buyers and distributors can take the view that if you were vulnerable once, you could be so again, at their expense.

It’s bad for morale: There’s nothing worse for a culture than seeing their brand attacked, and management not rallying the troops and leading the brand out to do battle with the adversary. Commitment wavers quickly in the face of indecision.

In this post from some time back, Jack Trout offers his views on how brands should play defence. A defensive position is called for, he says, when your organisation is the clear market leader, and even then the best defensive strategy is attack. You should also strengthen your position by introducing new products or services, have a proactive acquisition approach and look to increase the size of the pie, rather than of your slice.

I don’t disagree with any of that, but what happens if someone brings the fight to you, how should you respond? The successful approach for a counter-attack lies in the four Rs:

1. Redirect – if you are challenged in an area where you are susceptible, shift the focus of the argument to an area where you know you are stronger, and pitch your battle there. Go after your competitor on that point single-mindedly, and dismiss their attempts to turn the argument back as an inability to respond. You can do this with humour, you can do it with humility or you can do it with candour. The key thing is that it gets done.

2. Refute – if they come at you with “evidence”, go after their facts. Summon your own experts, draw up counter-arguments, pick holes in their points, or expose stupidity or naivete. Be dispassionate about it – calm, cool and cutting.

3. Re-position – recognise that you have indeed fallen behind, and use the attack as a much-needed prompt to change how you are perceived in the market. Being under attack puts people under pressure but it also gives them good reasons to focus and for teams to act decisively. If your business model needs revamping, the attack could well serve as the “business case” you need to get change happening quickly. The difficulty is that you will be changing at the same time as you are reacting. That’s never fun.

4. Remind – tell your customers why you are such a valuable asset and why they should remain loyal to you. This is a particularly effective approach if you are being harangued by a challenger brand. Use your heritage and credibility to your advantage. Reach out to your current customers and remind them what you have done for them and for the industry. Position leaving you as a risk or at the very least as an uncertainty.

So often, when brands are attacked, they focus their response on the attacker. It’s natural to see rebutting them as the right defence approach. However, the more effective approach is to engage your customers and the media and to look to convince them that you are in the right. Here are my seven rules for defending your brand (interestingly, several of them are the same as for attacking another brand):

1. Talk to the customer about what they stand to gain by staying with you.

2. Refute the competitors’ principles rather than focusing on people or details.

3. Show buyers that your key concern here is them and the things they care about.

4. Use a mix of media (and messages) to make your point.

5. Involve senior management in protecting key relationships. Try and do this before any stories break in the press.

6. Take any attack seriously, but don’t over-react.

7. Set a timeframe, budget and clear measures for seeing off the attack. Assess progress continually and act on it.

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Photo of “Drill Sergeant Giving Orders”, taken by UK Ministry of Defence, sourced from Flickr

Customer loyalty: 3 ways to win if you’re a retailer

By Mark Di Somma

Customers are closer than you think

These findings from research of the ways we go about our lives have confirmed people are nowhere near as random as previously thought. In point of fact, after tracking more than 100,000 mobile phone users over a period of six months, the clear conclusion from this research if you’re a brand is that people mostly visit a limited number of locations time and time again. Customer loyalty pays. Literally.

What’s interesting to note, given that we live in this much heralded era of mobility, is that most people also move around over very small distances – five to ten kilometres. No surprise then that this infographic by FlowingData shows a pizza-chain within a 10-mile radius across the United States.

Some people, of course, range much further, but even then, they stick to remarkably similar patterns, once again tending to return to the same places over and over again. So customer loyalty is also limited. For the most part, it operates within finite parameters.

But a recent study of grocery buying habits also reveals something stranger, and contradictory. Even though we generally return to the same places and those places are usually close by, we will travel much further than seems reasonable if the incentive to do so is great enough. For example, while we may like our fast food close, people in cities will travel miles to shop for food from their favourite outlet, even if they have a supermarket or corner store nearby. Watch the videos and see for yourself. Customer loyalty defies logic.

If you’re a business that depends on physical traffic, here are three take-outs around customer loyalty that I think are worth noting.

