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by David Goetzl, Wednesday, Jul 23, 2008 5:00 AM ET
Nielsen research shows that global ad spending climbed 4% in the first quarter, even as an economic slowdown accelerated. Yet much of the growth came from outside the U.S. and Canada, which saw a 1% increase. Spending in Europe, where the waters may be getting choppier than the U.S., was essentially flat–down 0.4%, compared to the same period last year.
The Asia-Pacific region–with China and India accounting for a chunk of the expansion–saw spending climb nearly 10%. Growth in Africa was strong–up 16%, with South Africa posting 15.3% growth, which Nielsen labeled “stunning.”
Nielsen said spending related to the U.S. presidential campaign helped offset negative factors, such as the Hollywood writers’ strike. Among traditional media, television showed the highest growth rate globally in the first quarter, up 6.9%. Radio was second at a 1.1% increase, with newspapers up 0.4%. Magazines saw a 0.9% drop. (In the U.S. at least, magazines may benefit the least from political spending.)
Television accounts for 60% of all global ad dollars, Nielsen said. In Europe, where TV accounts for half of the ad market, the medium was the only one posting growth in 1Q, with a 2.2% climb.
Nielsen said the health-care category accounted for about 10% of spending, the largest single sector.
The impact from the coming Beijing Olympics is expected to lead to a notable increase for the second half of the year, with a massive jump in China. It remains to be seen, however, whether any percentage increase will outpace an uptick from 2003 to 2004, the last year with a Summer Games.
In this sluggish economy, Procter & Gamble has rolled out a new ad campaign for its Swiffer brand that aims to instill consumer confidence in the household care sector.
The marketing effort kicks off today and includes three TV spots and a larger online media buy that emphasizes Swiffer’s value over traditional cleaning tools. Tagline: “Cleans better than a mop and bucket or your money back.”
The 30-second spots direct consumers to Swiffer’s Web site, Swiffer.com, for a $5 discount offer.
This is the first time P&G has offered a money-back guarantee on Swiffer, according to Pete Carter, advertising development director for the Swiffer brand. “About six months ago, we started seeing a looming recession out there and we knew that our potential consumers were going to be concerned about the value of their dollar and what they were purchasing,” he said. “The money-back guarantee makes it a no-lose proposition.”
The ads assert Swiffer is worth the money by humorously comparing it to other cleaning methods. One spot, titled “Flower Man,” shows a woman happily cleaning the floor with her Swiffer WetJet until she is interrupted by a man at the door. The visitor announces,” I have a delivery here from a Mr. Mop,” while a disheveled mop peeks from behind a tree. The woman is not interested and slams the door. Voiceover: “Once you switch to Swiffer WetJet, you’ll never go back to your old mop, again.” The commercial concludes with a side-by-side comparison of Swiffer to a mop. Kaplan Thaler, New York, handles.
In another spot, “Grocery Store,” a store clerk tries to convince a female customer of the benefits of Swiffer. Just then, a straw broom and mop appear, knocking over all the potatoes in one aisle. The customer ignores the ruckus and opts for the Swiffer starter kit.
“That’s the first time we ever positioned our [Swiffer] starter kit in that way,” said Carter. “Before, we had just talked about how it’s better than a mop or broom, but we thought that if a consumer is going to shell out money for our starter kit, they need to know they’re getting a lot of value for it.”
David Becker, president of ad agency PhilippeBecker, San Francisco, which specializes in consumer packaged goods, said the spots are extremely effective because they address the underlying issues: tighter spending habits due to a deepening recession.
“It’s well done because it doesn’t highlight the pain aspect, which is: ‘Gee, we’re all losers. We’re all staying home, but at the same time, we want a clean house.’ That’s a negative message to send,” said Becker. Instead, the Swiffer commercials state the message in a more subtle way by saying “the product is better, we’ll prove it to you, you have nothing to lose and there’s that guarantee.”
