A version of this piece was published in Marketing in 2008
16% of the world now connects to the internet via broadband. But this small group represent 78% of the world’s earnings.
This single fact lies behind the extraordinary growth we’ve seen in online retail over the past ten years. In 2006 total online retail spend grew by 33.4%, 13 times faster than the retail sector, and online clothing sales alone expanded over 40% in that year. According to the ONS, by 2007, 70% of UK web users had bought online.
But as the market has changed beyond recognition for categories like books, music, consumer electronics and insurance, one group of brands as lagged behind – resisting the trend to sell direct, and often discouraging the listing of its products with online retailers.
Concerned that the web didn’t offer brands the quality environment they require to sustain their premium positioning, many luxury brands have steered clear of selling on the web – some electing instead to have ‘brand experience’ sites. Despite this, according to the Luxury Institute, most luxury brand websites are poorly designed and constructed, with MyDeco’s founder Brent Hoberman noting that many make extensive use of Flash animation, making them all but invisible to search engines.
When Tyler Brûlé did the rounds of super-premium brands as he worked on the development of the Monocle magazine/website, he expected to find dazzling on-brand websites and web-savvy marketing directors – “how wrong I was”, he told Luxury Briefing.
Over 9.5 million people worldwide have assets of over $1m, and the luxury goods market is outperforming many markets – growing at over 20% a year in the UK. And since these people are much more likely to be heavy web users, it’s not surprising that the online luxury goods market is expected to grow rapidly – doubling in the next three years.
In Japan, Ledbury Research report that 39% of high earners have purchased an item online at over £1,000, with 28% in the US and 26% in the UK.
For the last eight years, Net-a-Porter.com has been mining this seam, successfully creating a market for high fashion online. The site cleverly reinvents the experiential qualities of boutique shopping through the quality of its editorial – a Vogue where you can buy the clothes, and its pioneering same-day delivery and beautiful packaging have helped to make shopping online exciting for its customers.
Sites like Net-a-porter, Myprestigium, CoutureLab and new UK startup iconicchic.com are filling the void left by the big brands’ reluctance to engage in the online space, and are providing stiff competition for the high street-based retailers as these businesses develop their online offering too.
High end high street fashion retailers Browns and Matches both have online retail operations, whilst Harvey Nichols sells accessories and Harrods has a pretty comprehensive online offering everything from cocktail dresses to confectionery.
These guys aren’t threatened by designers selling direct to the consumer online. If customers can be bothered to wait for the bloated flash-based sites to launch, they’ll rarely find anything to buy, with only around 30% of luxury brands selling online.
But even those who do e-retail merely give the impression they don’t understand either retail or the web. Prada sells online in 15 countries, but has a site built entirely in flash. Gucci’s site is similarly flash-based, whilst Armani has a tiny link on its homepage to ‘shop online’ – clicking on which has no effect (one wonders if anyone’s monitoring sales).
But a few labels are taking on the challenge. Louis Vuitton’s site is elegantly designed and still functional, Paul Smith’s lo-fi but effective.
It’s remarkable that despite the vastness of the market, and the success of retailers in the space, these two are amongst the very small number of luxury labels who are making a serious attempt at ecommerce.
The luxury market online is in its infancy. But since both online and luxury tend to be recession-resistant, we could be seeing a lot more soon.
Showing posts with label Brand. Show all posts
Showing posts with label Brand. Show all posts
Thursday, August 14, 2008
Thursday, June 26, 2008
Is marketing still fit for purpose?
A version of this piece was published in Marketing in 2008
Is marketing no longer fit for purpose?
Mass marketing emerged to deal with distance. To bring products from a marketing department in one city to small towns in Idaho and Italy.
Brands were a tool of that process - a ‘wrapper’ for all the rational and emotional attributes of a product that enabled that idea to survive intact when fired in the marketing cannon from Cincinnati to Cassadaga.
In the first place, it was the development of mass media that enabled this communication over distance – initially through newspapers, which followed the growth in literacy under the Victorians.
Before, many products were commodities – sold unbranded by local retailers. Soap (cut from a large bar), butter (bought by the pound).
But having first enabled the creation of brands, mass media evolved to deliver them – networks first of radio stations then of television, syndication, local opt-outs, national reach. The techniques of mass marketing were honed over many years to make it work better, and they were developed in an environment where the tools were limited to broadcast and print.