Firstly, we are indeed creatures of habit. If people’s behaviours are characterised by repetition, then it makes sense to look for ways to become part of their regular rituals. Find ways to incorporate what you do into their day.

Secondly, many retailers in particular, have an appeal strategy based around destination of chance rather than destination of choice. This research would suggest that customer loyalty and the repeat business it brings is even more important than many believe. In the case of some food anyway, it is possible to defy geography through the sheer attractiveness of your offer. Time to step up the reasons to get people back. A surprising amount of your take probably comes from people who keep coming back.

Thirdly, focus on narrowcasting. Think about what you could do to increase your “share of day” amongst the people you value most and who will value you most, rather than everyone.

We may live in a world of seemingly endless choices, but these studies show that consumers find and stay with choices and brands they know and feel comfortable with. For many people, that’s a surprisingly short list. What are you doing to win and hold local customer loyalty?

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Photo of “On the go phone” taken by Craig Cloutier, sourced from Flickr

A Virtual Coffee with Tom Asacker

Brands and Beliefs: A (Short) Virtual Coffee™ with Tom Asacker

By Mark Di Somma

I was first introduced to Tom a number of years ago when he and I were on the same contributor panel and I’ve always been taken by four qualities that come out time and again in his work: his call-it-the-way-it-is approach; his extraordinary ability to condense whole systems to meme-length summaries; his relentless search for new form; and above all his humanity and clarity.

Tom’s fifth book, The Business of Belief is about stories, dots and history (you’ll see why below). It did what I knew Tom would do: took a space that seemed finite and broadened the consideration-set to include ideas and insights that were very revealing. Reading it prompted me to seek a deeper understanding of what’s playing on Tom’s mind about beliefs and brands.

Here’s some of the highpoints from our conversation:

1. Wishes drive beliefs
Tom: The word “belief” comes from the Middle English “lief,” which means to wish. Belief is simply a working assumption about something or someone … driven by what we would wish something to be.

2. People forge meaning out of partial information
Tom: Stories are powerful because they express our beliefs. We have past experiences, which we spin into a coherent story, and revise when necessary, to rationalize previous actions and make us feel good about ourselves, our associations and decisions. I refer to this as “connecting the dots”. Some brands are very good at presenting us with “dots” — through their varied and evolving communications and behaviors — such that we create a coherent and motivating whole. We all become the stories we tell ourselves. You are not your history.

3. Brands are actually in the business of generating meaning
Tom: People’s expectations change, because their experiences in the marketplace change and their desires evolve. Great brands lead [that] change. It’s a process of continuous learning, discovery and creation of new meaning, which drives profitable growth and adds value to the lives of customers, employees, owners, partners, and the community. Apple is the classic example.

4. Finances measure opinions
Tom: Financial measurement is simply a way to gauge how well a brand is executing on its opinions, on its theories about how the marketplace is evolving and its unique role in that evolution.

5. Identity is not the same as narrative
Tom: Narrative is something the mind invents from past experiences. Identity is the result of what someone does and creates in the here and now. What’s Nokia’s identity? They were a manufacturer of paper, then cables, then rubber boots. They were also the world’s leading manufacturer of mobile phones. Those were their identities. Their identity today is much different. You are what you do, not who you were.

6. Brands die because they forget how to dream and customers lose belief in them
Tom: Customers lose belief when their desires are not being met, or when something or someone else is better at stimulating and satisfying those latent desires. When brands forget how to dream, the passion for the possible and for the customer typically goes with it.

Want more detail? Read the full interview:

Tom Asacker Long Virtual Coffee banner

Brand expression: the fight against dullness

By Mark Di Somma

brand expression - the fight against dullnessI’m a huge believer in stress-testing the expression limits of brands. And as a general rule, I’ve learnt that you can push language a long way – often further than you imagined – providing you demonstrate humanity, insight, humility and fun, and you connect in ways that people identify with and find refreshing.

People can be very scared of showing humanity, candour or opinion. But brands with character hook people in and make them loyal as hell. Rohit Bhargava has written an excellent book on the business case for authenticity, Personality Not Included. It’s a great read, and there are some telling case studies.

