Creative accounting that's legal: marketing drives profits

The Lynx effect: Marketers need to help business managers focus on the long term.

Yes, the world is experiencing rapid change and it’s accelerating. However with the average tenure of management in companies constantly getting shorter, retained knowledge is being lost and long term plans are often abandoned before they have a chance to deliver returns. Short termism is rife, sales managers will always tend towards a quick fix to get orders in this month, and financial controllers will naturally be looking for new ways to reduce spending.

Yet the bottom line is it's the businesses that invest year after year in building brands that create the most wealth. The chart below compares the S&P 500 index performance, the blue line, with businesses that own stronger brands, the green line. It proves the businesses that invest in brand building ultimately generate more wealth for shareholders.

Leading brands outperform the sharemarket

A great example of how building a brand over time makes more money is to look at the work BBH in London did for Unilever. The creative leap of saying a deodorant could make a man more attractive changed the dynamics of the market category. The ad agency took an also ran product to a profit powerhouse over 20 years with the one consistent creative idea; “The Lynx effect”.

Founder of BBH Sir John Heggarty says “All we did [back in 1995] was change the thinking. It’s more than a fragrance – anyone can make a fragrance – it’s actually about the marketing.”

"I fundamentally disagree that advertising is just selling people stuff they don’t want. I believe that you have to create a competitive advantage with creativity. It seems obvious but I spend so much of my time trying to convince marketers to be more creative.”

Marketing is more art than science says the global advertising guru

Last week in Sydney Heggarty told a room full of businesspeople and advertisers “you all want it to be a science, to get the equation right and go home. But selling stuff has never been a science, it’s about persuasion and it’s an art. It will never be a science. It’s important to remember that we’re all creative. If you’re in marketing, you’re creative.”

Branding today is worth more to a business than ever before

Here is the proof for the finance department. According to Millward Brown Optimor’s analysis, in 1980 virtually the entire value of an average S&P 500 company was comprised of tangible assets (computers, factories, inventory, etc). By 2010, tangible assets accounted for only 30 to 40 percent of a company’s value. The rest is intangible value, and about half of that intangible portion, close to 30 percent of total business value, is attributed to brands. Does your CFO treat your own brand as your single biggest asset?

It truly is the era of creative destruction. ROI marketing is one of the few tools left that can still make a difference and consistently drive business growth. It's worth investing in your brand if you want long term returns.

How many ads do we see a day? Do you remember any?

"We've gone from being exposed to about 500 ads a day back in the 1970s to as many as 5,000 a day today."

Jay Walker-Smith, Yankelovich Consumer Research

Hard to believe? Well, if you include the brand label on your undies when you put them on in the morning to the box your new tube of toothpaste came in that evening you can conceive you are exposed to branding messages thousands of times a day. This researcher also counted all the junk mail you probably don't read. But 5,000 ads?

A more reasonable figure for the marketing messages you see and hear daily is probably in the hundreds. Think about your average day, from the traffic report brought to you by Bob Jane T-Mart, the bus back for some show at The Star to the flyer for a Thai massage thrust in your hands as you walk past the poster for all-you-can-eat ribs on Wednesday nights. Then a barrage of down down retail ads on the TV during My Kitchen Rules, sponsored by some diet program. And those meet women in your area now!! ads on the side of your Facebook page late in the evening? What’s that about?

Whether it’s 300 or 3,000, we see so much that we register very little – and remember even less.

So if you were advertising your business don’t you think it might be wise to be distinctive and consistent enough to be recognised for something? Of course you would. So why is it most marketing communications is neither memorable nor consistent? Why doesn’t Qantas still call Australia home?

Why would an insurance company kill off its leading actors?

I can understand why an insurance company is killing off a 3 year ad campaign featuring Rhonda who now has a full time gig in a soap, but why did they drop the memorable jingle earlier? What have they got left to ensure we remember their brand? Who was that insurance company you may well ask? Ahhhhh, Allianz? No, when I double checked it was AAMI. You'd be forgiven if you haven’t been paying attention. Instead of keeping the sign off, "Luckyyyy, your with AAMIeeee", the ads no longer end with the sound of the jingle we’ve grown familiar with over 15+ years. Wonder why?

The average tenure of the CEO of an ASX 200 company is around 4-5 years*. The head marketer changes almost as often. Those brand managers on their way up move through more often, leaving behind their mark like my pug does on street posts. Which explains why the labels on all those Lindemans wines changed so often over the last decade. Southcorp then Treasury have destroyed so much brand equity because there were no custodians with a strong thread of brand DNA. Then each new agency wants to make its name, often at the expense of the advertiser.

Why will anyone remember your brand?

I was part of the team that created the "Which bank?" campaign for Commonwealth. It outlasted my time at Saatchi and survived a change of agency, despite their attempts to get rid of it. Brand building is like compound interest, you add a bit every year. And after a while it’s worth a fortune.

'Oh what a feeling' to be a copywriter for Toyota, knowing whatever the concept you come up with, the last 25 years of ads ensure the jump at the end will guarantee recognition by a half asleep viewer. Which is why the most successful marketing campaigns are the ones with legs. They go on and on like a Duracell battery.

