Why use social media when your business has a website? The stats say it all

One of my clients attended a Social Media Marketing forum at Deakin University recently. He was surprised just how out of touch most marketing and business managers are with this medium as a means for promoting a business. The questions being asked were about how to control staff access to social media or how to post their brands’ advertising and collateral across the newer platforms.

This top down approach where management dictates the agenda no longer cuts it.

In the same way the Internet has empowered the public to access their news, music and entertainment whenever they want, not when the distributers choose to roll it out, Social Media is taking the online quest for information about products and services away from publishing and brand sites. Social Media is creating a vibrant forum for conversation about products, services and brands beyond the direct control of a company’s sales and marketing force.

The statistics show the rapid pace of change of where people are going online in search of information of all kinds.

Trend away from website visitation to Social Web

Google trends show over the last 2 years a significant decline in visitors to brand and media sites.

Boom in Social Media and content sharing

More people are seeking and sharing what they want online.               

It’s no longer enough to have a brochure style website, you can no longer sit back while your salesforce distributes your marketing collateral and your marketing department runs ads telling the masses how good you are.

Everyone in your organisation and every one of your customers is now a prospective advocate for your business. Or they might be saying your competitors are better. You can’t control the conversation, but to compete today you need to formulate a social media strategy, coach your staff, create content of use to customers and prospects and contribute to the conversation in an open and honest way.               

Small can succeed in retail against big budget incumbents

Growing up in sixties suburban Sydney the most exotic cuisine my family was familiar with was cabanossi on Jatz crackers. Father felt like a Tooheys or two and good on my mum, she knew Tip Top was the one. Fortunately, forty years of immigrant mothers from around the globe have helped expand Australians’ culinary horizons.

Family businesses show how to be a challenger brand

At the Food and Wine Expo held by Family Business Australia in Sydney in November, the influence of Nonnas was evident as third generation business owners showcased their gourmet products. Their time has come, statistics show the trend to gourmetisation of the Australian shopping basket has now reached beyond the specialist deli and ethnic store to the Supermarket.

Unlike most trade shows, what struck me at the FBA event was the friendly atmosphere, no hard sell, just an infectious enthusiasm for the products these families have been creating for years and a desire to share business stories. From the small catering company making their first tentative step into retail, through to a food service business that gave up on retail in the 70s, one story is common: the bigger challenge isn’t getting onto the shelves of Coles and Woolworths, it’s how to stay there and make a profit.

Two family businesses, Taylors Wines and Coopers Brewery, are testament to the magic ingredient for success in the retail market – the power of building a brand. Branding is what puts the power in your hands, not the channel’s. Building a brand takes more than one-off promotions, or advertising that simply says you are in store now, or paying for inclusion in catalogues with discount offers. To build a brand you need to invest in marketing over time to establish the brand story and your values.

Brand marketing delivers these benefits over a me-to sales approach: 

Product

Easy to copy
A commodity
No special distinguishing features
What a factory produces
Shorter life cycle
Addresses functional needs
No identity
Products compete on price 

Brand

Hard to copy 
What consumers buy 
Emotional fit with consumers
Level of confidence and trust 
Longer life cycle 
Addresses emotional needs 
Have personalities 

Brand can demand a premium

Fosters Group has destroyed shareholder value to the tune of hundreds of millions of dollars over the last decade by mismanaging the marketing of some icon wine brands, from Lindemans and Penfolds to Seppelt and Tollana. Meanwhile, family business Taylors Wines has stayed true to its five decade history with consistent product, packaging and promotion.

Nick Levy, the marketing manager at Taylors, wouldn’t dream of throwing out the heritage of this family business, whereas corporations time and again allow each new brand manager to make their mark by changing the label their customers know and love to chase a fleeting fashion. Often the new look comes at the expense of long won recognition. Similarly, downgrading a product’s quality to maintain margin or constantly price-cutting to gain share ultimately destroys brands.

Yes, we live in a time where the pace of change is so much faster, yet taking the time to establish what you stand for, developing a dialogue with your customers and creating a sense of authenticity are increasingly valuable tools in a world where global producers can pitch to your retailer with a cheaper knock off product as soon as you leave the buyer’s office.

If you value what you have to sell, it pays to remind your customers as often as you can of why they should love you. Now you can afford to. New technologies, data intelligence and eCommunications now enable challenger brands to compete successfully with the large advertising budgets of corporations.

So find the true benefit of your offer and actively market it. As Revlon said, having built an empire with brand marketing, “we don’t sell cosmetics, we sell hope.” Worked on my mum.  

This article first appeared in Business Insight

Leave traditional marketing to your competition... Now there are smarter ways to connect

To make the most of a marketing budget there are now smarter ways to integrate social media and search optimisation.

Many struggle to keep abreast of the changing landscape, while companies that take advantage of 'eCommunication' will benefit from increased efficiencies, decreased costs and improved customer engagement.

Traditional marketing funnel view of prospects...

Medium and message is aligned to where the audience is in the funnel, information is controlled by the brand.

The decision making process in an e-connected era...

Time to replace the old touchpoints with a new mix

The journey is no longer simply linear, the customer now has control over what they see and read on any subject. The audience enters, leaves and re-enters the decision making process more often, with more access to information from more sources when they want it. 