The new effort is a sign that Swiffer has identified the need to reposition itself during a recession, Becker added. “The last couple of years have shown, if anything, that established brands cannot rest on their laurels,” he said. “There was a time when, if you were Campbell’s Soup, that was just a license for success. Nowadays, nothing is. You just don’t inherit that anymore . . . And when times are tough, humor goes a long way.”
Spending for the new campaign was not disclosed, though Carter said the ad budget for the Swiffer brand is on par with previous years. Swiffer spent $192 million on advertising last year (excluding online), per Nielsen Monitor-Plus, and $50 million through April this year.
by Laurie Sullivan, Monday, Jul 21, 2008 6:46 AM ET
Even as companies have begun to shell out more money to market products and services to reach consumers with tighter purse strings, their marketing departments are facing major hurdles to getting the job done, a new survey finds.
For one thing, the survey of nearly 400 Marketing Executives Networking Group (MENG) members suggests, more than 70% believe there is a shortage of qualified executive-level talent.
MENG President Richard Guha says companies are shifting employees from other areas into marketing or sitting on job vacancies. “I know companies that have not had a chief marketing officer for two years because they can’t find someone,” he says. “The alternative has been to rely on consultants.”
The financial and the energy sectors, which have not historically spent a lot of money to market consumer services, are stepping up efforts. Guha says many are not finding the marketing people with sufficient experience to execute plans. The electronics industry has also fallen on difficult times.
Many up-and-coming marketing professionals who would have been executives today were laid off in early 2000, following the burst of the dot-com bubble. Chase Norlin–CEO at video search engine Pixsy, who has served as senior business development executive at ValueClick–worked at an early YouTube-like startup, ShareYourWorld, founded in 1998.
Norlin says the sexy dot-coms attracted professionals into marketing, but when the bubble burst many returned to the industries they came from. “There’s always a shortage of the best marketing people, especially in tech,” he adds.
Guha says companies also have not considered the effects on the marketing industry as Baby Boomers retire.
MENG also partnered with Salary.com to survey marketing salary trends. It found salary parity despite 2006 U.S. Department of Labor statistics that show women made 66.5% of what men made in marketing executive jobs.
That’s the good news. But the average tenure of these executives is another thing.
“It’s disturbing that the average person these days is in a job for 2.5 years,” Guha says. “Very few people join a company saying in a year or two I’ll move on. It takes more than a year just to get familiar with the job and the company.”
Guha says marketing professionals get the least amount of time to learn a company business, and in many ways they need the most to fully understand the brand’s position. Too often, he says, companies bring on competent staff and don’t give them the time to figure out the business.
In most cases the executives are brought in to turn around a failing business. If the business doesn’t pick up, they are pushed out the door. “We know the average time a chief marketing officer spends in any position is 22 months, and the study suggests many marketing executives have just under eight jobs in about 18 years,” he says. “That’s quite horrifying.”
Laurie Sullivan can be reached at sullivan@mediapost.com.
Hybrids are easy on the environment and conservative on gas–a winning solution for easing pain at the pump. But there’s a catch: You may have to drive thousands of miles over several years before the savings on gas catch up to the extra expense of the car.
Of course, it all depends on which hybrid you buy, according to NADAguides.com, a vehicle pricing and information Web site, which last week announced the release of a study showing which hybrids earn their extra cost the fastest. The best cars only take a little more than a year. The worst take a bit longer. The 2008 Lexus LS600h sedan would take 1,390,850 miles to break even at Los Angeles gas prices ($4.59 per gallon). If you drive 15,000 miles per year, that’s 92.7 years.
“People buy hybrids because they want to save gas, make a small, individual impact on reducing the U.S. dependency on oil or make an individual impact on fuel emissions,” says Tara Baukus Mello, senior writer and lead market analyst for NADAguides.com. “But if you are looking to have an impact on your wallet, then buying a hybrid may not make the best financial sense.”