Here are my five best tips on how to nudge your language to the borderline:

1. Look at how your competitors speak – if they’re all talking foo-foo, don’t add your brand to that clamour. Instead, find a way of relating to people that makes you the most interesting voice in the marketplace.

2. Stay on brand – your voice should reflect who you are. If you’re a fun brand, be cheeky. If you’re a sentimental brand, speak warmly. If you’re a challenger brand, be indignant. Take your cues from your story, your purpose and your values.

3. Base how you speak on how they speak – I wish more writers would get out and listen, really listen, to the speech patterns of the people they are trying to reach. People talk in so many different ways, in so many situations. And our role as expressionists is to know how to speak, when to speak, where to speak and what to say. The first writer I was apprenticed to gave me a piece of advice that I’ve always treasured: talk to them like they were sitting next to you. So much writing fails to establish “I”-contact …

4. Calibrate the doseage – reveal more of your brand personality as people get to know you. Start out as distinctive, and in the course of the sales funnel, talk in ways that make your customers feel more involved and included. Pull them into the tribe. Introduce a ‘dialect’ that becomes more apparent, and feels more exclusive, over time.

5. Look forward to a fight with legal – be warned. The compliers and the legal team are going to hate this apparent sudden outburst of character. To them, saying what you really think as a brand feels like a mighty great risk. And it feels that way because they are trained to write in a specific style and within particular terms of reference. For many of them, language is about tying things down and having indisputable points of reference, and those guidelines clash with having a brand that expresses itself openly, candidly and without (excessive) qualification. Fight for your brand’s freedom of speech.

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Image of “RAF Firefighter”, taken by UK Ministry of Defence, sourced from Flickr

Telling the short (brand) story

By Mark Di Somma

telling the short brand story

Everyone has a story to tell. Not everyone feels they have the time to listen. Which is why brands need to become adept at the short story form. Increasingly, the messages that pass between brands and their customers will need to be articulated in 140 characters, 6 seconds, a shot, an update …

But brevity is not the full answer – and those who believe they can communicate exclusively in such formats will risk selling themselves short.

To master short form storytelling, marketers will need to know the long form version of their brand story better than ever. (You can’t edit what you don’t have.) And they will need to judge duration and relevance with greater accuracy. The ability to distil and disseminate bursts of interest, and to mix those short forms with longer, deeper, richer forms of expression, will decide who flourishes and who withers.

Acknowledgements
Image of “Clock” taken by Earls37a, sourced from Flickr

Brand repositioning: Radicalising your brand

By Mark Di Somma

Radicalise your brand positioning

Comes a point in the lifecycle of most brands when they hit critical complacency. The marque has mainstreamed to the point where it effectively blends with its surroundings to form part of the amorphous middle. That’s the black hole towards which all brands are drawn. Competitiveness erodes. Prices start to fall. Comfort levels and intransigence soar. Appetites for risk, so apparent in the early years, fall away. Eventually, the lights go out. We could all run a list of those that have succumbed.

But whilst complacency and conservatism are easily spotted, they are much more reluctantly abandoned. Getting off the merry-go-round is difficult, because it requires management to re-radicalise; to muster the courage and the energy to pick new fights and wage new wars; to attack what they operate so efficiently and effectively now in order to save it. (Seth Godin in his book The Icarus Deception expresses clearly and strongly how and why industrialisation works this way.)

It’s hard to be radical and commercial: hard because it so often looks unreasonable. As Gary Hamel has pointed out, it requires organisations to be able to identify what is sacred and what is unsacred, what should never be changed and what can (and perhaps must) continue to change. And, on examination, so many organisations hold the wrong things sacred. They cling to what they know rather than addressing what consumers want next. They believe their technologies and their techniques are the most important aspects of what they do. They rely on size and continuing to size up.

Better operations make you a better brand. But they don’t make you a more interesting brand. They may improve you, but they don’t iterate you. They streamline and correct the present, but they don’t ready you for your future. So if you are comfortable right now, that’s probably the strongest signal you’ll ever get that you need to get uncomfortable. Here are seven ways you can look to overturn your own brand, so that it lives to fight on.