Your eCommunications checklist

Whether your business is B2B or B2C, it’s no longer enough to think in the linear way of out of home, in store (channel), at home. Here is a new set of options which UNO utilise to supersede or integrate with existing programs:

Are you a retailer or publisher, advertiser or educator? The Internet has blurred the lines.

There used to be clear delineations between product manufacturer/creator, channel/distributor, retailer and end consumer.

Enabling this traditional marketing model there was mass media. Advertising mad men then helped consumers to embrace the products and services they hadn’t heard of and didn’t know they needed. Now the interconnections of the Internet have transformed the sequence of commerce and marketing.

Customers are now researching every category online

People have a need? They research online for themselves in the safety of their own home, avoiding the charms of advertisers and brand collateral, packaging and point of sale merchandising. The empowered consumer accessing product knowledge on the web via forums, chatrooms and reviews is beyond the charms of the seasoned salesman on the shop floor.

Even more disconcerting for the traditional retailer of a product or service is the emergence of the medium no longer just being the message, but now a vertically integrated marketing model.

From books to money management, every category has been turned inside out and upside down. What was linear, is now a 3D demand and supply freeform organism.

Consider books. A hard back would come out, early adopters would pay a hefty premium, soft cover would follow, trends would be noted, popular titles would have second and third editions printed and distributed, blockbusters would be advertised and the retailers would rake in the cash and the publishers would cover the costs of the many failures by most of their authors.

Then Amazon cut out the middleman, and now with the Kindle is changing the distance from content to delivery even further, you can now download and store a library of 3500 “books” on a device that is close to the price of a couple of hardbacks. So if there is no need to print and distribute, does the author deal direct with Amazon, seeing the retailer become the publisher?

Even services aren’t untouched by the digital revolution

Take for example Superannuation Funds. If you work you have one, no wonder there are thousands of funds competing for a share of 9% of your salary.

For Australian investors there used to be 3 Clayton’s choices, the choice you have when you don’t get a choice. If you were a blue-collar worker your employer put you into the Industry Super Fund that was created for your industry. If you were a public servant, you were automatically in your government fund. White-collar workers had a modicum of choice, the local Insurance salesman would flog a retail fund and benefit from the handsome commission and trailing fees.

Not any more. Super Choice means most can now choose their fund. Those who are motivated research online, in fact 50.6% do, whereas only 12% turn to newspapers and a mere 3% magazines. So while all those funds are spending hundreds of millions advertising in mass media, savvy investors that are shopping around are stumbling upon a vertically integrated model. Fairfax Digital owns InvestSmart, a licensed financial services business that bought Direct Access, which was a discount retailer of funds. Fairfax in its wealth and business sections publishes articles on super and investment. On the same pages are links and comparison tools branded InvestSmart. These tools and tips and comparison lists educate the Super Shopper. Then when they are ready to buy, fulfillment is just one click away for a fee a fraction of the traditional adviser model. So the publisher becomes the retailer.

So does all of this mean consumers are better off? The fastest growing and the biggest segment by value of the 1.4 trillion dollar Super category is DIY. Self Managed Super offers investors the allure of control. Pity the average SMSF underperforms the average Industry Fund and has higher costs, until someone challenges the model that is.

Whether you are a retailer or a service provider, a financial services business or a manufacturer, it’s now time to reappraise your marketing model before your competition beats you to it.

Time for Australian retailers to sell online or be left behind

Marketers have spent the last decade watching Woolworths maintain dominance in grocery while Coles failed to focus on customer needs and treated suppliers with disdain. Under Wesfarmers things are starting to change, yet the biggest fight in retail over the next decade is more likely to be driven by a huge shift to buying online.

While Australia’s Westfield has over 30 years fine-tuned a profitable model to encourage a visit to the Mall, as therapy for the modern empty soul, the Internet is on the cusp of changing the behaviour of society in an equally profound way.

It’s already happening. In 2009 Australians spent $24billion on retail online according to research commissioned by eBay and predicts a 40 percent increase to $32.8billion in 2012.

Australia’s retailers are falling behind the rest of the world in grabbing a share of the online retail spend. "As Australian retailers struggle to build effective online presence, overseas competitors are taking advantage of the gap in the Australian market and are currently taking around 40 per cent of Australia's online retail spend," according to PayPal MD Paul Feller.

"There is a huge opportunity for retailers to capitalise on the growing online marketplace in Australia. In the last six months alone the average consumer spent $1,223 on online shopping, an increase of $130 from the second half of 2009."

So Westfield has to balance an online strategy with keeping footfall high in the malls to keep those retail tenants in biz. No easy task, now that broadband speeds and speed and reliability of delivery through the mail are narrowing the gap between online purchase and the wardrobe.

Who shops online?

My daughter buys most of her clothes online from the US and UK for a fraction of local prices, my son buys his music and sound gear from all corners of the world and Amazon keeps my partner well read. Online purchases of all sorts of items will become the norm, especially as the ways to enhance the shopping experience online grow.

In the past you would see the latest fashions in a magazine spread, be exposed to an ad on TV with Megan Gale for David Jones and go the mall to try it on. Now the whole experience can be completed online. The Ceros platform is being used by the likes of Sears, Tesco, Virgin and IKEA to show product and close a sale using a rich media eMagazine. Have a look. We’re already using it to help our challenger brand clients leave their competition behind.

Marketing tips for fund managers

Fund managers can make more money by marketing. The trick is to know what marketing is exactly...

