Youtube and their "wraparound" adverts

There is an amazing amount of time and money being invested in User Generated Content (UGC) by both tech companies such as Google and advertisers and yet the value of this content is still up for debate. Both Google and News International clearly believe that UCG is the future and all those friends of mine out there on Facebook clearly agree (sorry but I just don’t get it as yet). However to justify the values placed on these businesses, advertising and PR on these sites is going to have to be worth its weight in gold. I’m just not convinced it is – at least not yet.

Google has apparently decided that they need to put adbreaks around video clips (see http://www.youtube.com/advertise#invideoads) to start clawing back some of the $1.65bn they spent on buying YouTube. My concern for them is that will users of youtube simply avoid this ads (as users of PVRs do – see some research from IBM on this here) or even more worrying, they go elsewhere with their 30 second MMS clips? The price that Google paid for YouTube equates to something like $29 for each unique user per month at current rates ($1.6bn / 55m). Assuming payback over five years, discount rates and strong growth in unique users – say 25% - I think they need to get each user to click through on about 4 ads a month to break even. If growth stalls then the price Google paid for YouTube will look painfully high. However since they paid in stock and not cash, maybe things aren’t that bad.

Anyway, where does that leave the advertisers themselves. Well UGC has some well documented issues and advertisers need to be careful about how they embrace it. There are some great examples out there of advertisers turning UGC to their advantage (e.g. Coke eventually) whilst some big brands have really struggled. UGC enables brands to join in converstaions with customers but ultimately the power stays with the consumer and not the brand. Advertisers and site owners need to remember this. Look at how quickly the “community” abandoned MySpace. Is there any reason why something else won’t come along and replace the current raft of network sites? Wasn’t Netscape replaced quite quickly. Didn’t Lycos and Yahoo look like the early winners of the Internet search engine crown.

HondaMentalism

Over the past three or four years, Honda must rank as one of the most improved and best run brands here in the UK. The old image of a Honda driver as a staid older person has not totally disappeared but has been adapted to a message of reasoned excellence that complements the historical positioning of reliability.

For many, the commercial that helped start their reassessment of the Honda brand was the infamous multi award winning "Cog".

"Cog" is a fantastic piece of communication and rightly won a whole heap of awards. It plays on the sensible aspect of the purchase but by adding the funky music (try thinking of this commercial running with a Vivaldi soundtrack to see the difference) they managed to broaden the appeal for a wider audience.

After "Cog" came a few other similar messages that were then followed up by "The Impossible Dream" commercial that focused on Honda as an all encompassing brand rather than just being a car company.

In addition to these great commercials were the famous "Choir" and "Hate something, change something" commercials. From a media planning point of view, the Honda commercials were excellent because they focused on finding epic spots in big events where these commercials would stand out. Whereas everyone else was running 30 second traditional spots across multiple networks, Honda focused on delivering 120 second ad break ownership in key spots. Then the ads went viral and Honda got their value for money. These campaigns were great integrated works - people could access extra content via CDs and I'd love to know how many new contacts Honda made.

So having established a fantastic track record in terms of creativity and re branding, Honda launched a campaign this year called "Hondamentalism" focusing on a new idea - Honda as a brand representing fundamental engineering excellence.

This campaign apparently launched earlier in the year and whilst the TV commercial passed me by, the associated online campaign really caught my attention (see http://www.honda.co.uk/hondaMentalism/index.html). This site represents a lovely piece of creative online communication and will no doubt win some awards. However there is a bigger question here. Do Honda believe that they have done enough to reestablish their brand in order to rely on online and direct mail for the majority of their communications budgets?

My belief is that Honda are now spending far less on ATL activities and have shifted money to these below the line activities to build on the engagement that they hope to have generated with the brand. The logic behind this appears sound but what is yet to be seen is whether small levels of mass communication can keep the customer pipeline full.

To round off, many people argue that one sign of truly great communication comes when other brands copy your style - i.e. the parody. Would any brand have tried to copy a Honda commercial back in the mid 1990's? Oh - wait. Both Honda and 118118 (the Number) had Naked as their strategic media agency at the time....do you think this was also a stunt?

