Reports of My Death Have Been Only Slightly Exaggerated

Remember Friendster? It was one of the very first social networking sites. It was new. It was popular. It had friends. It had investors. Google even offered to buy it for $30 million.

But that was back in 2003, eons ago in social networking time, an era when the first of such sites appeared on the Internet. But newer, younger, friendlier rivals like Facebook have eclipsed it. In fact, in our recent survey examining engagement and loyalty to social networking sites, the rankings are as follows:

1. Facebook

2. MySpace

3. LinkedIn

4. Flickr

5. Twitter

“Where’s Friendster?” you ask. Well, not enough people mentioned using site to include it in the study. And, no, it isn’t dead – although surveys notwithstanding, when’s the last time you actually heard anyone utter the phrase “Friendster, me”? And although there aren’t a whole lot of users anymore, it isn’t closing down.

No, the site is changing its strategy. It announced this week that they’ll be erasing all the remaining photos, blogs, and testimonials (remember “testimonials”?) and will be reinventing itself as a music and games site. As of the end of next month all that will be left of the original site will be basic profiles and friend lists, i.e., an outdated list of people you currently friend on Facebook. To add real insult to virtual injury, they’ll be using Facebook Connect.

There’s a Russian proverb that goes “true friendship comes when silence between people is comfortable.” The same, alas, is apparently not true when it comes to social networking sites.

And...

According to this January’s Customer Loyalty Engagement Index, the following were the brand rankings for the Movie Rental category:

1. Netflix
2. Blockbuster
3. Redbox
4. DVDXpress

And, Netflix posted a first-quarter profit of $60.2 million, added 3.3 million subscribers (its fastest rate of growths yet) giving it 22.8 million subscribers, a footprint as big as Comcast, the largest cable operator in the United States.

Just sayin’.

Just Sayin'...

It’s earnings season, and each day brings new reports of how brands have fared in the marketplace. For us, this time is always a strange sort of celebration. Though no champagne or greeting cards are involved, we do admit to some corporate-congratulations of our own as we compare what we predicted against what actually came to pass.

Fear not for our objective researcher soul, however. There is no danger of our collective egos running amok. We cannot help as we examine the data to remember it isn’t our personal prescience but our predictive metrics that deliver the kind of line-up we see between our engagement rankings and corporate earnings. Without the consumer data, we would be left to tea leaves or listening to Charlie Sheen rants backwards to try to discern the future. And, frankly, that’s a strategy that’s not only intellectually painful, but also more miss than hit. Just sayin’.

An examination of the rankings in the Customer Loyalty Engagement Index (CLEI) shows that McDonald’s ranked #1 in the Quick Serve Food Category. The brand also happened to report a net income rise of 11% or $1.15 a share. That’s compared with $1.1 billion or a $1 a share in the period a year earlier. Revenue increased 9%. It’s good to be #1!

Wells Fargo also ranked first in the top-five brands in the banking category in our CLEI. It posted a record profit of 48% percent in the first quarter. Bank of America ranked #5 and saw their profits fall 36%. Turns out that being #1 is better than being #5—some truths are indeed eternal.

AT&T, #1 in the Wireless Carrier category, posted a 39% increase in first-quarter profits, a net income of $3.4 billion and a revenue climb of more than 2%, despite losing the exclusive rights to sell the iPhone in the United States halfway through the period. Verizon, armed with iPhone ranked #2, and saw earnings rise 51 cents a share, from $443 million, or 16 cents in the same quarter a year ago.

In the Smartphone CLEI category, Apple ranked #1. Aided by the Verizon iPhone deal and updates of the iPad and MacBook, it reported a net income rise of 95% to $5.99 billion. That’s up from $3.07 billion in the year-ago quarter. Nokia, despite its partnership with Microsoft, ranked #5 (of 7) in Smartphone category. It reported that profits fell in the first quarter. Sales in North America fell 36%, and the average selling price fell 6% from a year earlier.

Xerox moved up a rank to tie for #2 in the Multifunctional Product Office Copier. It reported a rise in profit and revenue, with a net income of $281 million (in contrast to a loss of $42 million in the period a year earlier) with sales up 16%.

There you have it. Mere coincidence? You be the judge. Or give us a call. We promise you won’t have to listen to Charlie Sheen, and we may even have cake.

Rainy Days at B of A

It was humorist Mark Twain who quipped, “A banker is a fellow who lends his umbrella when the sun is shining and wants it back the minute it begins to rain.” Except these days one bank in particular seems to really need that umbrella for itself.

It’s been pretty stormy at Bank of America, which apparently failed the government’s stress test that would allow them to begin paying dividends again. In fact, B of A has emerged as the weakest of the big financial institutions per last week’s quarterly earnings report: profits down 36%, revenues down 16%, shares down 30% in the past year, stock down 2.3%. To be sure, B of A isn’t the only bank hoping for sunnier times. Citigroup reported 32% less profit and a 22% drop in revenue, both sharper drops than competing banks. J.P. Morgan Chase, for example, posted a 67% gain in profit.