It’s a fine balance between testing the new and stretching the offer without breaking the elastic brand. Some brands get it right. While there have been numerous small tweaks and occasional lapses, the VB can and the Coke dynamic-ribbon have survived decades of personnel changes. Less strongly managed brands seem to change annually. So when clients tell me they are getting tired of their campaign or their tag line or the font of their logo, I like to check if it’s busted first.

Sure we live in a world of rapid change, however, it’s more likely business survival and growth will come from product and service innovation and smarter marketing techniques, not from a new typeface. It may be a better strategy to refresh and re-launch rather than completely start again if you want to hold on to some rare customer goodwill. You’re doing well if they already have a small place for your brand pegged out in their cluttered head space.

Mortein tried to kill off Louie the Fly, but after over 50 years the public would have none of it. As John Laws used to say, when you’re on a good thing, stick to it.

Here's a Louie the fly ad from 1962

* Source: A Booz & Company study shows 23.5% of CEOs of ASX 200 companies left in 2011. Median tenure is 4.4 years and falling.

The top 20 valued brands in 2014

The world's most valued brands include some surprises. Coke is no longer it, in fact in the last year the brand value of Coca Cola has actually shrunk by 1%. Might not sound like much, but we are talking US$50million. A few more great ads like they used to make could have made a big difference to the bottom line. While there's a lot to lose there is a lot to be made by building a brand.

Innovation and marketing build brand value

Consider the year on year growth of Samsung as it continues to invest in product innovation and marketing. Now the number 2 in the world by brand valuation, Samsung increased it's value by US$20 billion over the last year. Coke slipped from number 9 to 12. Check out US telco Verizon, up from 10 to 5. Expect to hear more from them in Australia.

What are the highest valued Australian brands?

The value of a brand can be greater than the parts and isn't necessarily a reflection of the relative size of the business. While Australia's largest listed company by share market value is BHP, it doesn't rate on the scale for the book value of it's brand. The business with the highest valued brand in Australia is Woolworths. Woolworths sold $21 billion of food and liquor last year. The Woolworths brand is now ranked just outside the top 100 global brands and is valued at US$10.8 billion.

Racing up behind in second place is a newly invigorated Telstra which has re-invested, refreshed and relaunched it's brand over the past couple of years. The several millions spent on marketing has been rewarded, Telstra jumping 34 spots globally with an increase in brand value of over US$2.2 billion.

The banks brand valuations aren't the same as their market cap, but the shifts in brand value are a leading indicator of performance. ANZ is the smaller of the big 4 banks yet it has had a higher brand valuation for the last few years. But it's slipping, which helps give us an idea of which bank will grow faster in the coming years. ANZ, NAB and CommBank are all losing brand value and Westpac is climbing as they leverage stronger brand appeal to hold and grow customers.

So when you're in the boardroom discussing the pros and cons of discounting to drive sales or investing in marketing, show your peers what a difference a brand makes to the bottom line.

The business benefits of a strong brand

Remember just over a decade ago when IBM only sold big computers? Today most of us have more computing power on our smartphone and IBM is a consulting services business. UNO helped IBM make the transition to a service provider to mid-sized Australian businesses with a 4 year content publishing programme.

Many brands are having to change to survive

A few years ago if you wanted to find a business service you looked up the Yellow Pages. And if you wanted to make a call when you were out of the office you had to find a pay phone. It's amazing when you stop and think about how much the Internet has changed the way we do business.

Some once mighty brands like Kodak and Darrel Lea have disappeared, while others have successfully transformed what they offer. Have you taken the time to reconsider what your brand stands for in today's competitive market?

A brand is more than a name and logo

Your brand is what the public thinks you stand for. How you present your business shapes how your brand is perceived. Your brand is how your customers feel about you – the impression you make. It's how you look and how the way you speak. It's the unique way you reveal yourself to customers, from your choice of words to the typeface and colours you use.

If your business has been around for a decade then what your business does may no longer be well represented by what your brand is representing. Today's brands are distinctive yet flexible. Consider wWhat do Apple, Google and Virgin have in common? An ability to sell products and services across virtually any category by leveraging strong brand images that represent values that can be stretched as innovations are brought to market.

Strong branding is a smart business investment

Disciplined brand creation and consistant brand marketing is proven to deliver returns. Once you've differentiated your brand positioning, today you need to remember sales is no longer a linear pipeline, the power now lies with the customer. So for your brand to create wealth it needs to be discoverable across multiple touchpoints. With consistancy, the ROI from building a differentiated brand isn't just financial.

A strong differentiated brand enables the business to:

• Overcome competition based purely on price
• Prevent or slow decline of sales
• Hold on to existing customers
• Build sales leads
• Change perceived quality of your product
• Revitalise customer appeal
• Change company culture and boost employee morale
• Enter new markets
• Speed up product acceptance and trial
• Morally discourage competitors’ salespeople
• Raise capital more easily
• Sell a business more easily

See UNO's proven Formula for Growing Challenger Brands.

Who owns the world's best known brands?