Plug - try Zumyn

Everyone with a digital camera is probably sitting on a database of a thousands of different photos. The way that we take photos has changed beyond all recognition and some very clever people like Flickr have figured out that the way people "consume" images has changed.

My friend Ian is one of these clever people. He's decided that those thousands of photos we all have might just come in handy if we wanted to create a montage of images. You can't just put a few thousand images on a wall but you can if you put them all together in one shap shot.

Ian has launched a business called Zumyn - he has a cunning program that will take all those images from you and arrange them all so that they form one bigger image - a mosaic. The really clever bit (which used genetic algorithms) is to make sure that there are no repeated images.

The address is http://www.zumyn.com/

I've done one of me with baby Lewis in Tokyo and despite my obvious flaws, it's looking great!

I believe that you can import photos from flickr and an importer for Facebook is coming soon. That way you will be able to import all the photos of your friends if you want or create a unique image from a special event.

Do please pass this on to anyone who might be interested and get involved!

10 ways to get more from Marketing Mix Analysis

I'm currently working on a white paper about Marketing Mix Analysis and how the industry needs to adapt to meet new client needs. As part of this paper, I've created some "best practice" advice points that I wanted to share and get some feedback on. Please feed back any comments.

10 Ways to get more from Marketing Mix Analysis:

1. Be realistic about what the analysis can help you achieve – drop words like optimisation and replace with words such as “improvement”. Bravado is a great quality when used correctly but its place in analytics is questionable. Realistically, systematic measurement and improvement programmes in marketing can improve ROI by an average of 10%-15%. However it is not going to happen every time and when it does, it is unlikely to be effort free.


2. Focus on quality not quantity of results– many mix projects suffer from over engineering – both in terms of data used for analysis and detail in results. The old adage of Keep It Simple Stupid (KISS) applies as much for mix modelling as it does in any other area. Start with analysing the key metrics that determine business success before moving further down the value chain. Think of “money at risk” – that should clearly determine the key issues to be analysed. Simply adding dimensions of complexity may bring a new depth to the problems that can be solved but is that really where the real value is going to be derived from?


3. Beware of averages – average measures are a big danger in marketing for two reasons. Firstly, given that there is no such thing as an “average” customer, it is going to be very difficult to create a campaign that will satisfy them. Secondly, average performance may be misleading – it is the marginal returns that are meaningful – i.e. the return from the last unit invested. In an industry that rightfully eulogises the term “diminishing returns”, there is a woeful level of understanding about “marginal” performance.


4. Create genuinely meaningful reports – if an organisation is to make changes in marketing strategy then it needs to be clear to all those who are touched by this as to why changes are taking place. Clear and concise reports can help organisations share knowledge efficiently – long winded one hundred page presentations are not the best method to communicate change.


5. Use simple language where possible – enough said. The people who need to respond to marketing analytics tend not to be the most mathematical proportion of the population. Comparing results in statistical terms is easy for analysts but not for laymen. However the wider marketing community have a valuable part to play in the interpretation itself and needs to be included in discussions.


6. Standardise results– Not all models are built equal. Ask whether you can compare the range of potential models being presented to you on the same basis. If you can’t, how can you benchmark and improve performance. Standardised reporting may be inflexible but it is repeatable and enables quick comparisons between results. Standardised reporting enables one of the favourite techniques of modern managers - benchmarking. Marketing teams often hate it but it is valuable.


7. Focus on the actionable areas of the business – Report writers love to provide elaborate explanations for esoteric findings from their models but often they end up reporting on non marketing issues to marketing teams. Whilst some if this information may be useful, teams are often time pressed and it is marketing issues they need to focus on.


8. Systemise the analysis process– one-off reports may be useful to organisations seeking an occasional review of their activities but only continuous monitoring will lead to real improvements in performance. By systemising the reporting of marketing analytics, real processes can be adopted for test and learn marketing. The CMO council have shown that organisations that have managed to adopt these processes perform better and it can be no coincidence.


