Search Consolidation Puts on the Brakes

Barry Diller, the chief executive of InterActiveCorp, is giving serious thought to getting out of the search business. Apparently he is open to selling Ask.com—which currently grasps a weak 2% share of the US search market.

According to our 2009 Customer Loyalty Engagement Index, Ask ranks 6th, which may explain a lot about its levels of engagement and usage. Overall rankings look like this:

1. Google
2. Yahoo/Bing
3. AOL
4. MSN
5. Netscape
6. Ask
7. AltaVista

Consolidation in the online search category is already underway, and that could end up being Ask’s fate. After all, Yahoo! has already agreed to farm out its search business to Microsoft (an easy way for Microsoft to pick up more market share), but search engine business consolidation is intertwined and complex, is likely not going to rev up in the near future, especially given customer loyalty levels.

But the search highway looks like this: Ask uses its own search engine for results, but relies on Google to supply ads. Microsoft and Yahoo are unlikely to want to add a third partner so soon after their partial merger, and Google has no real use for Ask.com's capabilities.

So Ask searches for options. But ultimately it seems just another case of engine failure.



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Go Yankees! Or Phillies!

Player/Coach Tommy Lasorda once opined “There are three types of baseball players: those who make it happen, those who watch it happen, and those who wonder what happens.” But player or fan, everyone knows what happened Sunday night. After a six-year wait the Yankees conquered the LA Angels and are back in the World Series business.

It’s the 40th pennant for the Yankees, so you’d figure their odds of winning a World Series would be pretty good. But that’s just sports. Winning fan loyalty, on the other hand, is a little different. Oh, don’t misunderstand us. Winning matters, but only to the degree that it reinforces one of the critical four sports fan loyalty drivers. In this case that’s the “Pure Entertainment” driver.

Sure, winning is important. And it’s never just a game when you’re winning, but a team’s win-loss ratio is only one component of the “Pure Entertainment” driver, that win-loss ratio making a 25% contribution to real loyalty when it comes to entertaining the crowd. How a team plays (whether they win or lose) is an important component too. “Pure Entertainment” gets a lot of media attention but is only one of four loyalty drivers that define how – and to what extent – a sports fan becomes a loyal sports fan. And there’s a difference.

Fans watch the games. Or don’t watch the games. Loyal fans always watch the games – or least to the extent of six times more than just someone who “follows baseball.” Real fans are also 6 times more likely to buy licensed team merchandise, which is still a big business, even in this economy.

The other drivers are “Authenticity” (Do they play like a team, or as Hal Steinbrenner said of the Yankees, “ . . . they really care about each other. They are a family. . . they support each other.” And what’s the Manager like counts too), “Fan Bonding” (are there players like Derek Jeter with whom a real emotional bond is established?), and finally “History and Tradition,” the ultimate loyalty driver. If you watch baseball (or any other major league sport) sitting with 3 generations of Yankee or Phillies fans, watching the game wearing team shirts and hats, you’ll have an understanding of precisely how that driver resonates.

So how do the Yankees and Phillies stack up in terms of fan loyalty? For that answer we looked to our 2009 Brand Keys Sports Fan Loyalty Index, a scorecard of all the teams in the MLB, NFL, NBA, and NHL. Well, on an overall basis the Phillies were #2. That has a lot to do with what the season was like last year. The Yankees were #3. Rankings for the top and bottom-5 in all the leagues can be found on our website at http://www.brandkeys.com/awards/sports.cfm

Assessments are indexed against a benchmark of 100, so higher is better, just like sports scores. These assessments correlate very highly with TV viewership, merchandise purchase, and heart rates!


Phillies

Pure Entertainment: 131
Authenticity: 116
Fan Bonding: 111
History & Tradition: 119


Yankees

Pure Entertainment: 110
Authenticity: 110
Fan Bonding: 116
History & Tradition: 130


So will “History and Tradition” win out over “Pure Entertainment?” Will "Authenticity" score big against “Fan Bonding?” Tomorrow’s game will give some indication of the sports record’s outcome, but that’s mostly all down to the managers and players.

But in sports marketing and TV and licensing deals it all comes down to loyalty and when it comes to loyalty it all comes down to the fans, and you’ve got to manage those fans carefully. Because you know what the great Yogi Berra said about fans? “If the fans don’t come out to the ball park, you can’t stop them!”



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Listening to a Billion Consumers

Windows 7, the latest version of Microsoft Windows, a series of operating systems for use on personal computers, was released today less than three years after the release of its much-denigrated predecessor, Windows Vista.

With the official launch currently underway around the globe, Microsoft has released four new advertisements to market Windows 7. This round of advertisements is very direct and dubbed 7-Second Demos, with the theme “I’m a PC and Windows 7 was my idea,” an extension of the “I’m a PC” campaign, having consumers take credit for “developing” various aspects of the new operating system.