I have a passion for following fund managers’ performance and comparing how they stack up against their investment philosophies. There are a handful of fund managers who stick by their principles and deliver above average results through the ups and downs of the markets. What surprises many managers is that investment doesn’t always come flooding their way when they are doing better than the index. There are plenty of examples where poor performing funds continue to dominate in the competition for FUM.

It’s not enough to rely on BDMs and the distribution and sales channels; every fund is out there building relationships with the instos and advisers. The commercial reality is rooted in human nature; ultimately the salesmen who managers are relying on to recommend a fund will go for the easy sell. And as we’ve seen, performance can’t be the only draw card or there wouldn’t be 19,500 funds on the market where the biggest generally aren’t the best. It would be a mistake to think the end of commissions will result in a rush to quality, inertia and confusion will see to that.

It’s time the better managers tried something new to most in the industry. It’s what’s been honed and crafted by the world’s most successful companies, from Apple to Armani, Mercedes to Mars: it’s marketing. In a world of multiple choices, marketing is one of the few tools that can make a significant contribution to the success of a business.

The financial services industry still confuses sales and distribution for marketing

It isn’t. Marketing takes the ball the first fifty metres and sales kick the goal. Then it’s marketing that continues to remind investors why they made the right decision choosing your fund, so they’ll stick by you through the inevitable bumps and falls. And invest with you again and again.

In the words of Wikipedia, marketing is the process by which companies determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It is an integrated process through which companies create value for customers and build strong customer relationships in order to capture value from customers in return.

Manage the image you create for your brand and how you promote it

From product design and the language you use, your logo and stationery, the look and imagery in brochures and PDSs, the content and design of e-newsletters, what is on your website and how it is presented, to advertising and sales collateral. When every part is working together in a co-ordinated fashion the whole adds far more value to the business than the investment in the parts. And just like investments, managed well marketing delivers compound returns.

Over the years I’ve found integrated marketing works just as well for financial institutions as it does for baked beans. Research by the School of Management and Finance, University of Nottingham showed back in 1998 the similarities emerging even then between consumers’ responses to financial services ads which featured the same cues as ads for fast-moving consumer goods (FMCG) and the influence on subsequent purchase decisions.

Put simply, when it comes to proven ways to make money, fund managers can get a healthy ROI from marketing. For evidence, they just have to ask about the results of my many marketing experiences of 30 years, from banks to baked beans.

Signs of the times... who has the time?

Outdoor advertising is diminishing in effectiveness, like many traditional mediums

Not surprising when you think about the increasing clutter advertising billboards have to compete with for attention.

In the Drive section of the SMH the other day one motoring journo observed: “I went to a suburban shopping district and counted 19 road signs clustered around the first intersection. There were 55 road information messages in about 100 metres. Even when travelling at 40km/h you are left with just nine seconds to read them". In the book Traffic, Tom Vanderbilt states the average driver must process 1340 pieces of information every minute.

So recently when a client asked UNO to review their annual advertising media budget we weren’t too keen to recommend continuing to spend several hundred thousand dollars for one poster above the M4.

Old habits die-hard, the CEO drives to work each day and passes that one sign. We couldn’t convince management that for about 20% of the cost of that one sign they could develop an ongoing relationship with their customers using the latest Web2.0 technologies and build a valuable database for future use.

While traditional media companies like Eye Corp continue to sell posters, a medium that hasn’t changed for a couple of centuries, newer more effective alternatives are emerging. (When the price is right.) ROI marketing starts with understanding the real stats.

Innovation in signage

Recently Ryan Simpson of Val Morgan showed me the latest research on their innovative take on signage, large video screens in shopping centres.

While I always take statistics with a grain of salt, the figures reflect the relationship between clutter and proximity to where the purchase can be made. Despite the amount of billboards, busbacks and taxibacks that shoppers must have passed on their way to the shops, almost 50% say they didn’t notice any advertising. 30% remembered noticing billboards, whereas this new moving screen medium within shopping centres was noticed by over 70% of the 1,000 people surveyed by Nielsen research.

Pity I didn’t have those sorts of stats on hand when I tried to talk that client out of spending a large chunk of their budget on that one sign.               

Bigger ad budgets usually mean greater waste

Marketers don't always get what they pay for. I recently met with the new regional head of one to one marketing of a world leading brand. One to one is their fancy term for online. This new manager has been brought in from the USA to determine how the millions of dollars they spend annually in this region can deliver a better return.

Mid size companies can learn from the mistakes of larger marketers with larger budgets. Some of the areas of waste this expert has identified in just a few months are listed here:

Marketing budgets managed within silos is inefficient

Some products have budgets too small to make any impact, while others spend more than necessary because they have a larger allocation. Simply by adding an overview of expenditure across the portfolio would deliver a win win result.

Too many contracts with too many large agencies can drive a big spending approach. Marketing managers with little experience are often given average strategic advice and average creative executions. Large agencies are inclined to overspend on media exposure, (with commissions it's an easy earn).

Set marketing KPIs upfront

Smarter marketers know investing in more management time upfront determining objectives and KPIs, with strategic intellect and strong creative can mean a much smaller media spend can deliver greater impact, more leads and higher conversion rates. There is also an inevitable diminishing return factor from spending more, if someone sees your ad two or three times and still hasn't bought, spending more to show them the same proposition four or five times is simply a waste of money.