Were we surprised by this downpour? Not really. Yes, some of the puddles are due to decisions made by B of A’s previous CEO. But according to our Customer Loyalty Engagement Index, decisions regarding brand engagement reveal B of A hasn’t been doing too well there either, the current rankings as follows:

1. Wells Fargo
2. J.P. Morgan Chase
3. Bank of New York
4. PNC
5. Bank of America
6. Citibank

To deal with some of the tempest, last week Brian Moynihan, B of A’s CEO, shook up the management team and accelerated the planned exit of their CFO. One investor – one with 1.5 million shares – thinks B of A can ride out the storm, although the bank’s comeback has been “longer and cloudier” than its competitors.

Another humorist, Ogden Nash, once remarked, “Bankers are just like anybody else – except richer. Or at least the ones that that don’t need umbrellas!

Looking at Minivans

Chrysler has made minivans their focus for a while. But consumers have been looking for higher quality and better-designed vehicles so Chrysler has spent some time addressing those issues with new models, new interiors, and new, more-powerful powertrains. Chrysler has traditionally led in minivan sales, but these days many consumers have been looking at minivan-like crossovers and other caravan competitors like the Hyundai Santa Fe, the Ford Explorer, the Honda Odyssey, and Toyota Sienna.

Chrysler, looking to engender higher levels of consideration, brand engagement, and to maintain category leadership, are looking to a new promotion, the "Minivan Pledge” to shift consumer views. It’s a deal that allows anyone who purchases a 2011 Town & Country or Grand Caravan this month to return the vehicle in 60-days no-questions-asked if they’re not entirely happy. Buyers can also choose among customer cash or special financing or a variety of other deals.

Industry insiders suggest that consumers have been conditioned to look for ‘Summer Sales.’ But with fuel prices being what they are, a shortage of product out of Japan, and – for minivans, at least – competitive pressure from other vehicle models, consumers should look for incentive offers now. If they wait, promotions may become harder to find.

When it comes to automotive buyers looking at minivan attributes like Quality and Drivability, this year’s Customer Loyalty Engagement Index Top-5 ranking for those qualities looks like this:

1. Ford/Hyundai
2. BMW/Honda/Mercedes
3. Chrysler/Toyota/Volkswagen
4. Nissan/Mitsubishi/Saab/Jeep
5. Audi/Kia/Mazda/Volvo

Consumers are always looking for a deal, but a quality brand that can differentiate itself from the competition can serve as a surrogate for added-value. Henry Ford noted, “Quality means doing it right when no one is looking.” And in addressing design and drivability issues, Chrysler seems to be taking advice from one of their close competitors. Hoping consumers will give their brand a second look.

Strategy + Tactics = Success

Brand Keys is always delighted to share predictive and strategic loyalty and engagement insights with our colleagues, and we’ll be participating in two symposia, both today, April 14th. One will report online on promotional trends, and the other will share the latest about what’s happening on the ground.

In the online space, Amy Shea, Brand Keys EVP Global Brand Development, is conducting a 2 PM (EST) Promotion Marketing Association webinar, “How Promotions Can Take a Seat at the Branding Strategy Table.” She’s got good news, and bad news.

The good news is that promotional marketing is receiving a greater share of brand attention and budgets. The bad news is that the good news is accompanied by increased expectations for more strategic, consumer-centric promotional concepts, more engaging creative tactics, and promotional ROI in the form of optimized consumer loyalty and profits.

Join Amy on the PMA website and learn why many "consumer" measures lead to hit-or-miss promotions instead of true loyalty-driving experiences; the critical role emotion plays in creating effective strategy, how to measure it, and put it to work for your brand; and what our 2011 survey of 46,000 consumers, 79 categories, and 530 brands reveal about the role of promotions in creating the ultimate consumer deliverable: delight!

For news about on the ground maneuvers, Brand Keys founder and President, Robert Passikoff, is participating on MediaPost’s Digital Out of Home Forum panel, “Gauging DOOH Campaign Effectiveness” (17th floor, Sentry Center Midtown East building, 730 Third Avenue, New York City). Dr. Passikoff will be representing the researcher’s strategic viewpoint on this 11 AM (EST) panel, exploring how to measure and value the effectiveness of digital place-based advertising campaigns and how place-based media networks can bring advertising closer to the point of consideration, create higher levels of strategic brand engagement, and can ensure a powerful and effective media buy.

We hope you can attend one, the other, or both of these sessions, because as a successful strategist once pointed out, strategy without tactics is the slowest route to victory. Tactics without strategy is that terrible just before defeat.

The $15 Million Dollar Woman Cashes In

The 2006 offer to Katie Couric to anchor the CBS Evening News came with $15,000,000 a year and the chance to report on the venerable “60 Minutes.” It’s been reported that it apparently came with a less-than-collegial welcome from Jeff Fager, then “60 Minutes” executive producer.