1. Shoot your current mission – Take everything you’re now so proud of in terms of your aims and put it up against the wall. What did you lose to get to the point of acceptability you’re at now, and how are you going to reclaim the rage that once had the founders of the business saying “we have to start this company because what’s going on right now needs to be stopped”. This isn’t a history lesson and it’s not about nostalgia. It’s actually about re-starting; finding the spirit that once impelled brave people to put everything they had on the line. Get scared again.

2. Tell a shocking story – The story of the brand you will be will always be shocking. It will jarr. It will conflict with what seems sensible. It will appear far-fetched. And if it doesn’t, then the bar has not been set high enough. But – and this is critical – the story, whilst shocking to you, must be the one that your customers will be delighted to hear. It will redefine how they know you by upending what they know you for. Two things will really surprise you. How much your own people will resist, and need to be coaxed into, making changes that are in your brand’s best interests. And how quickly others will flood in to copy you as soon as your radical idea gels.

3. Apologise for your past success – We’re all prone to comfort seeking. We all seek the reassurance of knowing we have done well. Here’s an exercise for senior decision makers that I love because it systematically throws the cat amongst the pigeons. Draw up a list of your greatest successes as an organisation. Now have each member of the senior team stand up and one by one apologise to senior colleagues for one of those successes and propose what they would have done better. Yes, it’s weird. But it works.

4. Break the market – Best way to do this? Take market models that have never talked to each other and smash them together to see what happens. For example, what would happen if you launched a car the way the music industry launches an album – or vice versa for that matter? This always seems strange for the brands concerned. In point of fact, while it’s disruptive, it’s a relatively straightforward way to radicalise because you are essentially “transposing” a successful model from one place to another, adjusting as you go. It certainly inspires some wild and wacky questions. This was one of my favourites: “If Hallmark were an insurance company, how would they market their policies?” In case you’re wondering, we ended up here.

5. Change how you’re found – If you still are where you’ve always been, and where you’ve always been looks pretty much the same as it always has, it’s time to give your distribution strategy a serious talking-to. Channels are amongst the most dynamic areas of marketing and the quest to intensify the loyalty of those who love you, earn the interest of those who don’t (yet) and broaden your appeal to those who have yet to see why they should bother is a battle that will only intensify in the years ahead. As physical, mobile and online continue to converge, your ability to invite people into your brand surroundings and to make them feel welcome will become increasingly important.

6. Rewrite the experience – Giving customers new experiences isn’t always about upping the ante, but it is about informing, delighting and recognising them in ways that others won’t or don’t. This is the proving-ground, where everything your brand stands for lives or dies. If distribution is about efficiency and versatility, the experiences/encounters that people have with your brand are all about personality. Look for ways to be idiosyncratic. Align them back to your purpose, your values and your storyline. Experiences today, wherever and however they happen, are how you sign your brand.

7. Insist on new customers – Every successful middle-market brand has people who’ve been with them for years. You know them. They know you. They’re incredibly valuable, and you need to nurture them for all you’re worth. But you can’t just assume they’ll always be there. Where are the next generation of customers? Your ability to identify and adapt to your next era of buyer will decide whether you continue to grow and include or stand still and shrink. Link your innovation strategy to the people you’re trying to attract. Whose being neglected right now elsewhere in the market? Who thinks you hold nothing for them? Who is dying to be welcomed? Reach out to them with new ideas that redefine everyone’s understanding of your mandate.

One final note. Providing you don’t trample on anything sacred, nothing you do to radicalise your brand will, in all likelihood, feel as radical to others as it does to you.

Acknowledgements
Photo of “Extreme Downhill Road Skating Hoddevik” taken by Fairy Heart, sourced from Flickr

Finding the true value in non-financial returns

By Mark Di Somma

goodwill - assessing its worth

This article in the Wall Street Journal Online from some years back examines the business of social responsibility and asks what’s the financial payback for generating all this goodwill. Perhaps the most interesting point to emerge was that social responsibility was not directly rewarded financially by effort invested. Companies that did just a little were rewarded almost as much as those that went all out, leading the writers of the article to conclude: “It seems that once companies hit a certain ethical threshold, consumers will reward them by paying higher prices for their products. Any ethical acts past that point might reinforce the company’s image, but don’t make people willing to pay more.”