There is value in retained knowledge

Years of collected data, research results, campaign learnings and customer databases are often ignored with each new project. Every campaign can and should add incremental value to the next. Take a test and learn approach, rather than a big spending one-off hit. This is one of the fastest ways to implement ROI marketing.

Fortunately for my mid sized clients, I've found over the years insight led creative marketing can punch above it's media weight time and again.

GM a victim of launch and leave

For General Motors, big has not proven to be better. From 50% market share to 20% and bankruptcy in just 40 years has partly been blamed on an inability of management to move with the shift from big gas guzzlers to smaller cars. The disastrous purchase of Hummer in 1999 showed how recently GM thought big still had a big future. Time has proven there were only a few big spenders like Renee Rivkin who bought these massive buckets of bolts, obviously not enough to pay the massive borrowing costs.

Less obvious to the public, and of more interest to marketers, are the views being expressed that a lack of advertising support has played a very significant role in the rapid market share loss to the Japanese car makers.

One example was the surprisingly upbeat statements by the head of marketing of GM, he is excited by the prospect of having less brands to support with his marketing budget. With the jettisoning of divisions like Pontiac, he'll be left with just four brands to promote, including Chevrolette and Cadillac. This he trumpets will give him a chance to compete with the same ad budget as Toyota.

In an obituary of the once market leading General Motors, The New York Times blames management for a failure to support it's product with advertising.

Advertising works, The New York Times says so

It points out GM finance staff wrestled with product developers and marketers, thus causing GM to fall victim to a practice called launch and leave - that is, putting product on the market, then failing to support them with advertising.

As someone who has played a part in helping numerous businesses grow share by using smart, creative advertising, this is a particularly public example of the consequences of not believing in the power of marketing. If you ever have to justify to management the wisdom of investing in advertising, when so many accountants seem to view it as a discretionary cost, use this following quote from a past executive of GM who was part of the team that created the successful Pontiac GTO in the 60s and wrote the book about it Glory Days...

Image is everything in building brand equity

Nobody gave any respect to this thing called image, because it wasn't in the business plan. It was about "when is it going to earn a profit?"

As the New York Times points out, over the years the marketing skeptics at GM became practiced at the art of explaining their problems, attributing blame to everyone but themselves.

It pays to trust people with passion

In the last week a visit from a chimney sweep and a conversation with a successful Australian manufacturer reminded me of the value of passion in business.

I was surprised when the chimney sweep asked when was the last time my chimney had been cleaned. Annually didn’t make sense to him judging by what he saw with his fancy mirror... unless I burn 20 tonnes of wood a year, which I don’t. I was quickly impressed by his enthusiastic run down on the finer points of proper chimney maintenance. This man has been cleaning chimneys for 27 years and was still getting a buzz from helping people solve their dirty flue problems, he described the joy solving more difficult challenges and leaving customers with fires that draw like new. His fee was no more than the company that has under serviced us over the last few years.

Whatever service you need, find a practitioner who is passionate about what they do

One of my long standing clients, going on nine years now, makes plantation shutters. Marion Mikkelsen of Open Shutters is passionate about her product, and has built a brand over this time that has proven resilient against the onslaught of cheap Chinese imports. She is so passionate every aspect of her business is constantly reviewed with the objective of constant improvement. She refuses to compromise, so instead of cutting corners to save costs this business runs on a successful program of creative thinking, R&D, staff training and manufacturing innovation.

This passion shows in her product, which my wife thought was the best when she did her pre-purchase research for our home. It was only a few years later I coincidentally won Marion as a client... it is great to be able to market a product you’ve bought yourself.

Why do so many business people mistrust each other?  

Over 20 years this pioneer of timber shutters in Australia has led with product innovation and with UNO’s marketing help driven the growth of the category. Yet Marion lamented this week how it’s only after many years her distributors are beginning to trust what she says about her product and her overarching belief in the necessity to fulfill the expectations of consumers. How could so many small business owners not recognise the genuine passion displayed by Marion?

I shouldn’t be surprised, I often find business prospects are cynical of what I have to say about how smart marketing can help their businesses succeed. I’m passionate about what I can do to help people, however it’s even harder to be believed when I work in an industry that the public constantly ranks at the bottom of the trust table alongside used car sales and real estate agents.

Why the CEO has to be the chief blogger

Successful social media strategy starts at the top of every business

It's misguided to think social media can simply be delegated to the youngest in the business, or outsourced to a digital agency. Social media is simply another relationship management channel. So it makes sense the strategy of what will be discussed in social media and what won't lies with the CEO. Social media is the one place the CEO's message can get through direct to the individual, without being filtered.

So if you're the CEO, consider this medium as your direct way to have a personal conversation where you can champion what you believe in. Before you begin, reconsider what you want your business to be known for. Ask yourself what is at the heart of why people should buy from your business, rather than your competitors?

Recent research by PR firm Weber Shandwick shows social media has positive impacts on business. (Click to enlarge.)

This simple checklist will help frame the social media agenda for your business

• What is the purpose of the business, what will success look like?
• What is the business strategy?
• What does the business believe in?
• How does it add value?
• What are its beliefs and ethics, its reason for being, its mojo?
• What is the business story? The way you express your differentiation, the reason for customers to choose you.
• Who does the business want to help? Who do you want to leave for your competitors to lose time or money trying to please?
• Who does the business want to influence? The gatekeepers to your prospects, or perhaps the well connected people who might bad mouth you through ignorance?
• Who does the business want to work with? Do you have affinity partners or associations you can share your blogs with?
• What kind of people does the business want to attract? It now matters what you look like in the blogoshere because it's the first place most potential employees will check you out.

