The Future Place Blog

Which Western brands are hot in China?

CNet has and interesting article about the brands that are seen as hot (to own or work for) in China, based on the views of their China staff. Many of the views emphasise how the flat the world has become. The list of big brands and the views about them could come from anywhere: Sony (nice but expensive), Apple (love the iPod), Microsoft (hate the company, use the MSN), Dell (used to be good, but now service poor and what about those batteries), IBM (boring).

In fact, it was the few differences that were reported that made the article more interesting. YouTube, not a great success, it is not in Chinese, and there are plenty of video sites. Yahoo is marginal and Google has a much smaller share – one of the reasons is the strength of Baidu (Wikipedia link here). Baidu is a China based search engine, which is particularly strong at searching MP3 files. I checked on Alexa and Baidu is ranked 7th globally, the highest non-US site, one behine MySpace and two ahead of Wikipedia.

Jack of all trades, master of none

Seth Godin's blog highlights the excerpt below. One of the key things for anybody is to learn how to prioritise.

Old news on the front page

The Economist this week has a great article about an academic study looking at the financial performance of companies that appear on the front page of three leading business magazines: Business Week, Fortune and Forbes. The study looked at 549 cover pages, categorising the stories as very positive, very negative, or neutral. The research found that there were many more positive stories than negative, perhaps for fear of legal ramifications, or even because of fear about losses in advertising revenue?

The study found that in the 500 days before the story appeared, companies with a positive story had over-performed the index by 43%, whilst those with a negative story had under-performed by 35% in the 500 days leading up to the date of the story.

However, when the researchers looked at the following 500 days they found those with a negative story over-performed by 12%, and those with a positive story over-performed by 4%. The difference between the two numbers was not significant. What was interesting, however, was that the period of over-performance and under-performance was largely over by the time the cover story was printed.

In a similar vein the article reported analysis presented by Bill Miller, a fund manager at Legg Mason. He showed that the performance of ‘uncommon stock’ tipped by Lehman Brothers sometimes beat the market and sometimes lost, in the 12 months after they were tipped, but almost always beat the market in the 12 months before they were tipped.

The Economist highlighted the problem as ‘recency bias’, the tendency of people to assume that recent trends will continue in the future. This bias is ever present in market research situations. When we scope the research, when we create the questionnaire, when we analyse the results we need to guard against this temptation, particularly in a world where change is happening faster and faster.

The academic research referenced by the Economist was “Are Cover Stories Effective Contrarian Indicators?”, by tom Arnold, John Earl and David North in Financial Analysts Journal, Volume 53, No.2.

Niche brands need niche marketing, but mass brands still need mass marketing

That is the conclusion in Nigel Hollis’s recent blog. Whilst he accepts that brands like lowermybills.com and even Ben Sherman can profit from niche marketing, he contends that major brands such as P&G, Kraft and HP need to use mass (i.e. TV) advertising. His main point being that new media channels simply do not reach enough people on their own.

One of the interesting factors that Nigel highlights is the different standards of success and failure that different channels are currently being held to. A YouTube upload that is viewed 100,000 times is usually considered a success. By contrast “NBC’s Studio 60 on the Sunset Strip or [CBS’s]  Smith, which was the first cancellation of the fall TV season, are branded as failures even though they generated nearly 10 million viewers a week and are supported by advertising.” he says.

Nigel is certainly not a refusenik when it comes to new media, and highlights that one of the problems with conventional mass media is its declining value for money, which he considers to be a bigger issue than its declining reach.

Nigel also highlights the slide below from SlideShare which both highlights the current dominance of TV and the extent to which new media have arrived on the scene.

For non-UK readers ITV and C4 are the largest two UK TV channels that carry advertising (the BBC does not carry advertising).

The Future is Digital

BusinessWeek has conducted a survey amongst the 121 judges who were deciding the Effie Awards (a prize awarded by the New York American Marketing Association). Although their sample was small, it was very influential, including top marketing executives from Kraft, Home Depot, Pepsi, Yahoo, and agency execs from the likes of Leo Burnett and Ogilvy and Mather.

A slide show of the key results is here.

The things I found particularly interesting were:

• Amongst the clients, 46% had created YouTube videos, 28% had blogs, 23% had a MySpace profile, and 13% had a Second Life presence.
• When asked which brands had come the furthest in past year in terms of positive brand position the top brand was Apple with 16 votes, then Google with 12, then YouTube with 7 and Dove with 7.
• When asked which brands face the biggest challenges in the next year the top mention was JetBlue (a US low cost airline) with 29 votes, Taco Bell with 11, Ford with 10, and GM with 8.
• Asked to name the buzzwords they were most sick of (which I interpret as being the most impactful) the top one was Buzz 11 votes, User Generated Content with 9, and Viral with 9.
• Asked which buzzwords they will be sick of next year (which I interpret as the big themes for the next few months) they said: User Generated Content 15 votes and Second Life 7 votes.