9. Develop test & learn processes – many successful marketing organisations have figured out ways to experiment with marketing in order to prove to themselves what is working. In almost all these cases, the organisations in question are able to action findings quickly once they have been identified. If your marketing organisation makes changes to their plans once a year as part of an annual planning cycle then you are missing an enormous opportunity to improve marketing performance.


10. Combine it with other analysis - Marketing Mix Analysis can be a blunt tool - it tends to give high level results. It addresses some important business questions but isn't a panacea. Never overlook other research techniques.

Any other thoughts or comments?

Is user generated content overvalued?

The rise of websites such as youtube, Facebook, Flickr and MySpace has led to a raft of discussions in media land about how to best harness this phenomenon from an advertising perspective. Clearly the explosion in the number of people using such online sites has exceeded anything one could have imagined just five years ago.

Back then, we were all getting over the disappointment of WAP and other first generation web technologies - online marketing was in its infancy. Back then it was all banner ads and pop-ups until we all figured out that a) people were downloading lots and lots of ad blocker programs and b) the ads themselves were of negligible impact because the reach of the medium was quite poor. Five years on and the online digital experiment has changed quite a bit. Ad targeting has improved immeasurably and the range of measures for online campaigns is now so vast, many struggle to keep up with the latest trends.

In recent years, online advertisers have been able to rely on new targeting technologies (mainly cookie and / or content based) to help promote their ads across vast online networks. Google changed the game with their adwords program and now almost every business will be using some sort of online advertising and communication to promote their wares. These vast online advertising networks stretch far and wide across the web and one place they specialise in targeting are the User Generated Content (UGC) sites, forums, bulletin boards and chat rooms right around the world.

UCG attracts a multitude of users from around the world but very little advertising on these sites is “placed”. Most is brought as part of a package and the content against which you advertise is largely up to the site as opposed to the buyer. Of course the danger with throwing your online advertising out there without any say as to where it is being placed is now blindingly obvious yet until last week many UK brands didn’t understand this.

Last week, big brands such as Vodafone, T-Mobile, Virgin Media, Halifax, the AA, First Direct and even the UK Government were forced to pull advertising on Facebook after their ads were seen running against sites for the British National Party (a racist right wing organisation). Whilst Facebook are now offering UK advertisers an opt-out option for sites such as these (to be rolled out across other markets later on), this is the obvious risk that advertisers are taking when they have no clue on the type of content their ads will run next to. This incident in unlikely to be the only one of its type and many agencies are now going to be struggling to work out how they respond to this issue.

The great prize with UGC is that it supposedly offers much higher levels of engagement than other channels. An almost endless supply of fresh copy enables sites to grow quickly and capture hours of users online time at little cost – certainly no expensive journalists to worry about. However this also means is that there is little or no editorial control over what is being viewed, written about and discussed.

For advertisers, UCG is an interesting place to be although whether the benefits go beyond just getting another set of eyeballs is debatable. For UGC websites, these type of issues start to undermine the enormous values being placed on these companies. Google paid an amazing sum for youtube ($1.65bn - but much of this was paper money anyway i.e. a stock swap) whilst News International paid $580m (cash?) for MySpace. These valuations are almost exclusively based on potential and forecast ad revenues. Allegedly Facebook has not been sold because the valuation placed on the business is $8bn whilst organisations such as Microsoft only value the business at $6bn (see http://www.marketingweek.co.uk/item/57164/343/298/3). Such valuations are dependent on reliable revenue streams that will increase at a significant rate.

Whether these valuations take a knock after the Facebook débâcle remains to be seen. For my money, issues such as these reinforce the place of traditional media owners online. Groups like the FT, News International, Economist and Guardian have all embraced web 2.0 type interactivity but in each case, content may be vetted and advertisers are reasonably sure that their messages will reside in a suitable place. For those advertisers embracing UGC advertising, caution is recommended!

Common Afflictions that Marketers Suffer From

Ron Shevlin has detected some common afflictions that marketers suffer from. I loved the column he wrote and added some suggestions then I decided that this actually needed to be made into a presentation so I made one. Please let us know of more afflictions and their cures if known and I'll add them to the list.

See here for Ron's original post: http://marketingroi.wordpress.com/2007/08/07/common-marketing-afflictions/

Thanks,

John