Reputation risk has been elevated by social media

As equally important as having a social media presence is what you say. Being active across social media brings new risks. What is published online stays online, potentially forever. No wonder reputation risk is now the number one concern of CEOs globally according to the latest report from Deloitte.

Perhaps if more CEOs took control they would minimise the risk of staff who know less being the main originators of social media conversations. The CEO is best placed to set the agenda, staff can then follow through.

According to research by Weber Shandwick, more than six in 10 CEOs are already posting content on company websites. Yet only 18 per cent of the CEOs surveyed participated on social networks. The chart above gives an overview of the survey findings. Interstingly, 80% of staff want to see their CEOs on social media, largely because it's where they want to keep up to date.

I feel most CEOs I talk to are missing this powerful opportunity to spread the truth about their business vision. Social media is where these truths are shared and discussed, it's one place the leader can champion their cause with passion.

What makes mid-sized businesses more profitable than big?

So what is a mid-sized business?

GE Capital has been defining the mid market in Australia as businesses that have annual revenues of between A$10 million and A$250 million. Average firm turnover is about A$41 million. Despite comprising just 1.4% of companies by number, mid-market firms provide one in four full-time jobs and contribute A$425 billion annually to the economy.

The federal Department of Innovation, Industry, Science and Research, which has a broader definition of medium-sized businesses as those with between 20 and 199 employees, puts the economic contribution of the mid-market considerably higher.

The mid-market campaign we successfully managed over four years for IBM targeted businesses from 99 and right up to 999, the large corporate and government sectors that IBM traditionally owned really kick in around 1,000 staff.

Australian Business

Most mangers still hold the belief big means better. We hold a belief businesses can only succeed today by being nimble. The reason for this is the profound change the Internet has brought to our lives. The world even quite recently was quite slow to change, and most businesses were relatively simple. Today we all compete in a world of rapid paced change and increasing complexity. So the old big business model of slowly and effectively finding savings from gradual improvements to products and services and small efficiency gains in management and procurement are no longer enough to stay competitive. Let alone stay in business.

The evidence for the decline in profitability of big business is seen in this chart. It shows one third of market leaders in their category in 1950 were also the most profitable businesses in their category, whereas today being big almost guarantees you’ll be struggling to make a buck.

Market leaders that are also category profit leaders:

What makes big business vulnerable to challenger brands

George Shinkle is a Lecturer in the School of Strategy and Entrepreneurship at the Australian School of Business. He has been studying why big business is failing.

“Organisations grow large by becoming more efficient, so when you’re really focusing on efficiency you typically become less and less flexible. The rules and processes and procedures become more and more about keeping you efficient, constraining your ability to be flexible,” he says.

“If you talk to the CEO of a very large firm, they don’t feel as if they’ve got direct control of what the organisation’s really doing. They give guidance and they set policy but the organisation has some variance on how well they follow those things,” says Shinkle.

The learning you can take advantage of is that managers in large companies try to hide from change. Which is why, if you’re running a mid-market business, you will create your own advantage by actively seeking out things to change to differentiate from the competition.

Not too big, not too small, mid-sized business is just right

Big business is still obsessed with conformity, groupthink and doing things the way they have always been done around here. Small businesses may be the birthplace of great ideas, but they usually don’t have the scale or resources to commercialise those insights.

The mid-sized business is perfectly placed in the middle, where the distance between innovative thinkers and management that can actually make decisions is short. Unlike small business, resources aren’t so slim ideas can’t be trialled without damaging the existing business of running the business.

At a CEO Institute meeting Susan Lenehan told me the biggest frustration of the CEOs of Australian arms of global businesses she mentors is their total lack of autonomy. They are prescribed what to do by head office irrespective of local circumstances. In her words, it’s the pinnacle of the “bully culture” of big business management.

Challenger brands will prosper by taking risks

This is the great opportunity mid-sized Australian businesses are exploiting, they can leverage their ability to try changes, while the big guys are stuck in the inertia of business as usual, with its five year plans, annual targets and quarterly reporting. By challenging traditional big brands, Australians can be globally competitive in a world that is changing daily.

The real successes come from maximising returns by minimising the risks of change – we developed the challenger brand formula for growth for this very reason.

Why you need brand awareness before sales

This famous ad for advertising with McGraw Hill appeared in 1958

Business owners sometimes need reminding of the timeless challenge, why would a prospect buy from you rather than one of your competitors?

For 50 years the simple answer was to spend more on advertising than the rest of your category. As marketers now realise, simple strategies in this Internet enabled world now require more complex solutions.

Challenger brands can succeed today without big ad budgets

The good news is smaller businesses can now be successful challenger brands with smaller budgets than the big brands. The staring point is to differentiate. with a singleminded story that prospects will value. you can then apply a test and learn approach to marketing across multiple mediums. Smarter strategies applied with insight will now succeed while big spending inflexible brands continue to struggle.

73% of marketers say more has changed in 2 years than the past 50

Who are you going to call to advise your business on how to grasp the rapidly expanding number of marketing communications options? Usually you’d call in an expert. However, the pace of change right across the business world and the complexity of competing solutions is so great how can any individual be an expert? And big businesses may have lots of individuals, but we all know they rarely work as a team let alone communicate well with clients.