These were all techniques that were designed to work at a distance, and when consumers had little access to another view than those of the owners of brands and the controllers of media.
But digital has changed that. Digital has rendered distance unimportant. Our friends on Facebook can as easily be in Auckland as Altringham, and teenagers number their friends in the hundreds in these social networks, because they’ve shaken off the bounds of geography.
And we take our friends’ views as seriously as we do professionals. An AOL/Henley Centre survey shows that respondents regard the opinions of other consumers as being just as important as those of experts when considering a purchase.
So our circle is wider, and our attention is divided now between the noise of advertising and the voices of other consumers – and those consumers are becoming more influential as our culture and our economy become digital.
The wrapper we call brand is a thin one. It remains intact only if consumers’ experience of us is consistent with the idea we’ve communicated.
Now, though, our performance is talked about. It’s shared. It’s public (and measured). Ask anyone in financial services, where Moneysupermarket compares their products for consumers, making clear the performance differentials. See how USwitch exposes the differences between utility providers, whilst hundreds of websites have sprung up reviewing and publishing data around schools, consumer electronics, cars, and neighbourhoods.
What has emerged is proximity.
Now, consumers can get close to brands. They can see under the wrapper, without having to buy – know our flaws, our shortcomings, our benefits and our strengths.
So now, we have to do two things.
Engage – listen, support, connect, involve our consumers – both in development of product and delivery of service.
Deliver – do what we say we will, avoiding what Chris Clark at HSBC calls that ‘mind the gap’ moment.
To an uncomfortably large degree, a marketing department isn’t operationally concerned with either of these. It commonly lacks the tools even if it has the will to engage with consumers in any meaningful or sustainable way, and misses the support of the rest of the organisation to deliver on the wishes of consumers – whether that’s HR, operations or finance.
So it’s a challenge that shouldn’t be underestimated for marketing departments. But success here means the wrapper we put round products becomes stronger, more robust. It strengthens brand premium, supports differentiation, promotes loyalty.
Because whilst in the past, distance might have allowed us to get away with a gap between brand promise and product delivery, consumers are close enough to see now.
If marketing yesterday was about conquering distance, today it’s about mastering proximity. And marketing will have to reflect this if it’s going to be fit for purpose tomorrow.
Is marketing no longer fit for purpose?
Mass marketing emerged to deal with distance. To bring products from a marketing department in one city to small towns in Idaho and Italy.
Brands were a tool of that process - a ‘wrapper’ for all the rational and emotional attributes of a product that enabled that idea to survive intact when fired in the marketing cannon from Cincinnati to Cassadaga.
In the first place, it was the development of mass media that enabled this communication over distance – initially through newspapers, which followed the growth in literacy under the Victorians.
Before, many products were commodities – sold unbranded by local retailers. Soap (cut from a large bar), butter (bought by the pound).
But having first enabled the creation of brands, mass media evolved to deliver them – networks first of radio stations then of television, syndication, local opt-outs, national reach. The techniques of mass marketing were honed over many years to make it work better, and they were developed in an environment where the tools were limited to broadcast and print.
These were all techniques that were designed to work at a distance, and when consumers had little access to another view than those of the owners of brands and the controllers of media.
But digital has changed that. Digital has rendered distance unimportant. Our friends on Facebook can as easily be in Auckland as Altringham, and teenagers number their friends in the hundreds in these social networks, because they’ve shaken off the bounds of geography.
And we take our friends’ views as seriously as we do professionals. An AOL/Henley Centre survey shows that respondents regard the opinions of other consumers as being just as important as those of experts when considering a purchase.
So our circle is wider, and our attention is divided now between the noise of advertising and the voices of other consumers – and those consumers are becoming more influential as our culture and our economy become digital.
The wrapper we call brand is a thin one. It remains intact only if consumers’ experience of us is consistent with the idea we’ve communicated.
Now, though, our performance is talked about. It’s shared. It’s public (and measured). Ask anyone in financial services, where Moneysupermarket compares their products for consumers, making clear the performance differentials. See how USwitch exposes the differences between utility providers, whilst hundreds of websites have sprung up reviewing and publishing data around schools, consumer electronics, cars, and neighbourhoods.
What has emerged is proximity.
Now, consumers can get close to brands. They can see under the wrapper, without having to buy – know our flaws, our shortcomings, our benefits and our strengths.
So now, we have to do two things.
Engage – listen, support, connect, involve our consumers – both in development of product and delivery of service.