We cannot comment upon whether Windows 7 will live up to promises and expectations, but we think that the concept of a billion consumers co-creating the product, is a wonderful example of meaningfully leveraging the real voice-of-the-consumer, an often overused advertising expression.

Lots of companies – especially big companies like Microsoft – do all kinds of research. Most of that research ends up providing excellent answers to meaningless questions, and virtually none reflect the real voice or expectations of the consumer. Check out the new GM campaign if you doubt us. And while a product positioning approach of “we not only hear you but we’ve listened to you” isn’t new, it’s usually the small niche brands that do it well.

And it shouldn’t be surprising that it’s Microsoft who’s doing it now. After all it was Bill Gates who pointed out this strategy back in 2000, in his book “Business @The Speed of Thought.” “Your most unhappy customers are your greatest source of learning.”

And perhaps a meaningful voice for the brand.



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The 2009 Brand Keys Loyalty Leaders List: 63 Categories, 440 Brands. Guess Who’s Last?

First, the good news for us brand investors: iPhone, Samsung, and Blackberry accounted for a third of 2009’s top-10 Loyalty Leaders, with the next third represented by cosmetic brands like Mary Kay, Maybelline, Estee Lauder, Clinique, and Lancôme. When it came to the most powerful brands overall in terms of loyalty, the award goes to Google, Wal-Mart, Grey Goose, Mary Kay, Avis, Apple, and Amazon.com.

Customer values intrinsic to technology brands were seen to best meet, and even exceed, customer expectations for their categories, and the ‘emotional engagement’ that women share with their favorite beauty brands is still very powerful. And loyalty – a leading-indicator of consumer behavior and profitability and a proxy for real emotional bonding – has become more and more important, especially at a time when many brands are turning into commoditized category placeholders.

Wal-Mart and J. Crew (taking two places, one for apparel retail the other for clothing catalogues) posted strong numbers among the retailers, but car brands ran out of gas. Only two auto brands showed in the top-25: Toyota, a perennial loyalty leader, and Hyundai, which moved up from #295 on the last year’s list to #24 this year—an increase in loyalty largely due to massively improved product quality, and it’s emotionally resonating ‘Assurance’ campaign: a one-year promise to buy back Hyundais from any customer who became unemployed.

McDonald’s perked up loyalty and profits with an enormous increase in the Coffee category, moving from #156 last year to #16, and mostly to Starbucks detriment. Ranked #191 on the 2008 Loyalty Leaders List, the once-invincible Starbucks now ranks #428, in the bottom dozen brands—a move that tracks exactly with decreases in same-store sales and profitability.

Some segments have, of course, suffered because of the economy, but brands that understand that the old ‘price-value’ equation has been transformed to a ‘value-for-dollar’ assessment, will have also realized that the brand can have meaning and can act as a surrogate for value. For a list of complete 2009 rankings – who got it right and who still can’t figure it out – we invite you to visit http://www.brandkeys.com/awards/leaders.cfm

Much to the dismay of the bailer-out’ers of our great nation, General Motors clearly didn’t get that memo and ranked last.

GM might want to start with doing more than investing in a big string section in their advertising, and doing some meaningful branding. Because when it comes to engendering loyalty, meaning is what sets us apart from other life forms – or at least the ones with driver’s licenses.



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Running Against Global Warming

Blog Action Day is an annual event that unites the world's bloggers in posting about the same issue on the same day on their own blogs. The aim is to get discussions started around an issue of global importance. One day. One issue. This year the topic is “climate change.”

Brand Keys is able to identify how issues like climate change impact the way consumers view categories. We see changes in what drives engagement and loyalty usually 12 to 18 months before they show up on traditional research radar screens or are actually articulated in focus group discussions. One of the earliest shifts dealing with the environment showed up in the Athletic Shoe category five years ago. One of the category’s drivers – previously labeled “Manufacturing and Materials” – morphed into (no pun intended) “Carbon Footprint.”

We note that this was shortly after Nike joined Climate Savers in 2001 and set a target of reducing greenhouse gas emissions by 13% from Nike-owned operations and business travel. Nike achieved those reductions via energy efficiency projects and the purchase of green power, including the installation of 6 wind turbines. Nike also completed its goal of measuring the greenhouse gas emissions from its contracted manufacturing and shipping operations. Nike offset business travel carbon dioxide emissions through partnerships with air carriers and car rental companies.

OK, there’s always room for more action, but one needs to start someplace. For the athletic shoe category Carbon Footprint driver, here’s how consumers rank other athletic shoe brands:

1. Nike
2. Air Jordan
3. Adidas
4. New Balance/Reebok
5. Fila
6. Sketchers

You’ll have to check with you own brand to see whether these rankings are perception or reality. But the potential for global climate change is frighteningly real and has never been more present. The most dangerous changes may still be avoided if both consumer and corporations alter our hydrocarbon based energy systems and initiate balanced and adequately financed programs to forestall the coming disaster.