What do these highlights and the other findings tell us? The trend is towards online, brand in the ascendancy are either wired or great users of new media. The Web 2.0 bandwagon has certainly got legs for at least another year.

Free Photocopies for Students

Springwise has a really interesting post about a Japanese company that is offering a free photocopying service to students. The service is paid for by selling ads on the reverse side of the paper. The paper is a little thicker than usual paper to ensure the ad is not visible through the paper.

The company running the idea, Tadcopy, was set up and created by students. This is a really good example of how traditional models of who pays for what are being challenged.

The service being offered is an example of what www.trendwatching.com call “Free Love”. Trend watching have a spectrum, they call hygenia which runs from Free Love, through Cheap Heaps, and No Frills Chic, to Mass Class and Massclusivity and finishes with Uber Premium.

Umbrella Vending Machines

Springwise report on 6 vending machines in Singapore which sell umbrellas (and it seems they also exist in the UK). The umbrellas sell for 3 Euro, which seems pretty reasonable. Evidently the company behind the vending machines, Uport, is looking for funding to expand into Hong Kong, Taiwan, and China.

Every time I see an article like this I start to wonder about the competing consumer demand issues and supply side issues that determine which products are sold in vending machines and which are not. My guess is that the economies are not that great.

Music as the hook, not the product

Chris Anderson’s Long Tail blog has a thought provoking article where he puts forward the proposition that many bands may be better off giving their music away (via downloads) and making their money from live appearances.

Anderson starts off by reminding readers that the marginal costs of production and distribution are close to zero for music, something which Anderson has termed the economics of abundance. Revenues from legal downloads are growing, but they are not compensating for the drop in CD sales. By contrast the prices of tickets for live performances have been growing. Anderson quotes the average US major gig ticket in 2006 as $61, up 8% on the year before.

Anderson collects various other stats to back up his argument. For example, the share of music revenue accounted by live performances in North America was at an all time high in 2006, at 16% of the total or $3.6 billion.

Anderson also pointed out that 92% of the Rolling Stones revenue comes from touring, not from record sales.

So, live music might be part of the answer for bands, with downloaded music, at marginal prices or even free, becomes a method for creating the demand for live music. One group of people do not care for this vision of the future. Generally, the labels make their money from record sales not from live performances.

Things may not turn out as Anderson predicts, but his article does ask questions that need answering, and highlights the need for marketers to keep re-evaluating what is the market (just as manufacturers of computer printers changed the profit stream from the printer to the consumables).

Social Media and Marketing

Clickz and WOMMA both report that research firm Compete has released an interesting report into the people who use social networking sites such as MySpace and their use of e-commerce.

Amongst the items reported is a section on why people join social networks. 78% of people join networks to meet people, 47% for entertainment, 38% to learn something new, but 23% (nearly a quarter) say they join social networks to influence people. This finding has lots of implications for people trying to use brand forums to understand more about consumers and to create a co-creation environment. The forum needs to ensure it is a vehicle for people to meet people, but it probably needs to be very strong on providing a sense of making a difference and of providing information not available elsewhere.

The report suggests that users of social networks have higher disposable incomes and that they spend more online that other internet users. The report refers to social network users as ‘socialites’ and highlights that they consume/view less traditional media and are more likely to say that peers and colleagues influence their decisions. I think the term socialites is a poor choice as it traditionally refers to a minority who are seen as fashionable and who work less and are privileged - the lesson at the moment about social networks is that they are for the majority, not the minority, something like 70% of 18-24 year olds in developed countries use social networks.

The report from Compete tries to launch the term “s-commerce”, i.e. e-commerce through social networks, I am not sure this is a viable addition to the list of specialist phrases!

The report was released in October, and Clickz picked it up at the time, but others (including me) have been a bit slower in spotting it.

The Web is becoming the dominant advertising medium

Joe Mandese has posted a story on MediaPost based on GroupM’s “This Year Next Year Worldwide” (GroupM is the holding company for WPP’s media buying and planning companies). The report highlights several useful facts, and several interesting forecasts.

Worldwide in 2006, the dominant advertising medium is expected to be TV, accounting for  56% of the 2006 increase in revenues. The Internet is second, with 21% of the 2006 increase. The report also says that in the US and the developed markets the Internet is already the dominant medium, accounting for 37% of the 2006 increase, whilst TV will account for 33%.

Simply looking at revenues tends to understate the changes going on in advertising and marketing. Internet advertising is expanding, it is cheaper than alternatives, and it is getting cheaper. So, as advertising and marketing activity is transferred from conventional formats to the web it reduces the cost. The net effect is that whilst activity continues to rise faster than growth in GDP, this rise in advertising and marketing expenditure is increasing at a rate slower than would be expected. A good example of this is direct marketing in Europe, where despite a growth in the amount of marketing there has been no growth in expenditure.