"Brands are intangible assets and account for, on average, 75% of the value of a company."

– Blake Deutsch

Investors don't value what businesses make. The sharemarkets around the world have placed the most value not on production, rather they value the power of brands. Most share prices are a reflection of the future earning ability of a brand. The brands people most recognise also get the most votes from investors.

Just ten global companies own a surprising number of the world's best known brands.

From cat food to confectionary, shampoo to fragrances, each of these companies use their marketing skills to create shareholder value. As well as the dairy brands you probably associate with Nestle, the Swiss company also owns some of the most renowned brands in other diverse categories. Most people are surprised to see just how many categories just ten global corporations are active in. (View on Pinterest):

See larger image on Pinterest.

The big benefit of differentiating your brand is pricing power

The same marketing disciplines that are used to by Nestle to differentiate Kit Kat are leveraged by Nestle in other categories like fragrance. Georgio Armani Beauty is a Nestle brand, with Cate Blanchett its public face. Differentiation is why Nestle can charge a premium for perfume, Purina pet food and Nespresso coffee capsules.

In an Internet enabled world, where prospects can literally buy anything from anyone, it is now essential to differentiate your brand. It is differentiation that will ensure long term sustainable and profitable business.

Big brands have the world covered, which opens market niches to the nimble

The good news for challenger brands is the majors have slimmed down their portfolios over the last decade to concentrate on a smaller number of brands they can manage globally. So if you now apply the same proven brand marketing disciplines in niche markets you can most likely do so knowing there will be less competition from big global players.

As for Armani the fashion brand, it's still a family owned business with Georgio, it's 78 year old founder, still at the head. See how UNO grows Challenger Brands, including a number of successful Australian family businesses, just download our free eBook.

Who tweets about brands?

Technology companies get the most tweets

If Twitter users are image shapers, setting the trends in awareness in our society, it follows that marketers want to see their brands tweeted. Research by Nielsen has for the first time shown which brand categories are most tweeted, and who is doing the tweeting. Technology companies lead, followed by restaurants.

How to get people tweeting about your brand?

Be seen on TV. The age old adage, fame is the name of the brand game is underlined by the fact the brands people tweet about are the brands seen on what is still the world's mass market medium – TV. Perhaps this explains why the biggest brands still invest in TV advertising, it's the one medium that they can still use to shape mass opinion.

What Australians look for when shopping online

Myer missed the post-Christmas online retail rush, and it was BIG. On 1 January, The Australian Retailers Association put an update out on expected post-Christmas sales from Boxing Day to 14 January to be $15.1 billion.

You may have read Myer's site was down for over a week. CEO Bernie Brookes told shareholders it wasn't a big deal because online represents just 1% of Myers sales. I'd be wary of investing in a retail business that doesn't realise the importance of e-commerce.

6.4% or retail shopping is done online

In the year to November 2013, Australians spent $14.6 billion* on online retail. This level is equivalent to 6.4% of spending with traditional bricks & mortar retailers. Some discretionary spending categories are already well into the double digits for online sales. Despite Bernie's spin about the insignificance of his own online sales, in fact Myer's business plan has a 5 year target for online sales of 10%.

I've been brushing up on online retail best-practice

Those retailers that did get a share of the online post-Christmas sales rush now have stats on what worked for them. Fortunately we can all learn from what Australians did over Christmas thanks to a survey by Credit Card Selector of online gift purchases. Here are some of the insights on what shoppers are seeking online...

Why Australians purchased Christmas gifts online rather than instore

How shoppers find online stores

What gifts shoppers bought online in 2013

What would make an online shopper buy again

* Source: NAB Retail Index

How can you measure a marketer's contribution to the business?

CEOs and business owners often ask me what’s the best way for them to measure my contribution to their business. The business of business has never been more complex, yet we are actually in an era where marketing is one of the few levers left that management can actually control to engage customers. And that’s how a marketer is best judged – by the improvement of the brand’s engagement with customers.

Marketing is all about the customer. The customer

Don’t just take my word for it.

A survey of CMOs across 92 countries reveals consensus – the most valuable measures of marketing’s contribution are in the areas of engagement and “brand health”. Health being a bit of a catchall word for the grab bag of KPIs that show how much customers recognise you, like you, value and understand what you stand for. They also ranked the capabilities that will be more important to marketers over the next 5 years.

KPIs for measuring marketing effectiveness

Source: The Marketing 2020 Report, Effective Brands survey of 10,000 professionals across 92 countrie

The capabilities most important for marketers in 5 years

How to manage the 9 biggest marketing challenges

Here is how we manage the biggest marketing challenges today:

1. What do you stand for?
   Define your differentiated positioning in the market that not only you have a passion for, enough prospects will pay for.
2. Know your customer
   Base your story on what customers genuinely care about that you can deliver. The features with benefits that ideally are unmet by competitors, or unknown to prospects. Think like a challenger brand.
3. Define your target audiences
   Don’t attempt to sell something to everyone. It’s the era of niches within subgroups. Align your messages to what each customer target cares about.
4. Customer service
   Never over promise, always over deliver on expectations.See some of the proven ways to foster customer loyalty here. 
5. Pricing strategy
   Remember pricing is a two way lever, framing value to maximise profit is the game, not cost plus pricing, that was the era of mass market production line manufacturing. Be nimble and exploit unique profit opportunities from short term market mispricing. Then find another.
6. Packaging and design
   Sell the sizzle. Creativity and a consistent brand image increases cut through, recall and engagement and helps you command a price premium. Bad ads are bad for business. Stand out and apart. Safe isn’t just boring, it’s high risk.
7. Be prepared for a crisis
   The Internet now makes everything public and places the power in the customer’s hands. Have a plan. Tell the truth, you’ll be outed if you don’t. Make sure you know your legal position with social media.
8. Innovate for growth
   Or die. Big business struggles to change, this is the great advantage for those who aren’t market leaders. Become a challenger brand by zigging while the category zags. See the bottom line benefits of innovation as determined by AIM, they are significant.
9. Data
   We are now in a digitised world. The companies that have the most data on people have the power to own their custom. Whether you are a manufacturer, distributer, service business or retailer, the business that makes the most of data will control the money.
   
   

Email outperforms social media for new business, by far

McKinsey has just published some research I wrote about last year on the ineffectiveness of social media for customer acquisition. While marketers have increasingly jumped on the social media bandwagon, the stats show the effectiveness of Facebook and Twitter as a method of acquiring customers has remained flat. In contrast, email’s share of customer acquisitions has shot up over the last three years by 700%.

% of customers acquired by channel

Source: Custora, E-Commerce Customer Acquisition Snapshot, 2013. McKinsey iConsumer survey

The tip for challenger brands here is to zig when the others zag. The more your competition and every other marketer swamp social media with activity, the less likely you will be noticed. Personally, every time I now venture onto Facebook I am actually getting rather tired of being targeted by advertisers for diets, wine and dating.

Facebook is out of favour for new business

In the quest to deliver Facebook shareholders a profit, marketers are being encouraged to spend big. Meanwhile Facebook users are beginning to move on. The statistics show us those marketers who continue using email can expect 40 times the customer acquisition than from Facebook and Twitter combined.

That's not to say I'm recommending mass email blasts. The frequency of spam in your inbox is why marketers now have to be more discerning in what they send and who they send it to. For instance, Qantas has a frequent flyer database of 10 million members, slicing and dicing and and segmenting offers with hundreds of individual creative executions.

When Email marketing, remember what’s in it for the customer

Most of us hate spam. Prospects and customers however generally appreciate receiving an email when it concerns something of value to them. Depending on your category, different days of the week achieve higher responses. And of course, research on brand recall has proven the more creative your message, the more your brand will be remembered.

So make sure your email campaigns are well crafted and you offer a real benefit aligned to a genuine customer need. In other words, smart marketing not spam.

How Private Label hollows out brands

Australia is unique for the oligopolistic power of just two supermarkets. Coles and Woolworths have 80% market share of an industry valued at A$80+ billion.

In the UK, the two major chains Tesco and Sainsbury have 48% and the US equivalent is just 20%. Consequently when our retailers brought in management from the UK to apply the successful Private Label model developed by Tesco and Asda they did so with the potential to have a significantly bigger impact on our market overall.

Private label is no longer cheap generic Black & Gold commodity lines, it's the key to the retailers growing profit at the expense of both brands and producers. Whether you are in the FMCG business or a service business, the Private Label strategy is one that threatens every business as the company with the most customer data gains ownership of the sales process.

Global FMCG brands now struggle to turn a profit in Australia

In the last year major FMCG brand owners like Unilever and Nestle have publicly lamented their lack of power in this country to compete with the oligopoly's own brand agenda. While we have more supermarkets per capita than the US and nearly 3 times as many as the UK, the 10,000 Australian independents have so little share and such disparate distribution requirements for fulfilment they offer brands little scope for profitable scale.

Most shoppers don't realise they're being had

The trend to consumer demand for more brand choice and gourmet choices is being matched by Woolworths by it's purchase of Macro Wholefoods and roll out of Thomas Dux stores. Not only have Woolies out-merchandised the Harris Farm model, they've done an even better job in wine.

Together, Coles and Woolworths have over 50% of the liquor market, not just through retail store brands like Dan Murphys, Liquorland, 1st Choice, Porters, Theos and Vintage Cellars, but the big online database driven direct marketers like Cellarmasters and Langtons. Here is how Choice sees it:

This dominance has enabled the two majors to dictate what brands you can buy. They have delisted most small vineyards and substituted them with a cynical excercise in facadism. There is a plethora of over 240 Private Labels masquerading as boutique wines giving the impression of choice. They are merely made-up attractive wine labels stuck on bottles of mass produced vin ordinaire. From Abbey View to Willowbrook, see the list of fake wine brands for yourself.

Now they are using their data Intelligence to segment and market everything from Private Label credit cards to health insurance. For instance, they use loyalty card tracking of grocery purchases and the knowledge that if you eat red meat you are a better actuarial risk to target the insurance sales process. What insurance company can compete with this big brother view of Australians?