Deliver – do what we say we will, avoiding what Chris Clark at HSBC calls that ‘mind the gap’ moment.
To an uncomfortably large degree, a marketing department isn’t operationally concerned with either of these. It commonly lacks the tools even if it has the will to engage with consumers in any meaningful or sustainable way, and misses the support of the rest of the organisation to deliver on the wishes of consumers – whether that’s HR, operations or finance.
So it’s a challenge that shouldn’t be underestimated for marketing departments. But success here means the wrapper we put round products becomes stronger, more robust. It strengthens brand premium, supports differentiation, promotes loyalty.
Because whilst in the past, distance might have allowed us to get away with a gap between brand promise and product delivery, consumers are close enough to see now.
If marketing yesterday was about conquering distance, today it’s about mastering proximity. And marketing will have to reflect this if it’s going to be fit for purpose tomorrow.
Thursday, April 10, 2008
Coveting your neighbour's brand terms...
A version of this piece was published in Marketing in 2008
Thou shalt not covet thy neighbour’s ox.
Any Israelite who happenened to have a neighbour with an attractive ox was probably beginning to think he’d got away with it, until Moses said “and tenthly”. Still, everybody was probably relieved to have that whole ox-coveting thing cleared up as it probably caused more than a little strife, what with the lack of non-bovine consumer durables which might have provided alternatives to covet at the time.
Whatever else we might have got up to, coveting was definitely off.
And so it was until this month with Google too.
There we were all eying up our competitors’ brand names, but not allowed to do anything about it by the search engine. For some years now, Google enabled companies to protect their trademarks by preventing bidding by competitors – so Tesco couldn’t bid for Sainsbury’s.
Last week though, the search giant announced a change of plan. From May, the UK will follow the US, in allowing a free-for-all. Now, advertisers can get on with some serious coveting.
All this attention from your competitors could significantly impact on your search programme’s effectiveness, so you need to start work now to make sure you don’t lose out. Fortunately, there are three key things you can do to come out on top under the new commandment – and even better, I’m going to tell you what they are.
Content. Boosting the quality score of your landing page can directly impact on the amount you might have to bid for your brand term, because the Google algorithm rewards relevance. An effective SEO programme will boost your ‘natural immunity’ from competitors, meaning that you can retain top position in the paid-for rankings even with a lower bid for your brand term than your opponent.
Integration. Most affiliates generate traffic to their sites by using paid search, and unchecked they can drive up your bids on Google. Many advertisers fail properly to manage affiliates’ search activity, and some ban affiliates from bidding on their brand terms in the mistaken belief that this will control costs. In fact, properly controlled, affiliates can help a brand to block out the competition – outperforming competitors and pushing them down the rankings. Integrated search and affiliate management is the only way to achieve this – managing these in silos is only going to benefit your competition.
Data. Most advertisers attribute 100% of the sale to the last step in the process - more often than not, search. But most consumers make more than one search, mixing generic searches (“dresses”) with brand searches (“Next”) and branded product (“Next dresses”), and data-smart advertisers have responded by investing in clickstream analysis – understanding the value of keywords not just in creating a sale, but in pushing the consumer down the acquisition path towards a later sale.
Without this data-based model, both volume and cost-effectiveness are limited – and since bidding on competitors’ brand terms may be costly at face value, a more sophisticated model is necessary to justify the value of activity beyond simply annoying rivals (although this is fun too).
Google might be poor at relationships, but they’re very good at sums. They’ve got a huge test market for this approach in the US and Canada, where they’ve been allowing competitive bidding for four years – so I think we can be certain it’s going to generate increased revenues for Google, which means of course it’s going to cost marketers more.
The problem for most search advertisers is they don’t have a strategy.
A detailed focus on bid management, keyword groups and optimisation is important, but at a time of fundamental shift it’s those who have a big picture who will thrive. As Google moves the goalposts once again, the three core strategic pillars of content, integration and data will be essential components of that picture – and the critical success factors that will distinguish those who prosper, from those who merely covet.
Thou shalt not covet thy neighbour’s ox.
Any Israelite who happenened to have a neighbour with an attractive ox was probably beginning to think he’d got away with it, until Moses said “and tenthly”. Still, everybody was probably relieved to have that whole ox-coveting thing cleared up as it probably caused more than a little strife, what with the lack of non-bovine consumer durables which might have provided alternatives to covet at the time.