So consumers and corporations both would be wise to follow Nike’s own admonition: Just do it!



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Meaning + Style = Fashion Choice

We were interviewed by a French fashion magazine about the influence the TV show "Mad Men" has had on how men dress: slimmer cuts and thin-lapeled suits, skinny ties, subdued colors, but generally a more adult and masculine style.

It’s attracted attention from consumers and fashion designers, clothing retailers, and even hotels. Banana Republic launched a line of Mad Men-inspired clothing. Theory re-branded its space at Bloomingdale's with "Mad Men" paraphernalia. Hilton introduced a "Live Like a Mad Man Sweepstakes" that includes two round trip tickets to NYC, 4 days at The Waldorf Astoria, one Mad Men wardrobe item, (like Don Draper’s fedora), a Mad Men Guide to New York, an autographed script, a DVD collection, and gift cards for Mad Men inspired locations so they can be wined and dined like a real Sterling Cooper client. They’ll also look the part after being styled by a show stylist.

But it isn’t just the clothing’s style that’s creating the appeal. Narrow lapels, thin ties, and fedoras have been available in the marketplace for a while for those willing to take the time to look.

No, it’s something that is often missing from fashion – and that’s some sense of “meaning.” The show literally provides a context for the clothing and, thus, imbues the clothing with something more than the style itself. It doesn’t happen all the time, but over decades, TV shows and movies have played a primary role in providing a context and adding meaning to style, directly affecting people's fashion choices. So Mad Men isn’t the first entertainment vehicle to instill meaning to style.

In the 1977 Woody Allen film, "Annie Hall," Diane Keaton wore baggy pants, dress shirts, a vest and tie, which led women to adopt a masculine preppy look still with us.

"Who Wants to Be a Millionaire," featured host Regis Philbin wearing a monochromatic shirt-and-tie set, which launched a popular line of shirts and ties from Van Heusen.

John Travolta's white polyester suit in "Saturday Night Fever" rejuvenated the disco craze in the late ‘70’s that gave permission for men to wear crotch-hugging pants, chest-baring shirts, and large medallion jewelry.

The TV series "Miami Vice’s" lightweight fabrics and pastel colors proved a hit on television and in the stores. Don Johnson's signature look of the tee-shirt, suit jacket, linen pants and shoes worn without socks has become an established look.

The film "Flashdance" made activewear – like a ripped sweatshirt worn off one shoulder, tight leggings and leg warmers – a sexy (and acceptable) look for women.

And finally, the mother of all fashion trendsetters, "Sex and the City": the HBO series, which ran for 6 years and spawned a 2008 movie (with another to come), literally created the stilettos and denim look, and became a fashion that millions of viewers would follow, along with brands like Manolo Blahnik and Jimmy Choo.

Gilda Radner once joked that she based most of her fashion sense on what didn’t itch, but the truth is that style is just a word until someone or something comes along and give it meaning.



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Is a Mona Lisa Extra Value Meal In France’s Future?

Celebrating its 30th anniversary in France, a new McDonald's will be installed in December in the Carrousel du Louvre food court, an underground mall that adjoins the museum. Some think it’s going to be a great coupling; the world's most visited museum and McDonald's top market outside the United States.

In fact, according to our Customer Loyalty Engagement Index, McDonald’s ranks #1 in the Quick-Serve Restaurant category that according to our most recent update looks like this:

1. McDonald’s
2. Subway
3. Quiznos
4. Burger King
5. KFC
6. Wendy’s
7. Hardee’s
8. Jack in the Box/Taco Bell

But in France and other countries and cultures, McDonald's is symbolic of US ethos, globalization, and a homogenization of cultures, so not everybody is happy.

No comment was offered by the Louvre about the arrival of its new neighbor (the mall adjoins the museum but is privately owned) but the mixing of French fries and French art are raising some hackles in France, with some calling the incursion the “Disneylandization” of French culture and cuisine.

Of course, it has been pointed out that one of the glories of visiting foreign lands is the local ethnic cuisine. It’s fair to say that in today’s world when it comes to food, only McDonald's is the great equalizer.



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10:10 Brand and Marketing Trends for 2010

Niels Bohr once noted that “prediction is very difficult, especially about the future,” but then he didn’t have access to predictive loyalty metrics. Happily, Brand Keys does. And as they measure the direction and velocity of consumer values 12 to 18 months in advance of the marketplace and consumer articulations of category needs and expectations, they identify future trends with uncanny accuracy.

Having examined these measures, we offer up ten trends for marketers in 2010 that will have direct consequences to the success – or failure – of next year’s branding and marketing efforts.