How does a business compete with this onslaught? A study by international branding expert Professor Mark Ritson of Melbourne Business School gives some insight...

The formula for Private Label success

• Lack of perceived differentiation between brands in a category

• Lack of value innovation of incumbent brands

• Increased proportion of price promotion activity

• Available production capacity

• For me products

• Smart retailers

• Competitive retailers

• Concentrated retailers

The power of the retailers in this market allows them to demand more price promotion from brands, which leaves little in their budgets for brand building marketing campaigns or new product innovation. In no time the brand values are hollowed out, leaving the category ripe for Private Label substitution.

The Seven stages of Private Label dominance

Stage 1: Price-based generics (Home Brand, Black and Gold etc)

Stage 2: Copycat (Penguin vs Puffin biscuits)

Australia has passed here and well into the next stage.

Stage 3: Good, Better, Best (Tesco Value, Tesco, Tesco Finest)

Stage 4: Flanker brands (brand extensions to attract brand 'switchers')

Stage 5: Category leaders (Sainsbury Extra Special Tea Bags)

Stage 6: Non exclusive (expanding beyond the store)

Stage 7: Legal monopoly

The supply side to killing brands

The no-name supplier is offered a carrot to become the stick that wacks the known brands.This business is often an existing maker of their own known brand line. Why would a Heinz for instance supply Woolies Private Label baked beans? This is what attracts them:

• Usually opportunistic origins
• Often based on excess capacity utilisation
• Any contribution over variable costs of production is seen by management as good
• Less profit... but still profit

Where it leads is usually not so positive. Here is what happens when the no-name supplier exceeds production capacity:

• Increased production costs for same or less profit
• Cannibalisation of existing branded product

Gradual strategic 'split':

• From brand builder to PL supplier
• Internal resources get utilised
• An implicit strategic change

Change of business from:

• Brand builder / innovator / consumer focus to
• PL supplier / cost cutter / business customer focus

Private Label and the weaker brands are consolidated:

• As PL grows weaker manufacturer shares decline
• Brand fights brand – not PL
• To maintain brand and shelf presence, 'lesser' products become 'propped' up with disproportionate costs
• Resources become further diluted
• Finally, once mighty brands are de-listed by the duopoly
• The retailer approaches a new potential supplier for PL, and so it all repeats

How high can Private Label go? (How low will brands fall?)

Private Label share in Australia today
23% is current floor

The UK is in the middle
50% Private Label

Theoretical ceiling
95% of product in Aldi is Private Label

The supermarket categories where marketing instore sways consumers' choice

Over 70% of FMCG categories are predetermined before shoppers enter the store. Most of the items bought in supermarkets are already determined by routine before the shopper walks down the aisle. Yet there's a massive opportunity for 28% of the product purchases where impulse purchasing still reigns. The question is, what categories do shoppers engage with instore?

The Nielsen Category Shopping Fundamentals survey shows more people go to the supermarket to buy milk (57%) than any other item. Now you know why Coles launched its massive $1 a litre own brand milk campaign to grab share from Woolworths. Yet milk is one of the least considered decisions shoppers make at point of sale. Over 70% of shoppers aren't engaged by the category in the store.

It's a similar story for pet food and toilet paper. If you're a marketer of these low engagement instore categories you will get a better marketing ROI from a brand advertising campaign or an incentive before people go shopping.

Low engagement products don't benefit well from instore merchandising

Prospects who are less interested in your product instore are best marketed to out of store. From flyers to shopper dockets, catalogues to mobile promotions driving people to the store you will have better impact than attempting to get their attention while on autopilot in your category aisle. Packaging and instore merchadising is also less likely to switch customers between brands than other categories where people are actually paying attention.

However over half the shoppers surveyed are engaged by the process of shopping, just not with every category. So it follows knowing which category a product falls into helps marketers decide where to best invest in marketing.

The high engagement FMCG categories are frozen snacks and desserts

Shoppers are more engaged by more indulgent purchases like frozen desserts (64%) and infrequent purchases like toothbrushes (64%). Here is a snapshot of what shoppers are looking at with their brains switched off versus on:

Categories with high engagement are better served by product innovation, instore merchandising and promotions and eye catching packaging.

Our marketing for Pacific West frozen seafood and snacks was centred on creating news and a fresh take on seafood. More adventurous choices has proven to be a more appealing strategy to the predictable product and positioning of Birdseye and I&J. Seven years of year on year growth for Pacific West shows what a difference it makes when you leverage an engaged instore audience.

Pugs & Kisses & Christmas Wishes

(Click to Play)

A sincere thanks to our friends and colleagues for sharing our journey in 2013, UNO’s 13^th year growing challenger brands.

We wish you and your family (and all creatures great and small) all the best for 2014.

Once again rather than send cards, we are supporting four koalas through the caring efforts of The Koala Foundation.

Best wishes from the UNO family.

AIDS ads that changed our lives: If it's not on, it's not on

Australia faced a big problem in the 80s: AIDS was killing us

In the late 1980s AIDS was spreading unchecked in Australia amongst sexually active adults with multiple partners, homosexual males and intravenous drug users. Most people had no idea how you could catch it and there was no known cure. The only certainty was if you found you had AIDS, it was a death sentence.