If you don’t remember Ms. Couric’s appearances on “60 Minutes,” that’s not surprising. Her reports haven’t even averaged five a year, and Mr. Fager‘s appointment as chairman of CBS News has apparently sent a message to Team Couric that perhaps it was time to move on. And, as the revered Walter Cronkite used to say, “that’s the way it was.” Ms. Couric and CBS are negotiating when and how to end her 5-year run.

One can only suppose that the overall disappointing ratings haven’t helped engender a high level of professional respect and collegiality. According to the most recent Customer Loyalty Engagement Index, under Ms. Couric, CBS news ranked last among the evening news offerings we measure. Remember, these rankings are conducted among the viewers of the actual news programs themselves, so where engagement is weak, ratings should shrink—which is what happened. Most recent rankings are:

1. NBC
2. CNN
3. ABC
4. MSNBC/FOX
5. CBS

It’s been reported that Ms. Couric is pursuing the idea of her own syndicated reality talk show, possibly with her former “Today” show co-host, Matt Lauer. But Mr. Lauer is under contract to NBC until 2012, so it’s not certain how real that dream is going to be. But we’ll see. As social historian Daniel J. Boorstein noted, “Nothing is really real unless it happens on TV.”

Living within One’s Means

The average price of gasoline just hit $3.68 a gallon. That’s up nine cents from last week, and 86 cents from a year ago. It’s the markets reacting to continuing instability in the Middle East—at least that’s what the analysts say. But the high cost of gas isn’t just having an effect on consumer driving behavior; it’s also impacting how consumers shop.

When gas prices get this high – they haven’t been over $3.50 a gallon since 2008 – consumers come up with imaginative ways of making their money work harder for them. Take driving behavior, for example. They drive less, to keep costs down. Nearly 20% of consumers in our Customer Loyalty Engagement Index indicated that they’d shop at a retailer closer to home or go shopping fewer times during the week because of gas prices.

But even if they are shopping less often, they do have to shop: a situation that could make the registers ring for online retailers. Also according to our survey, more than a quarter of the respondents (27%) indicated they’d purchase more online to try and keep gas consumption to a minimum, thus getting more value for their dollars. So, according to their customers, which of the on-line retailers we track provides the best value-for-dollar? Here’s how they ranked this year:

1. Amazon.com
2. Walmart.com
3. Zappos
4. Overstock.com
5. Ebay
6. Buy.com

Okay, it’s tough to stretch a dollar these days. But remember, it was Oscar Wilde who wrote, “Anyone who lives within their means suffers from a lack of imagination.” Or these days, a full tank of gas.

Engagement Is Never on Clearance

It’s claimed that the very first coupon appeared in 1887 – for a free glass of Coca-Cola. It’s all gone downhill from there, or uphill, depending on whether you’re a retailer or a consumer. Think S&H Green Stamps, airline miles, credit card points, newspaper free-standing-inserts, and buy-10-get-one-free punch cards. And now online coupons and deals abound.

Groupon is the current leader in the group-buying coupon scheme; team up with merchants, send out email blasts that pitch a discount coupon for a product or a service and keep 50% of the revenue. It’s a money-maker, which is why Groupon has a billion dollars in venture capital, and $760 million in annual revenue. Oh, and a lot of competitors.

Currently, Groupon’s closest rival is LivingSocial but others – in other forms – are coming on strong. Firefly Rewards takes the traditional punch card format digital. Yowza! offers coupons via mobile phones. Blinkness partners with newspapers’ local coupon offers, and digitizes them. And don’t forget the other web heavyweights that also offer access to coupons and deals: Facebook, Yelp, OpenTable, and most recently Expedia. It’s all getting a little out of hand.

Don’t get us wrong. Coupons, price reductions and such can be very useful, especially when marketers are looking to produce maximum short term volume, or gain first-time trial. But when these offers become a constant substitute for brand value, retailers are looking at a very slippery slope, where consumers quickly file the brand under “commodity,” one that can be easily replaced.

Yes, everybody is delighted with a deal—or they were. But given the current state of consumer knowledge of the marketplace and access to information not controlled by the brand, what used to be “delight” has turned to “expectation.” And the constant couponing, sales, and deals have dramatically changed the traditional price-value equation into a consumer-driven value-for-dollar credo, which comes with good news-bad news.

The bad news is that consumers still want a deal. The good news is that the brand can serve as a surrogate for the added-value consumers are looking for, and become a driving factor in the value equation. Brands that stand for something find themselves less in need of creating value through price reduction. They create value through what they have to offer, often emotionally.

Tiffany’s little blue box has made many a woman’s heart skip a beat, all while never being marked with a red clearance tag. Diamonds may be cheaper down the street, but engagement – brand engagement, that is – is the word every brand wants whispered in its ear.