So, beyond a certain point of noticeability, the notion of social responsibility is actually more important than the reality. As consumers we are motivated to reward positive actions – up to that point, but not far beyond.

This in itself raises begs wider questions around the elasticity of goodwill. How far does it stretch economically? What credibility should we give goodwill as a consideration factor? And, therefore, what are the implications for brands in terms of “goodwill” decisions around a whole host of activities that are often underpinned by “goodwill” motivations, such as sponsorship, ethical behaviour and sustainability?

To help answer that, let me take a step sideways for a moment. A recent study in New Zealand of the economic outcomes arising from sponsorship of major events is a sobering reminder that the claims for goodwill and economic stimulation made before an event/action seldom eventuate. In the study, 18 events were estimated to have collectively generated approximately $32.1 million of net economic benefit. However, that compares somewhat poorly to the estimated $143.8 million of aggregate national economic benefit originally submitted by event organisers and their consultants.

There are many reasons for this discrepancy, according to the study:
• Expenditure was included as a contribution when it actually represented only a transfer of expenditure or savings that would have occurred anyway;
• Generic and/or unjustifiably high multipliers were applied to direct economic activity that then led to questionable indirect and induced effects;
• Estimates of per day expenditure were often imprecise or inflated because of how the basis data was collected in the first place; and
• Expenditure was attributed to visitor activity regardless of whether those visitors were “coincidental” or “additional”.

I’m more than willing to accept that this piece casts the net wide – but my search is for the broadest view on what conclusions, if any, might be drawn from the projections of goodwill returns vs the economic realities? Here’s where I landed:

The tide clearly doesn’t rise as high as forecast. There is little or no reliable economic case, so far, for the generation of income from goodwill-producing actions. Goodwill gets a lot of airtime and yes, it counts – but the economic case only stretches so far and it often counts for much less than was originally forecast because of the criteria on which those forecasts have been based. In the case of the major events studied in New Zealand, the real returns amounted to just 22% of what had been ‘promised’. So if your brand is relying on what it does or what it supports to boost the overall value of what it is via direct goodwill inputs, that’s the wrong strategy. There will be an uplift compared to doing nothing, but you should be mindful of promises of optimistic returns.

To get the best results, specific actions or support should be targeted to attract the loyalty of specific audiences. From the Wall Street Journal article: “Companies should segment their market and make a particular effort to reach out to buyers with high ethical standards, because those are the customers who can deliver the biggest potential profits on ethically produced goods.” Goodwill, in other words, is most powerful to those who regard it as most good.

Your actions should align directly with your story. Your sponsorships, ethical behaviours and sustainability measures should “prove” perceptions of your brand that specific segments of your audience value and that differentiate you, in terms of what you prioritise and are prepared to act on, from your competitors. They should correlate directly with your purpose and values. They should prove that as a brand you are indeed prepared to do good not just talk good. They should be distinctive and on-brand.

Conversely, goodwill actions that match the actions of your competitors raise the industry’s social commitment overall, but will make no specific goodwill difference to your brand.

I’ve talked previously of the power of good social actions to impose a corporate “moral compass”, and this article by Dr Raj Raghunathan proposes another metric for assessing progress. The opportunity exists to quantify goodwill by actual enjoyment. It’s a bigger gamechanger than it might first appear.

Goodwill is an assessment of what brands get in return for their investment. It’s all about their reward financially.

Joy is about what people feel at the time and beyond and what that then will generate. It’s an assessment of how customers are rewarded emotionally.