The first government advertising campaign to raise awareness of the issue had failed to address the spread of AIDS. While “The Grim Reaper” ads certainly gained attention, the messages had not connected with those at risk and had not changed unsafe sex practices.

Indeed the Grim Reaper had simply scared the general public, especially kids and older people, without offering a compelling safe sex message. In charge of the government's AIDS awareness task force, Ita Buttrose had acknowledged the mistake the Grim Reaper fear campaign had been. The agency responsible that she'd appointed was fired and we were asked to implement our campaign they'd originally passed over for the Reaper.

The creative solution: "next time you go to bed with someone, ask yourself..."

"...how many people are you really going to bed with?"

You can't scare people into doing what's good for them. In fact, it's human nature to reject being told what to do. The art of persuasion often begins with starting a conversation that acknowledges the audience's point of view. And builds from there with an undeniable logic.

This commercial for the first time educated the community it wasn't "other people" who got AIDS, it was potentially anyone who went to bed with someone for unprotected sex.

Shot by Ray Lawrence (who went on to direct Bliss, Lantana and Jindabyne) my AIDS "beds" ad was made before the era of computer generated images. We put 800 real people into 400 real beds in the largest space we could hire in Sydney, the old tobacco bond store in Moore Park. The campaign worked in achieving the brief of raising awareness and driving behaviour change amongst those most at risk. The managers at Ansell would report an uplift in condom sales with every burst of our ads.

It's not often in this business you get the opportunity to really make a difference for society. It's usually baked beans and banking products.

Over three years as lead creative communicator I helped develop a series of undeniable messages that were created for specific audiences. From mass market messages on TV and radio, brochures for distribution in health clinics, English as a second language ads in ethnic press to bus sides and gay street press, posters on beats and stickers on public toilet doors.

The “Beds” ad which asked “next time you go to bed with someone, ask yourself how many are you really having sex with?” gave a graphic explanation of the chain of infection. The “Tell him if it’s not on, it’s not on” ads empowered people to demand their partners wear a condom. On the back of dunny doors in pubs across the country you couldn't ignore the big sticker of a condom clad erect penis with the words: "cover yourself against AIDS"

The outcome: Australia led the world in stopping the spread of AIDS

The integrated advertising campaign successfully raised awareness of AIDS amongst those segments of society most at risk of infection. The messages also reassured those not at risk and transformed the public view from one of “victims of AIDS” to an empowering safe sex message.

The creative campaign was instrumental in educating the public and changing sexual behaviour to succesfully reduce the transmission of the AIDS virus. The leader of Australia's health sector tasked with stemming the epidemic acknowledged the strength of the campaign:

“The message in this war against AIDS is a tough one – we know it will be controversial but we are certain it is the right approach, and it is backed by the World Health Organisation.”

Professor Ron Penny, National AIDS Council, 1988

This AIDS campaign is still recognised around the world as the most effective of it’s kind

Obstacles to innovation: A jeweller’s tale

Have you read the retail sector is finally looking up? Unfortunately not for everyone.

A friend of mine is one of Australia’s leading luxury jewellers. This year his turnover is down 20% and the word in the trade is over two dozen high-end jewellers around Sydney are on the brink of closure. That’s a lot in such a niche category. What has served them well for decades has seemingly evaporated overnight.

Where have the sales gone? A few years ago no-one had heard of Pandora as a brand of jewellery. Australia is now Pandora's fouth biggest market in the world. Or have you heard of The Iconic as a place to shop for fashion? Last week The Iconic turned over $1,000,000 of online sales in one day.

The simple answer for retail is to go online, right?

My jeweller’s quandary is he opened an online store with a similar offer to his shop and failed to gain any incremental growth.

Global changes demand an innovative response

It’s not just small high-end jewellers suffering from change. The global super premium brands are suffering the curse of ubiquity, Louis Vuitton sales are plummeting despite the increase in purchases of luxury goods by the emerging Chinese millionaire class.

We are increasingly seeing fashion conscious style setters seeking designs from unknown startups, boutique designers that they can tell friends they’ve discovered. Being in the know has more credibility with peers than wearing what any person with a Platinum card can buy in any Gucci store, from Guangzou to Fifth Avenue, Sydney to Roppongi.

Big brands have difficulty innovating as they have an aversion to cannibalising their existing business. It becomes harder the bigger and more established you are, which fortunately gives Australian challenger brands an advantage. The barriers to innovation have been identified in a Australia wide research by the Australian Institute of Management:

What’s stopping Australian businesses innovating

My friend said he had come across an offshore maker of silver jewellery, gold plated with semi-precious stones that look amazing but only retail for $300 to $500. His fear is if he stocked them no-one would continue to pay $3,000 to $5,000 for his similar looking existing product.

My suggestion to my jeweller friend is to take advantage of his ability to be more nimble than a Tiffany. He isn't facing the number one barrier to innovation, a lengthy development time and there is a way he can try something new with minimal risk. If he quickly sets up a small online store under a different brand, he then has no reputation to lose and can test the appetite for this new product.