The best deal for a Los Angeles commuter is the $25,200 Toyota Camry hybrid that only costs $200 more than the gas-powered Camry XLE. The hybrid gets 34 mpg, and the gas model gets only 22 mpg. The owner of the hybrid breaks even after 18,292 miles. For Los Angles commuters who log 15,000 miles a year, that’s just a little over a year of driving.
Rounding out the top five hybrids with the shortest miles required to break even are No. 2 Chevrolet Malibu (32,206 miles), No. 3 Nissan Altima (37,580), No. 4 Toyota Prius (41,626) and at No. 5, the Honda Civic (57,216).
At the bottom of the list–but still the eighth most economic hybrid according to the NADAguides–is the Lexus RX400h. A Los Angeles commuter owning an RX400h and paying an average $4.59 a gallon to fill up the tank would have to drive 96,013 miles, or nearly 6.2 years at 15,000 miles a year before reaching the break-even point. A Lexus luxury hybrid SUV costs $4,180 more than the $37,400 RX350, the comparable gas-powered SUV. The only difference in combined EPA estimated fuel economy is 5 mpg; the RX400h gets 25 mpg, while the RX350 gets 20 mpg.
Behind the Numbers
NADAguides.com derived its list of hybrids that earn their cost the fastest by using EPA-estimated combined average fuel economy, current 2008 manufacturer suggested retail price for all vehicles, federal tax credits when applicable and regular unleaded per gallon gas prices for 10 metropolitan cities as of July 3 from the Energy Information Administration. Break-even points vary slightly in different parts of the country, depending on gas prices and how much driving commuters tend to do. The more time spent in the car with higher gas prices, the faster the hybrid earns out its extra cost.
Overall, California is the leading state for hybrid sales, according to R. L. Polk & Co., an automotive marketing and research company. In 2007, 26% of all hybrid registrations were in California. Los Angeles was the city in the NADAguides.com study with the shortest break-even time for hybrid owners, because drivers there spend more time on the road and have the highest gas prices ($4.59 a gallon as of July 3). Houston had the longest break-even time since drivers there commute shorter distances and have the lowest gas prices ($3.88 a gallon).
In an attempt to offset the higher premium paid for a hybrid, the federal government implemented a hybrid tax credit for up to $3,000. Once a manufacturer has sold 60,000 hybrid vehicles, the tax credit for buyers gradually phases out and eventually disappears. There are no tax credits on the Prius and Lexus hybrids as of Oct. 1, 2007; Toyota hit the 60,000 mark in 2006. Honda reached the 60,000 threshold in the third quarter of 2007. Buyers are eligible for lower tax credits through July 1, 2009.
In some instances, the tax credit offsets the premium paid for a hybrid, like the $23,640 Chevrolet Malibu that gets 27 mpg and costs $2,455 more than the gas-powered model that gets 20 mpg.
July 16, 2008
CHICAGO (AdAge.com) — Starbucks might have taken a hiatus from TV advertising, but it isn’t ruling out a comeback to pitch its new health-and-wellness platform, Vivanno Nourishing Blends, said Senior VP-Marketing Terry Davenport. In Los Angeles, Starbucks is also unveiling Sorbetto, a proprietary blend of ice, fruit and, in some cases, Pinkberry-inspired frozen yogurt blend.
They are one of many initiatives launched since CEO Howard Schultz retook the reins in January, aiming for a turnaround that industry experts say will take time. A rewards program is now in place, new espresso and specialized coffee machines are on the way to stores, healthier food and beverage options have begun to arrive and the recently launched Pike Place Roast has boosted drip coffee sales systemwide.
The company has also made an effort to listen to consumers, at MyStarbucksIdea.com, which Mr. Davenport calls a “suggestion box.” Some of the most popular requests have been for healthier food and lower prices. Starbucks responded to the latter last week with a host of regional promotions and discounts, once anathema to the brand.
Mr. Davenport, a former KFC marketer who joined Starbucks in 2006, was one of Howard Schultz’ few quick-fire promotions upon returning to the company. Mr. Davenport now oversees the coffee giant’s overall brand strategy. He talked to Ad Age about his upcoming plans.