Whatever else we might have got up to, coveting was definitely off.
And so it was until this month with Google too.
There we were all eying up our competitors’ brand names, but not allowed to do anything about it by the search engine. For some years now, Google enabled companies to protect their trademarks by preventing bidding by competitors – so Tesco couldn’t bid for Sainsbury’s.
Last week though, the search giant announced a change of plan. From May, the UK will follow the US, in allowing a free-for-all. Now, advertisers can get on with some serious coveting.
All this attention from your competitors could significantly impact on your search programme’s effectiveness, so you need to start work now to make sure you don’t lose out. Fortunately, there are three key things you can do to come out on top under the new commandment – and even better, I’m going to tell you what they are.
Content. Boosting the quality score of your landing page can directly impact on the amount you might have to bid for your brand term, because the Google algorithm rewards relevance. An effective SEO programme will boost your ‘natural immunity’ from competitors, meaning that you can retain top position in the paid-for rankings even with a lower bid for your brand term than your opponent.
Integration. Most affiliates generate traffic to their sites by using paid search, and unchecked they can drive up your bids on Google. Many advertisers fail properly to manage affiliates’ search activity, and some ban affiliates from bidding on their brand terms in the mistaken belief that this will control costs. In fact, properly controlled, affiliates can help a brand to block out the competition – outperforming competitors and pushing them down the rankings. Integrated search and affiliate management is the only way to achieve this – managing these in silos is only going to benefit your competition.
Data. Most advertisers attribute 100% of the sale to the last step in the process - more often than not, search. But most consumers make more than one search, mixing generic searches (“dresses”) with brand searches (“Next”) and branded product (“Next dresses”), and data-smart advertisers have responded by investing in clickstream analysis – understanding the value of keywords not just in creating a sale, but in pushing the consumer down the acquisition path towards a later sale.
Without this data-based model, both volume and cost-effectiveness are limited – and since bidding on competitors’ brand terms may be costly at face value, a more sophisticated model is necessary to justify the value of activity beyond simply annoying rivals (although this is fun too).
Google might be poor at relationships, but they’re very good at sums. They’ve got a huge test market for this approach in the US and Canada, where they’ve been allowing competitive bidding for four years – so I think we can be certain it’s going to generate increased revenues for Google, which means of course it’s going to cost marketers more.
The problem for most search advertisers is they don’t have a strategy.
A detailed focus on bid management, keyword groups and optimisation is important, but at a time of fundamental shift it’s those who have a big picture who will thrive. As Google moves the goalposts once again, the three core strategic pillars of content, integration and data will be essential components of that picture – and the critical success factors that will distinguish those who prosper, from those who merely covet.
Thursday, March 6, 2008
Is search advertising?
A version of this piece was published in Marketing in 2008
In 1928, universities in the USA announced that continental drift was impossible, and banned the teaching of it – a ban that largely remained in place until the theory of Plate Tectonics was published in the sixties.
It’s not unusual for the old to struggle with the new. But perhaps we should be more surprised when the old struggle with the established.
It’s been ten years since Google launched, and five years since they started charging for search. Since then there’s been an explosion in search marketing, and it’s become a vital weapon in the marketer’s armoury – making Google one of the biggest media companies in the world.
So if search isn’t new, we’re hearing some remarkable thinking about it from the traditional media world.
I was at the WARC research conference a couple of weeks ago, and was struck when one of the speakers opined that he “wasn’t sure that search was really advertising – it’s really just distribution.”
Nobody picked him up on it, and clearly smoking the same meme, M&C Saatchi chairman Moray MacLennan at the FT Digital Media Conference a couple of days later picked up on the same theme:
“When you’re putting money into search you’re taking it out of marketing,” he said. “All you’re doing is buying a space on the internet high street. You’re commoditising your brand.”
So are they right? Is search ‘advertising’ or ‘marketing’ at all? Is it just distribution?
Let’s for a moment assume that MacLennan’s right – search is just buying space on the internet high street. If he means that it’s a part of distribution, then that would certainly make it part of McCarthy’s four P’s of marketing. If he means that it’s part of what many marketers call ‘the last six feet’, then to dismiss it as commoditisation of the brand is to similarly exclude in-store merchandising.
And are you commoditising your brand by using search? A commodity has no differentiating characteristics, and is bought on price only – so is search leading brands this way?