1) Value is the new black

Excessive spending, even on sale items, will continue to be replaced by a reason-to-buy at all. This is trouble for brands with no authentic meaning, whether high-end or low.

2) Brands increasingly a surrogate for “value”

What makes goods and services valuable will increasingly be what’s wrapped up in the brand and what it stands for. Why J Crew instead of The Gap? J Crew stands for a new era in careful chic—being smart and stylish. And the first family’s support of the brand doesn’t hurt either.

3) Brand differentiation is Brand Value

The unique meaning of a brand will increase in importance as generic features continue to plague the brand landscape. Awareness as a meaningful market force has long been obsolete, and differentiation will be critical for success—meaning sales and profitability.

4) “Because I Said So” is so over

Brand values can be established as a brand identity, but they must believably exist in the mind of the consumer. A brand can’t just say it stands for something and make it so. The consumer will decide, making it more important than ever for a brand to have measures of authenticity that will aid in brand differentiation and consumer engagement.

5) Consumer expectations are growing

Brands are barely keeping up with consumer expectations now. Every day consumers adopt and devour the latest technologies and innovations, and only hunger for more. Smarter marketers will identify and capitalize on unmet expectations. Those brands that understand where the strongest expectations exist will be the brands that survive – and prosper.

6) Old tricks don’t work/won’t work

In case your brand didn’t get the memo here it is: consumers are on to brands trying to play their emotions for profit. In the wake of the financial debacle of this past year, people are more aware then ever of the hollowness of bank ads that claim “we’re all in this together” when those same banks have rescinded their credit and turned their retirement plan into case studies. The same is true for insincere celebrity pairings: think Seinfeld & Microsoft or Tiger Woods & Buick. Celebrity values and brand values need to be in concert, like Tiger Woods & Accenture. That’s authenticity.

7) They won’t need to know you to love you.

As the buying space becomes even more online-driven and International (and uncontrolled by brands and corporations), front-end awareness will become less important. A brand with the right street cred can go viral in days, with awareness following, not leading, the conversation. After all, everybody knows GM, but nobody’s buying the cars.

8) It’s not just buzz.

Conversation and community is all: ebay thrives based on consumer feedback. If consumers trust the community, they will extend trust to the brand. Not just word of mouth, but the right word of mouth within the community. This means the coming of a new era of customer care.

9) They’re talking to each other before talking to the brand
Social Networking and exchange of information outside of the brand space will increase. Look for more websites using Facebook Connect to share information with the friends from those sites. More companies will become members of Linkedin. Twitter users will spend more money on the Internet than those who don’t tweet.

10) Engagement is not a fad; It’s the way today’s consumers do business

Marketers will come to accept that there are four engagement methods including Platform (TV; online), Context (Program; webpage), Message (Ad or Communication), and Experience (Store/Event). But there is only one objective for the future: Brand Engagement. Marketers will continue realize that attaining real brand engagement is impossible using out-dated attitudinal models.

Accommodating these trends will require a paradigm change on the parts of some companies. But whether a brand does something about it or not, the future is where it’s going to spend the rest of its life. How long that life is up to the brand, determined by how it responds to today’s reality.



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Good Marketing that Really Sucks

Everywhere you look the overbite is back in fashion — this time coming with more than just incisors in an extra-long and a strong distaste for garlic. Today’s vampire culture has evolved into a buff crowd of populars, seemingly as interested in cool couture as they are in blood donations. True Blood, the smash-hit series for HBO revolving around this new brand-conscious vampire will have some competition this fall when the CW Network debuts The Vampire Diaries — a series that promises to deliver the same fashion bite that modern viewers have found irresistible.

It’s interesting to ponder the changes to the vampire “category” over time. Clearly today’s vampire brands are responding to something shifting in the consumer landscape, as the musty bad-guy played by Bela Lugosi has given way to the chic morally-ambiguous nocturnal, mmmmmm of True Blood fame. This new version of blood-sucker embodies many positive associations with the night, such as a taste for glamour and parties, and their accompanying youth. As society agrees less and less on right and wrong, the vampire keeps pace—choosing to drink artificial blood rather than initiate the innocent.

The shift in the way brands reach out to viewers — who are also consumers — has led to some unusual offerings in the marketplace, not the least of which is a drink meant to be sucked down, possibly with your favorite spirit. “Tru:Blood,” a blood-orange drink now available, is an exact replica of that used on the show, and comes in A, B, O-Positive and other flavors—bringing a new level of meaning to product placement as it migrates from TV to reality instead of the other way around.

As marketers scramble to maximize profits off the un-dead, it remains to be seen just how much of a stake consumers will want in the products that rise out of them. But then, stranger things have happened. As we’ve learned watching the vampire myth survive death more than once, we have a thirst for both the sexy and the macabre—a combination perfect for today’s vampires with taste.



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