Ad Age: With all of these new products coming out, should we expect another broadcast blitz?
Mr. Davenport: I don’t know, I think it depends. … When you’re introducing new platforms, raising awareness, generating trial and getting repeat, it’s more of a long-term investment. We’re looking at go-to market mix, and we’re open-minded about doing things differently.
Ad Age: Sorbetto is also launching this week, but only in Los Angeles. Why?
Mr. Davenport: It’s a product that might skew more regional, and it’s just a newer idea. Vivanno has been in the innovation stream almost a year now and the Sorbetto was an idea that really just got started in January and February and we’ve been fast-tracking it — a lot of people in this building might say exceedingly fast — to get it into the U.S. market this week.
Ad Age: Sorbetto is one of a handful of ideas that came from a trend-spotting trip to Italy last winter, right?
Mr. Davenport: Sorbetto we saw from a couple of different angles in Italy. As we brought it back, everybody got incredibly enthusiastic about it. It’s different from anything else that’s out there. The texture and flavor profile would have a unique and distinctive usage occasion for our customer. And in Italy, products like that have really become part of the coffeehouse culture.
Ad Age: There’s been a lot of talk about your logo lately. A number of consumers were confused by the old brown logo’s return, and a handful were offended. Was that a mistake?
Mr. Davenport: I would say that probably was the plan, to take something that might be a daily routine and suddenly it gets disrupted in some way. Some people liked it and some didn’t like it, but the hope was that it would spark some conversation about the coffee.
Ad Age: But why do it with the cup?
Mr. Davenport: It’s one of the best marketing tools we have because it not only walks around the streets but it’s handed from our partners to our customers — and the connection and opportunities to have that first impression is what the Starbucks experience is all about.
Amid a softening upscale hotel market in the U.S., Starwood is launching its first branding campaign for its Luxury Collection Hotels & Resorts. The portfolio includes 65 of the world’s finest resorts in 26 countries.
Print ads, breaking in August magazines, tell affluent consumers “Life is a collection of experiences. Let us be your guide.” Bora Bora, Italy and popular North American scenery are shown in three separate ads. Atmosphere BBDO, New York, handles.
The move comes at a time when the luxury hotel segment is experiencing some unforeseen softness. Smith Travel Research, Hendersonville, Tenn., which tracks hotel performance, earlier this year forecasted “that luxury hotels would be able to maintain pricing power well above the level of inflation,” said vp Jan Freitag. However this prediction hasn’t held true.
Through May, the average daily rate at U.S. luxury hotels increased 3.2% (or roughly at the same rate as inflation). This is a steep drop from December’s 6.9% rate. “Luxury hotels had a very good couple of years. We were suggesting that would continue,” Freitag said. “The pricing power we had suggested is not as strong year-to-date.”
Occupancy is down 1.6%, but that is more of a function of increased inventory, he said.
Still, Phil McAverty, chief brand officer at Starwood Hotels & Resorts, New York, said in a statement, “For today’s affluent global explorer, the Luxury Collection is the curator of extra ordinary destination experiences where nothing less than an exceptional level of service, perfect location and indigenous personal offerings will do.”
A new Luxurycollection.com site was launched July 8 to convey this message. It offers expert travel advice, photography from the National Geographic Image Collection and global cultural calendar so travelers know what events are happening where.
By Katie Benner, writer
July 13, 2008: 6:33 PM EDT
NEW YORK (Fortune) — They own or guarantee $5 trillion worth of mortgages - nearly half of all the country’s outstanding home loan debt - and they’re crashing. But not everybody is convinced they should be.
Fannie Mae and Freddie Mac are struggling with an investor loss of confidence so great that, while they’re unlikely to go under, they could conceivably see their ability to function impaired. That would wreak yet more havoc on an already wrecked housing market - making loans tougher to come by and possibly pushing hundreds of billions of dollars in cost onto U.S. taxpayers.