Marketing professionals are confused

A survey* by Adobe of 1000 marketers in the US shows the crisis in confidence of the marketing services.

“Marketers are facing a dilemma: they aren’t sure what’s working, they’re feeling under-equipped to meet the challenges of digital, and they’re having a tough time keeping up with the pace of change in the industry. What’s worse, no one hands you a playbook on how to make it all work,” says Ann Lewnes, Chief Marketing Officer, Adobe.

Digital marketing is full of novices

Adobe’s survey found less than half (48%) of marketers who consider themselves primarily digital specialists feel highly proficient in digital marketing. Most digital marketers haven’t had any formal training in digital marketing. No surprise really, it’s so new and evolving very few places can teach it.

The problem for business owners is how to leverage what’s new when so few people, if indeed any, know what will work. The people whose job it is to know, professional marketers, revealed in the survey the same old issues are today’s top challenges. 82% cited reaching their customers as the biggest challenge, then the uncertainty of knowing if their campaigns are working (79%), and measuring campaign effectiveness (77%) and marketing ROI (75%).

The answer for marketing your business?

Today every part of the business has to take risks

Whether it’s your accounting systems, distribution, IT or marketing, everything now is facing change. It’s hard enough to know the right question to ask anymore, let alone have the right answer. The safest option today is counterintuitive – it’s to realise you can’t predict winners anymore.

So the safe approach with marketing is no longer to set and forget. Rather than taking a long time and spending a lot of money attempting to develop the one perfect solution, try a lot ideas and mediums. And try them quickly and often.

Test. Learn. Adjust. Test again.

Learn to feel comfortable with failures. Set out to make the risks small so the stakes aren’t too high. Then go for it with a test and learn approach to marketing. The more often you fail the quicker you’ll find yourself challenging the competition and being successful.

* Source: Adobe and Edelman Berland, online survey among a total of 1000 US marketers.  Marketing Staff (n=499), Marketing Decision Makers (n=436), Digital Marketers (n=263), and Marketing Generalists (n=754). September 2013

Are fashion retailers training customers to buy on sale?

I've written in the past how Zara led the world by applying just-in-time manufacturing and data analytics to bring us fashion forward product design. This has given them an advantage over traditional retailers by circumventing the traditional seasonal approach to fashion.

Instead of waiting for the leading designers to reveal on the Paris catwalks what we'll be wearing next year, Zara's innovation was to take the Dell Computer model. Zara replenishes stock in their stores every week, see what sells, then make more of what is popular. Rather than sitting on large quantities of stock hoping people will like what style you've backed, Zara take a test and learn approach. They never back one colour or style for a full season, Zara simply adjusts what they manufacture on the fly to what the consumer wants this week.

Fashion challenger brands risk destroying the advantage they have created

Retailers are losing the power to maintain margins by encouraging a buy on sale mentality. According to Robin Givhan, the only clothes critic to win a Pulitzer Prize, with the constant turnover and turnout of items due to the ever-quickening fashion cycle, there’s no need to buy anything at full price anymore.

While bloggers and fashion critics have used social media to drive awareness and demand of the weekly fashion cycle, retailers she says are to blame for the loss of their pricing power.

"Retailers talk a lot about how the availability of show images pique the interest of consumers before the clothes are available. But I blame retailers for creating a system in which they want spring clothes in November and more shipments every five second[s] and then putting things on sale when they've only been on the racks for one second," said Givhan.

Consumers usually don't know how to establish the value of something, it's actually within the power of the seller to frame the price that they will believe is fair.

Innovate for pricing advantage

If you have innovated your way to a price advantage, don't throw away your smartly won margin. Instead, decide how you can frame the price as fair value, for instance in terms of more for the same, or faster for the same, or better for the same. Offering something for less is an approach fashion retailers are finding comes at the cost of not just profit, but long term survival.

Don't drive your category to the bottom the way Persian Rug stores have, where in every corner of the world the SALE sign on the window now means OPEN. Here's one I snapped in Hong Kong...

Do you have a clear point of difference to drive growth?

Staying in business has never been harder. 10,632 companies collapsed in the 12 months to March 1 2013 -  ASIC also reports the number of firms being placed in administration is more than 12 per cent higher than during the GFC. Over the last few months an average of 44 small businesses were closing every day according to ABS data.

A change of government won’t change the fact the pace of change is still accelerating, the choices for customers continue growing and the decisions we all face in life are more complex than ever.

Where will your business growth come from?

These are your options:

1. From existing clients
2. By getting new clients
3. Expanding to new locations, (interstate, overseas)
4. Developing new services
5. Making acquisitions

90% of businesses focus on number 1, selling more to current customers or charging them more. Yet the upside is limited.

Of the small number that go down the acquisition path most are disappointed. An AGSM survey of mergers and acquisitions showed after 3 years just 10% exceeded expectations of synergy and only 10% - 15% met expectations. The rest had failed or were in a death spiral.

Expansion and new product or service development often require a large commitment of resources and takes attention away from the existing business.

Which leaves new business as the key driver of growth. Marketing is the one proven method that can drive scalable new business growth. A successful new business program begins by confirming you have a differentiated offer relevant to today’s customer. Every prospective customer has more than one choice. What does your business have that makes it so special they have to choose you?

Customer alignment, simplification and innovation

Here’s a simple technique that GE Capital employs to keep their business differentiated in this time of rapid change.