In reality, that’s up to us. If we choose as marketers to throw up our hands in resignation at this challenge, then the brands we nurture will probably wither – either becoming commoditised, or more likely, beaten into submission by those who rise to the challenge.
Because consumers make brand choices in search.
This isn’t speculation – it’s empirically demonstrated by the data. Search engine users don’t just make one search before a purchase – they typically make several. We can track this behaviour, and understand how the process works as they progress – “flat screen TV”, “Sony TV”, “Bravia”, and often the model number. We can see where they were diverted to competitors, and where competitors lost them to us – and most importantly we can influence this with the copy we use in the listing (and A/B test that copy to refine its effectiveness).
If we say the right things, and do so in the right places, we can work to protect and even build our brand premium.
This is marketing alright, and moreover, it’s advertising – in a pure, analytical and rather detail-obsessive way. To master it truly, we must understand how it creates value in the marketing and media mix – where and how it influences users on their journey to being customers (either of ours or of the competition). And we’re not going to get there if we dismiss it.
I suspect MacLennan was being deliberately provocative. But what he said plays to the prejudices of the luddite faction, and is on the lips of many in what for want of a better term might be referred to as ‘traditional’ advertising. For these increasingly beleaguered folk, these new forms of advertising/marketing are sparking a semantic debate – rather than a determined attempt to master new techniques that bring real value to marketers.
For these folk, the barbarians really are at the gate – and they’re using Google to get in.
In 1928, universities in the USA announced that continental drift was impossible, and banned the teaching of it – a ban that largely remained in place until the theory of Plate Tectonics was published in the sixties.
It’s not unusual for the old to struggle with the new. But perhaps we should be more surprised when the old struggle with the established.
It’s been ten years since Google launched, and five years since they started charging for search. Since then there’s been an explosion in search marketing, and it’s become a vital weapon in the marketer’s armoury – making Google one of the biggest media companies in the world.
So if search isn’t new, we’re hearing some remarkable thinking about it from the traditional media world.
I was at the WARC research conference a couple of weeks ago, and was struck when one of the speakers opined that he “wasn’t sure that search was really advertising – it’s really just distribution.”
Nobody picked him up on it, and clearly smoking the same meme, M&C Saatchi chairman Moray MacLennan at the FT Digital Media Conference a couple of days later picked up on the same theme:
“When you’re putting money into search you’re taking it out of marketing,” he said. “All you’re doing is buying a space on the internet high street. You’re commoditising your brand.”
So are they right? Is search ‘advertising’ or ‘marketing’ at all? Is it just distribution?
Let’s for a moment assume that MacLennan’s right – search is just buying space on the internet high street. If he means that it’s a part of distribution, then that would certainly make it part of McCarthy’s four P’s of marketing. If he means that it’s part of what many marketers call ‘the last six feet’, then to dismiss it as commoditisation of the brand is to similarly exclude in-store merchandising.
And are you commoditising your brand by using search? A commodity has no differentiating characteristics, and is bought on price only – so is search leading brands this way?
In reality, that’s up to us. If we choose as marketers to throw up our hands in resignation at this challenge, then the brands we nurture will probably wither – either becoming commoditised, or more likely, beaten into submission by those who rise to the challenge.
Because consumers make brand choices in search.
This isn’t speculation – it’s empirically demonstrated by the data. Search engine users don’t just make one search before a purchase – they typically make several. We can track this behaviour, and understand how the process works as they progress – “flat screen TV”, “Sony TV”, “Bravia”, and often the model number. We can see where they were diverted to competitors, and where competitors lost them to us – and most importantly we can influence this with the copy we use in the listing (and A/B test that copy to refine its effectiveness).
If we say the right things, and do so in the right places, we can work to protect and even build our brand premium.
This is marketing alright, and moreover, it’s advertising – in a pure, analytical and rather detail-obsessive way. To master it truly, we must understand how it creates value in the marketing and media mix – where and how it influences users on their journey to being customers (either of ours or of the competition). And we’re not going to get there if we dismiss it.
I suspect MacLennan was being deliberately provocative. But what he said plays to the prejudices of the luddite faction, and is on the lips of many in what for want of a better term might be referred to as ‘traditional’ advertising. For these increasingly beleaguered folk, these new forms of advertising/marketing are sparking a semantic debate – rather than a determined attempt to master new techniques that bring real value to marketers.
For these folk, the barbarians really are at the gate – and they’re using Google to get in.
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