The ability to test the mix of product and price is easily done with an online store. I’ve written in the past about how we can learn from fashion retailers that are innovating for pricing advantage.

The study shows the upside to trying new ways by becoming an innovator in your category is huge.

Innovation leaders Vs laggers: business performance ratings.

Innovation leaders are two to three times more successful than innovation laggers in terms of growth, profitability, productivity and cash flow. Risk obviously has greater rewards than business as usual. One UNO case study proves the point, Butterfly Silver was the first Australian Jeweller to apply a fashion forward procurement model to become a successful challenger brand.

Source: University of Melbourne and the Australian Institute of Management. 2013

Sales conversion rates: the facts

Sales call stats – how does your team rate?

48% of sales people NEVER follow up with a prospect.

25% of sales people make a second contact and stop.

12% of sales people only make three contacts and stop.

Only 10% of sales people make more than three contacts with a prospect

So if your sales people are typical of all sales forces, what are the consequences of only 10% of them calling on a prospect more than three times?

Conversion rates increase with sales call rates

2% of sales are made on the first contact.

3% of sales are made on the second contact.

5% of sales are made on the third contact.

10% of sales are made on the fourth contact.

80% of sales are made on the fifth to twelfth contact

Sure, it costs more for your people to call more than 3 times, but consider your return on investment when you factor in the typical conversion rates. Three calls and under only converts 10% of sales!

If your sales people are not following up, the stats indicate there is little to be gained by simply adding new names for them to visit. It also shows the value of building brand awareness before the sales person calls.

Source: Richter10. Thanks to Rick Allen for sharing

Why are most ads so bad nowadays?

Bartle Bogle Hegarty was the London ad agency every ambitious Australian creative wanted to work at in the 80s. They made a series of great ads for Levis including “laundrette”, came up with "Vorsprung durch Technik" for Audi, "The Lynx Effect" for Unilever and "Keep Walking" for Johnnie Walker whiskey.

BBH creative founder “Sir” John Heggarty will speak at a global advertiser conference in Sydney in March. He has already given an idea of what advice he has to for Australia's advertisers.

What is the state of advertising creativity today?

“It’s one of the best times ever to be in advertising but why is it the work is poor,” he told AdNews from his organic and biodynamic vineyard in France. “I don’t know of any other industry in the world that would say the way to succeed is to make a worse product. And we seem to be in that situation in advertising."

CEOs in Australia say they want creativity 

More than anything else, a recent Australia wide survey of CEOs shows they want their marketing agencies to be creative. Yet one look around shows how poor ads are today.

The CEO of a financial services group asked me recently what killed the Australian ad industry? "The Internet?" he asked. "Globalisation" I answered.

The fact is, in Australia the biggest brands mostly run ads from somewhere else. They don’t care if their ads don’t work very well here, in the global scheme of things one year’s revenue in Australia can be surpassed in one long-weekend in Florida.

So I wasn’t surprised to see Sir John identify the cause of mediocre advertising. “You can talk about technology being the reason but for me the biggest issue is the globalisation of our industry. We don’t seem to be able to create work globally that has impact. I think marketers today are losing contact with people despite the fact they have many more ways of communicating with them.”

Meanwhile home grown ad standards are going down, down

We are increasingly bomdarded with ads produced in-house by Australia's retailers, further driving standards down, down. Over 30 years creating ads has taught me great creativity sells. Especially when developed by local writers and art directors who are in touch with the essence of what makes Australians tick. I believe clients are best served by ads that tap into human insights, no matter how small. When told with humour or compelling gravitas a human truth will cut through where so called big ideas with big budgets and big name stars fail to connect with real customers.

Are you more inclined to buy from someone you like? I know I respond better to brands that have an endearing conversation with me, rather than a list of claims shouted at me, even when put to a jingle. The answer to appealing to customers doesn't lie in more data.

Sir John also warned about the dangers of data and analytics –

“Clients are desperate for salesmanship to be a science. They would love it to be. They would love to be able to say this equals that and this will be the return on investment so let’s do it. But they can’t. In the end it’s a judgment call you still have to make.”

Lets all hope more advertisers re-embrace the power of creative story telling, it makes better viewing.

Customer loyalty in Australia comes at a different price to O.S.

Our region ranks 1st in responsiveness to loyalty programs

We now have proof customers in the Asia-Pacific are the most willing in the world to reward businesses with loyalty. Whether you are in a service or product category, the good news for Australian business managers is your customers' loyalty doesn’t have to come at the price of discounting.

Don’t think global when marketing local

You can out-maneuver big brands that continue applying globally what works in their home market. Consider implementing strategies that Australian customers will reward with loyalty.

The US is introspective, remember it's the country that has a World Series with only US teams. Most US companies don’t have our local market's needs on their radar. Meanwhile, Europe’s big brands are struggling at home with a deflationary market. These parochial management mindsets offer Australian brands an unique opportunity. It's the perfect time to think and act local where big global players have a tendency to universally apply one strategy.

A global survey now shows us just how different Australian consumers are compared to the home town customers of global brands.

