Archive for March 7, 2005

Attending

I shall be in Chicago next week for the WOMMA Summit (Word of Mouth Marketing Assoc)

Hope to bring back lots of good information – let me know if you would like to get a personal debrief.

Speaking

And speaking at the Ideas Marketing Summit in Singapore 12 – 14th April. Should be a good event with many interesting speakers from Australia and the region

Ideas Marketing Summit website here, 

Ideas Marketing Summit Conference program here

How Dietrich Mateschitz turned Red Bull into a cult tipple

This great piece  (I love the Economist) is the real story behind Red Bull.

I especially love this quote "What Red Bull showed, according to Nancy Koehn, a historian of brands at Harvard Business School, is that mass-market advertising was not the most effective way to reach and keep customers."

 
Just to give you a sense of scale and the explosive growth … in 2002 Red Bull sold 1.6 billion cans in 62 countries, an increase of 80% over 2000.

Update: 2003 figs (the latest available – 2003 Revenue US$1.6bn, Growth 64%, Number of Employees 1,850.

And in the sincerest form of a complement, other companies (Coca-Cola, PepsiCo and Anheuser-Busch ) are now trying to copy Red Bull and launch energy drinks

However rational we are, there is always the little voice of our gut feel.  Typically its the result of experience and it leads us to make good choices.  Sometimes, often when we have had no way to experience something it can mislead us.

Here are two, trivial but illustrative, examples where the results surprise us, indicating that our natural gut feel is wrong.  Both relate to assessing what reach is possible for a word of mouth message

• Just how interconnected are we?
• How the maths works – technically multiplicative expansion

Interconnectivity

WARNING before you try this, it is adictive.

The 6 Degrees of Kevin Bacon - The Oracle of Bacon at Virginia

Type in the name of any film actor, however obscure, and this tool will find how to link them to Kevin Bacon. I could not find an actor with a Bacon Number (distance from Mr Bacon) with more than 2 – I tried Bruce Lee, Charles Chaplin, Chow Yuan Fat and many others. Let me know if you find a 3 or a 4.

Challenge – I’ll send (via The Grotto) a bottle of Champaign the 1st first person to find 5 or a 6

Interconnectivity

1967, the social psychologist Stanley Milgram did the seminal study from which he proposed that we can all be connected by just six links. Back in those days this had to be done by snail mail. This study has been re-run (by Columbia University’s dept of sociology) using email and hence at much larger scale (over 60,000 people participated) A full description can be found here

The results as published in "Science" are amazing.

(just noticed you have to register (for free) to read the article)

In summary

• 61,168 people took part – making it statistically solid
• they were asked to get a message to 18 selected targets spread over 13 countries(a professor at an Ivy League university, an archival inspector in Estonia, a technology consultant in India, a policeman in Australia, and a veterinarian in the Norwegian army)
• they created 24,163 chains
• 384 messages were successfully delivered to the targets
• It took approx 4 links to get the messages to the targets in the successful chains
• Adjusted to a real word scenario this equates to a chain length of approx 7
• All the 18 target people received their messages showing their location did not matter

Multiplicative expansion

Simple question – if you fold a piece of paper in half 50 times, how thick will it become? Dont sneak a look and simply choose the answer based on your gut feel

1. as thick a telephone book
2. as tall as a refrigerator
3. as tall as the empire state building
4. as tall as from the earth to the moon
5. as tall as from the earth to the sun

scroll down for the answer

The answer:
5. Here to the sun – even when we know the answer, it feels amazing, showing that in general we underestimate the end result of one person telling 2 who tell 2 who tell 2 …

Deutsche Bank Study Cites Wasted Brand Spending May 24, 2004

The whole article can be found at AdAge here

It seems that it is premium content so they ask you to pay a few $s to read it; but its an interesting article so well worth it.

(Update: Just found the whole article posted on a free to read site . Thank you The Marketing Organisation of New Zealand)

Here are a few choice quotes from the article

CINCINNATI (AdAge.com) — TV advertising doesn’t work for most mature package-goods brands, and the industry’s increase in ad spending over the past three years has accelerated waste, concludes a sure-to-be-controversial Deutsche Bank report.

The study, released on the eve of the TV buying upfront, examined 23 household, personal-care, food and beverage brands using customized marketing-mix analysis from Information Resources Inc. It found only 18% generated a positive return on investment (ROI) in the short term (a year or less) from TV advertising. Less than half (45%) saw their TV investment pay off long term.

"I think the marketing line is going to be the next cost bucket all these companies look at," said analyst Andrew Shore, who authored the report. "For the past 50 years, the media industry has been extracting a sort of value-added tax from [package-goods] companies. And right now I think they’re in the early throes of this revolution saying … ‘It’s not working anymore.’ "

Mr. Shore attributed most package-good brands getting poor returns in large part to the rising cost of TV combined with declining and fragmented viewership and lack of adequate measurement systems, such as commercial ratings.

Indeed, that was the theme of a speech by Procter & Gamble Co. Global Marketing Officer Jim Stengel to the American Association of Advertising Agencies Media

David Poltrack, executive vice president of research and planning for Viacom’s CBS, said the Deutsche Bank findings are similar to those of "How Advertising Works" studies of the 1980s and early 1990s that the TV industry commissioned with IRI, noting that TV ROIs are lower for mature brands and declining categories.

Managed to get some peace and quiet while my 2 month old son slept, and found this great HBR article

The headline para for it reads

Is there any way marketing executives can harness the power of word-of-mouth promotion? The answer is yes. In this excerpt from the Harvard Business Review, strategy consultant Renée Dye dissects one big fallacy of buzz — the notion that "only outrageous or edgy products are buzz-worthy."

Welcome to the club Renee – indeed the more mundane the product, the more creative we have to be to develop a message that will be interesting enough to spread!