The extent of their troubles is in debate. Several analysts and a former Federal Reserve governor have said the two companies desperately need to raise money to continue their business of buying and guaranteeing home mortgages.
Others, including Fannie and Freddie, their regulators, some Wall Street analysts, and Sen. Christopher Dodd, D - Conn., the chairman of the Senate Banking Committee, have defended the strength of the two companies.
“What’s important are facts - and the facts are that Fannie and Freddie are in sound situation,” Dodd said on CNN’s Late Edition on Sunday. “They have more than adequate capital. They’re in good shape. The chairman of the Federal Reserve has said as much. The Secretary of the Treasury has said as much.”
The Treasury Dept. and the Federal Reserve on Sunday outlined plans that would provide capital to Fannie and Freddie if it were needed.
By Scott Moritz, writer
July 11, 2008: 11:19 PM EDT
NEW YORK (Fortune) — The new Apple iPhone went on sale Friday morning, but early reports of software problems overshadowed the debut of the faster, cheaper device.
As eager buyers flocked to Apple stores, news sites chronicled reports that Apple’s iTunes store was struggling with a massive outage that prevented buyers from activating their phones.
Apple’s new iPhone is built on third-generation, or 3G, technology that is speedier than the original iPhone’s network.
As Fortune.com first reported, AT&T, the iPhone’s exclusive carrier in the United States, cut the price of the iPhone in half: an 8-GB model sells for $199, or $200 less than the original iPhone. A 16-GB version costs $299.
The Apple Store on New York City’s tony Fifth Avenue, which drew a crowd of 150 people just after 5:00 a.m. ET, was moving customers through the line in about 10 minutes per customer when the doors opened at 8:00 a.m., according to Fortune’s Philip Elmer-DeWitt.
High expectations
But problems soon appeared. Elmer-DeWitt, who live-blogged from the store, was one of the first to report difficulty setting up his new phone. Eventually he was told, along with other customers, to go home and try to activate his device later.
Elmer-DeWitt was able to get his phone to work about three hours after his purchase. By early afternoon, there were more anecdotal reports online of users completing the activation process.
The system crash affected buyers throughout the 21countries where the new iPhone debuted Friday. Owners of the original iPhone and the iPod touch looking to upgrade their software were also hobbled by the breakdown.
(Fortune Magazine) — Doug Buchanan grins with relief when he sees the carcasses. He has just driven up a steep dirt road onto a vast, sunbaked mesa overlooking the Mojave Desert in western Nevada. There, a few feet from the trail, lie the corpses of two steers. A raven perches on one, the only object more than three feet above the ground on this pancake-flat plateau. Cattle, dead or alive, qualify as good news in Buchanan’s line of work. If cattle are present, that means grazing is permitted, and that in turn means that this land is most likely not protected habitat for the desert tortoise.
Buchanan, 53, is scouting sites for a solar power company called BrightSource Energy, an Oakland-based startup backed by Google (GOOG, Fortune 500) and Morgan Stanley (MS, Fortune 500). The blunt, fifth-generation Californian, who used to survey the same area for natural-gas power sites, knows that the presence of an endangered species such as the tortoise could derail BrightSource’s plans to build a multibillion-dollar solar energy plant on the mesa.
BrightSource badly wants these 20 square miles of federal land on what is called Mormon Mesa. The company was in such a hurry to stake its claim with the U.S. Bureau of Land Management that it applied for a lease sight unseen. That’s an expensive gamble for a startup, given that application fees alone run in the six figures. “I usually like to go out and kick the tires before filing a claim,” Buchanan says, “but there’s a lot of competitive pressure these days to move fast.”
That’s putting it mildly. A solar land rush is rolling across the desert Southwest. Goldman Sachs, utilities PG&E and FPL, Silicon Valley startups, Israeli and German solar firms, Chevron, speculators - all are scrambling to lock up hundreds of thousands of acres of long-worthless land now coveted as sites for solar power plants.
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