The Neilsen Global Report of Loyalty shows our customers are different

Unlike Europe and the US where 82% customers want discounts and free products as a reward, in our region we are less motivated (70%) than anywhere else by something for nothing. Here customers lead the world in valuing good customer service (53%) and exclusive deals (41%). The Customer Loyalty Report shows your customers want you to give them quality and service more than just price:

Loyalty programs can improve profits

UNO applied the disciplines of building a loyalty program around quality and service for Vivien's Jewellers. We replaced monthly cardboard in-window price promotions with quality themed creative store merchandising. We introduced a VIP loyalty program that emphasised exclusive product offers. Sales, discounting and price promotions were no longer frequent, being replaced with special occassion sales through invitation-only Wednesday night store openings. While Angus & Coote and Michael Hill were seen to be always on sale, we built a reputation for accessable aspiration.

Over 5 years we transformed Vivien's sales base from only 25% repeat sales to 75%. This also helped Vivien's double the number of profitable stores and ultimately sell the business at a category premium.

I continue to encourage our challenger brand clients to compete with the global competition by developing marketing strategies focused on what customers really value. The big guys often lack the ability to get close to the customer, let alone respond. You may have noticed over the last year a number of visiting global FMCG heads lamenting how hard it is for them to make money in the Australian market. Coles and Woolies forcing them to cut margins isn't helping.

Do you cut for share or innovate to grow?

Increasingly businesses nimble enough to canibalise their existing sales by trialing new products or services will gain market share in the long term. And because they aren’t discounting, those sales can be more profitable.

Spend your time looking at ways to make your customers feel understood and then invest in a creative communucation of your differentiated proposition. Let the global brands discount their way to local irrelevance.

From the people who gave us wooden pillows – brand differentiation

Do you think it’s hard to differentiate in your category?

A trip to Japan gave me a fresh perspective on how to make any brand stand apart from the competition.

Last month I bought a new mattress from David Jones Sydney city store. Each brand had the same proposition: sleep soundly and wake refreshed. Choose between hard or soft, affordable or expensive.

Talk about a lack of fresh ideas, the promise of a good nights sleep hasn’t changed since I worked on the Simons mattress account 30 years ago, or the idea of looking after your back when I marketed Sealy “Posturepedic” 20 years ago.

The Japanese have a strange way of looking at brand propositions

At least on first view this first world nation has some peculiar ideas about brand messaging. The English language isn’t used by 999 out of 1,000. And Japan has a proud history of maintaining thousand year old traditions. So this different background means common products are often promoted in totally different ways to our western approach.

A couple of weeks ago I checked out the merchandising of mattresses in a central Tokyo department store. Here are some pictures I took when the salesman wasn’t looking – mattresses marketed the way Nike sells shoes.

Nothing soft and fluffy about this positioning – “Activor, the next generation in sleep technology.” Hi-tech performance for the modern Japanese consumer. 

Feeling inspired? Whatever your category, you can find inspiration from taking a completely different perspective.

P.S. Aussie mattress brand repositions for export market

Local mattress maker A H Beard has just launched in China. Unencumbered by any legacy in this new market, how are they differentiating? Their first mattress for Chinese consumers retails for over $20,000. That should set them apart.

Vale Scott Kennedy – one of NZ's finest artists

Our professional careers are sometimes touched by the most inspiring personal relationships. I was blessed with the early entry into my life as an Art Director by an artistic genius from across the ditch, Scott Kennedy. It was the early 80s and any Kiwi artist of promise had washed up in Sydney seeking a broader canvas.

Scott bid us goodbye last week after a painful but defiantly good-humoured fight with cancer. At the end his hands wouldn’t work, but Scott’s creativity was always alive in his one of a kind headspace.

As you can see Scott’s view of life was re-expressed through the lens of 60s cartoon characters and tin toy robots and Dr Strangelove. His ex-US Army dad had relocated the entire family from California to New Zealand in the belief it was the safest place to be when they dropped The Bomb.

I loved Scott for his quirky humour, big heartedness and child like enthusiasm for new creative possibilities. Have a Captain Cook at Scott’s book covers for the popular How to… series, no surprises which is my favourite.

I write this while wearing Scott's "Joy kills sorrow" T-shirt, which is a fitting memorial to his precious time with us.

What CEOs want from an agency

The top 3 things CEOs and CMOs want from their agency according to a survey by the Communications Council are:

1. Innovation and creativity

2. Leadership

3. Integrity

Funnily enough, the leaders of agencies put Leadership last.

Which could explain why three quarters of CEOs don't value marketers at the board level.

I wonder if this is a reflection of the transaction based relationships most agencies seem to be stuck in today. Whatever happened to “fearless advice”. It's what most left brain business managers want from right brain agency creative thinkers. Creative thought leadership is where agencies add value, not servile account management.

Perhaps it’s a consequence of a co-dependent relationship between ignorant brand managers and subservient suppliers. Meanwhile the smart business leaders appreciate the real value to be added is at the board level, with lateral and entrepreneurial advisors from outside their organisation helping them challenge traditional business models.