Customer aligned

• Employees know which customer segments we serve and what their top 3 needs are
• Our organisation rallies around these needs (customer facing & support departments)
• We continuously track customer metrics at a transaction, product and business level
• We respond to customer feedback fast

Simple

• We do less, better
• Our customer processes are intuitive
• Our internal processes are as easy as our customer processes
• We routinely identify and eliminate the bottom 30% flow value processes, reporting and meetings

Innovative

• We encourage, empower and reward staff who challenge the status quo
• We launch new ideas fast (< 45 days average)
• We have a full pipeline of ideas linked to incremental volume
• We invest a significant amount annually on innovation

Differentiation for new business growth

Don’t hold your breath waiting for the government to simplify regulation, align their policies with your needs or innovate the country’s way to prosperity. Look at your current structure, reconsider what the business currently offers and determine a positioning that will differentiate you from your competition. Today.

This is just one of the tools UNO uses to ensure when our challenger brand clients invest in marketing, the returns will be worth the effort.

Two fast food brands prove the long term value of a challenger positioning

There are few categories more sophisticated at marketing than fast food. For 50 years McDonalds has been fine-tuning their brand marketing driven machine in Australia. Other brands may talk share of voice or share of wallet, McDonalds is famous for wanting the largest share of stomach in the country.

The business is a great example of how to upsell, cross sell and find new reasons for customers to visit. From breakfast muffins through burgers and happy meals to soft serves and late night treats, washed down by McCafe coffees in between. From Pasta Zu to chicken nuggets to who knows what else a machine can transform animal castoffs into.

Want fries with that?

All of these tactics are an excuse to get more people to buy fries more often, it's where the big profits are made. Makes you wonder how anyone can compete? If you don't work for an omnipotent  global business there is evidence of hope. Roy Morgan reasearch released in August 2013 shows just how well new competitors can do by choosing to take a challenger brand positioning.

A case study in how positioning can outsmart the big brands

Hungry Jacks came much later, and has never had the footprint or the ad budget to compete head on. What has worked long term for Jack Cowin's fast food challenger up against a global heavyweight, is a differentiated positioning that gives it a clearly defined space to compete in. "The burgers are better at Hungry Jacks."

From day one they lived up to that positioning statement, better burgers; either with biigger burger patties, actual lettuce instead of a miserable pickled cucumber, to the first Angus beef burger, then bacon and now organic beef. Single mindedly niche focused, and better for it in the minds of customers, who consistently rank Hungry Jacks above Maccas.

Long-term customer satisfaction in fast food comes from smart positioning. Chart: Roy Morgan, August 2013 

Challenger brands create new terms to compete on

Subway shows the rewards of zigging when the competition zags. While fast food leaders spent their product and promotion strategies on short term price promotion or new themes, from changing with the seasons, think summer pineapple burgers to following fashions, think cajun sauce. Meanwhile Subway went where no fast food had ever successfully gone before: the good for you. positioning.

The chart shows the relative strength of Burger King's "do less of the same, better" approach, and Subway's "do something completely different" model. Both are positively recognised by the consumer and continue to command a price premium to the slower to innovate fast food competition.

What size is a typical marketing budget?

How much is the right amount to invest in marketing?

Depends who you ask. The CMO Council asked hundreds of chief marketing officers around the world across categories how big their budgets are. While this was post GFC, it gives us a useful benchmark when planning ahead.

The starting point for setting a budget uses a top down approach based on your revenue. The chart we've made below shows the percentage of revenue invested in marketing by business to business firms.

Percentage of revenue invested in B2B marketing
2010 CMO Council Survey

Interestingly, the consensus view amongst those surveyed was that a new brand launch required a minimum investment of 20% of revenue. As we can see from the chart, either there aren't many new brands launched in any year, or the majority aren't spending enough to ensure they don't fail.

Another way of determining the right size of budget is to compare how much is spent according to the size of the business.

Percentage of revenue invested in marketing by company size
2010 CMO Council Survey

We shouldn't be surprised that as businesses establish themselves and grow, the number of staff grows. As they grow, the relative proportion of their revenue invested in marketing decreases. Marketers understand the long term nature of judging the return on investiment in marketing. Marketing that is consistant delivers compounding returns, a relatively large initial spend will pay dividends in the long term.

Average marketing budget for FMCG brands

A Go-to-Market survey in 2012 found this spread of investment by revenue of FMCG brands:

% of revenue % of companies

No budget    1.1%

0 - 2%           28.6%

3 - 5%           33%

6 - 10%         21.1%

11 - 15%        8.6%

16 - 20%        4.3%

20%+             3.2%

You can use these percentages as a starting point for framing your marketing budget and then compare to the result of viewing your requirements from a bottom up view.

Bottom up marketing budget approach

Create a list of activities you plan to undertake across your integrated marcomms plan and estimate the required investments for each. Balance and adjust for frequency, reach and coverage. Consider set-up costs for all mediums and a realistic figure for content creation and creative, remembering the better the idea the less times your audience needs to see it to get a result. Factor in research and tracking and an allowance to have the flexibility to react and respond. Remember to allocate around half your total budget for labour, across both internal and outsourced agencies for development and management throughout the year.

Depending on the particular segment your brand is in, the consensus is a B2B marcomms budget needs to be between 3 and 6% of revenue and for FMCG between 6 and 12% to have at least a competitive share of voice.