It gives rise to some fascinating questions:
1.  How many people will actually enjoy us doing this? (active support)
2.  Why will they enjoy it? (how do they assess the benefit to them, individually and collectively?)
3.  How does this add to people’s enjoyment of the brand? (what’s the “translation effect” in terms of direct upsurge of sales, and why will that upsurge occur?)
4.  How does it actually change how they value the brand? (what will they feel about the brand that they don’t feel now, and why will that motivate them to spend more?)
5.  Who will not enjoy it? Why? With what consequences? (negative interest)

And if we apply this idea of “joy” as a measure of individual impact to the examples given earlier, some interesting insights seem to emerge:

People might expect ethical behaviour from brands but they only notice it to a point, and reward it to a point. In other words, ethical delivers limited joy but non-ethical delivers damaging mistrust.

People may act on any enjoyment in various ways, and not all of them will manifest financially. That’s important in terms of assessing realistic tangible and intangible returns.

Many more people may be exposed to an event or action than will enjoy it. For example, while many people may like the idea of an event being in their city, they themselves may leave to escape the expected crowds. That insight contradicts the way that a lot of “goodwill” is calculated. It’s not about eyeballs. Also, lack of enjoyment is a genuine economic consideration in itself because of its ability to generate “badwill”. If your brand is associated with an event or an action that people resent or avoid, there is likely to be a negative impact in terms of their inclination towards you.

Further reading
Here’s some sobering insights on the proliferation of stadia in the States and the effects they have had economically.
Nicely balanced article in Forbes on what cities do and don’t get out of sponsoring major events like the Olympics.

Acknowledgements
Photo of “ANZ Stadium” taken by Vijay Chennupati, sourced from Flickr

Sincere thanks to Shamubeel Eaquab of NZIER for directing me to the MBIE report.

Would you want to sit next to your own brand at dinner?

By Mark Di Somma

sitting next to your brand at dinner

Recently, in a thought-provoking post on why the PR industry, advertising and the mainstream and hybrid media need to work in a much more integrated way, Richard Edelman made this deceptively simple observation, “Ads are inherently more effective when you have something to say.”

And therein lies the crux. In a world where it’s never been harder to get people’s attention, too many brands have nothing in their DNA and in their messages that brings a smile to the faces of consumers. They exist. But there is no Long Idea. There is nothing iconic. There are no delicious insights. As a result, their marketing is often just information and, hard as it is for many brand managers to hear this, pure-play marketing information is flatline from an excitement point of view.

Presence, top of mind, awareness – whatever you want to call it – is a far cry from being interesting. Impressions mean nothing if brands fail to impress.

Before anyone says it, this is not about budget. It’s really about having the imagination and the tenacity to develop brands that are fascinating. And so many brands aren’t. It’s about knowing what Brian Clark refers to as “your particular future”. And so many brands don’t. They’re built on an also-ran premise, designed to a mediocre aesthetic and delivered in an also-ran way. As David Ogilvy himself said in Confessions of An Advertising Man, “You cannot bore people into buying”.

Hugh MacLeod has gone further, quoting this statement that he attributes to Andy Sernovitz: “Advertising is the cost of being boring”. In other words, MacLeod explains, advertising is what happens when you have to pay to interrupt people with messages that no-one would volunteer to listen to. It’s what you have to do when you have no other way of trying to catch consumers’ eyes.

Even the world’s biggest advertisers are seeing that media alone doesn’t get them the results they now need. As Mark Parker observes in this article on why Nike has made some big shifts in its marketing approach, “Connecting used to be, ‘Here’s some product, and here’s some advertising. We hope you like it’ … Connecting today is a dialogue.” And that dialogue is changing the breadth and the nature of brand connection to the point where Nike have completely revamped their communications approach. Once, the biggest audience Nike had on any given day was when 200 million tuned into the Super Bowl. Now, across all its sites and social media communities, it can hit that figure any day.

That in turn raises an issue that in my view has gone unattended to for too long – the obligation of advertising channels to lift engagement and be part of the conversations. If, as Richard Edelman says, the communication industries and the media need to work in a much more integrated way, then channels need to take more responsibility for the overall experience they deliver, not just what plays “between the breaks”. Because right now, the sheer volumes of messages and the lack of quality control in those breaks may amount to easy money but, in the longer term, is gradually disconnecting the channels themselves from the very viewers they depend on.

Acknowledgements
Photo of “Dinner’s served”, taken by Pawel Loj, sourced from Flickr