The most and least trusted professions

Every year Roy Morgan releases a ranking of the trust Australians have for each of the professions. Advertising is down and real estate salesmen up in 2013.

Here are the jobs as they rank for trust in Australia

How does this compare on a global basis? See the global trust index.

The Naked truth on Rudd's interview for ads scandal

You probably already have an inkling the public rate marketers and ad people at the bottom of the trust scale for professions. You're right, they are down there with politicians. Something happened this week to reinforce the view that neither can be trusted, it's a classic example of an "whatever it takes who cares about the ethics" attitude.

Controversy blew up when Sydney based Naked Communications was exposed while working on a project for Labor when it offered video interviews with PM Kevin Rudd to online youth publishers in return for free online ad space.

Further blurring the lines between “an interview”, and an ad campaign, the agency wrote to Faifax owned The Vine they were “particularly keen for a deeper relationship (including putting investment behind your content on YouTube).”

They also encouraged the online publication to provide “access to pro-Labor or pro-NBN talent.”

When found with their pants down, Naked were fired by Labor. The Sydney Morning Herald’s political reporter, Jonathan Swan, who broke the story, said “it seemed very odd” that Labor was oblivious to the deals offered to online youth sites.

The agency’s CEO claimed no knowledge of the deal, blaming a younger staff member. Indeed, the day after it blew up the agency planner responsible was “no longer in the building”, having left for a holiday in the UK.

What has been adland's reponse to this question of maintaining standards?

Next day the Creative Director of Wonder wrote in AdNews “how much responsibility are we giving young and inexperienced executives? I think too much. Our industry is more impressed by 20-something backward baseball cap-wearing gamers that impress us with their social media savvy than wise old owls. Where are our wise old owls? Nobody could ever accuse the marketing industry as one that eats their young. Quite the opposite, we assassinate the old and we call anyone over 50 old. Mike Wilson (CEO) is Naked’s wise old owl and the bloke is only in his 40s.”

He then suggested the team at Naked vote Abbott to avoid a Labor backlash. This received some wise comments, my favourite from No Wonder of Paddington:

"Wisdom is not the province of age, and this is not an 'odd judgement error'. It's a failure from top down to create a culture of ethics... that at all times forces doing the right thing to trump making a splash for your client. Wilson may be the straight shooter he's characterised here to be, but as the leader of the pack, he's ultimately responsible for the culture that would spawn the actions of that 'rogue executive' who was shown the door"

"This isn't the first time that Naked has been guilty of pushing the envelope at the expense of common sense, and more importantly common decency. What's worse is that the creative drive to market at any expense has had a poisonous influence on the business in general, and in some corners legitimised the art of the stunt and the bad habit of erasing the moral line to such an extent that many of the young guns don't even know it exists."

"It's the agency that should take the fall in the end, not just the employee directly responsible, and encouraging them to vote for Abbott in an attempt to avoid the negative reaction from everyone that they richly deserve shows us all just how jaded the industry at large has become. Sad and sadder."

SMH's Swan labeled the agency “a bit wild west, they’ve got a cowboy reputation” and said they have a history of “doing things a bit off-piste”. Swan also mentioned the infamous fake Facebook Witchery coat campaign which duped both mainstream media and social media users in 2009. 

When does online content become advertising?

According to the ACCC and AANA it’s one and the same in the eyes of the law, as we can see from the new Code on marketing communications that encompases social media.

Gabriel McDowell, MD of PR firm Res Publica pointed out the new risks inherent in attempting to leverage digital channels: “From a crisis management perspective, and based on the reported facts so far, I think the ALP has reacted promptly and appropriately to try to limit reputational damage to the Labor brand. They have made it clear they didn’t sanction the offending proposal and firing the responsible agency was a justifiable response given the seriousness of its misjudgement.

"And there can be no doubt that it is a whopper of a misjudgement because building trust and understanding between a brand and its public is the fundamental objective of any communication campaign and deliberately blurring the lines between editorial and advertising can only erode trust when it is uncovered.”

"It has never happened before. My mouth was on the ground. Young people are politically engaged and this is not the way to go about appealing to them. It is why we tend to shy away from the major parties."

She told AdNews it was "exactly the sort of thing that is killing media", but that brands generally grasped the value of editorial over paid content.

The challenge for the communications industry is while we may have self-regulation, only a handful of agencies are Accredited by the Communications Council. UNO is, Naked isn't and most clients don't appreciate the difference. As I commented to AdNews, "what's the point of having an agency Accreditation scheme when people arrive at work having forgotten to pack the moral compass. If we want to be regarded higher than real estate salesmen, which the latest research shows we don't, both clients and agencies need to keep briefs away from the irresponsible."

Will digital spell the end of editorial integrity?

This has all happened less than a week after Adnews editor-in-chief Paul McIntyre expressed a fear for the future of publishing as the title becomes a defacto re-publisher of PR releases and sponsored events. This is what he said in an open editorial:

"Change can be painful but equally stimulating. Just as long the industry knows where it’s all headed and in what direction it is pushing its industry media. It won’t be too far away, for example, when you all can hack back your budget for PR operatives. And PR types, brace for a much harder slog. Seriously, most of you won’t be needed. The deluge of PR-generated ideas and story angles is rising rapidly while the ability for business-to-business media to cover it is declining at the same pace. Don’t forget that. Okay, sorry, rant over."