Yellow Book Ad Guru vs. Reality

A new series of ads for Yellow Book USA features actor David Carradine as the ad guru. Sales are down at Any Company, Inc., and they need help! To whom do they turn? Why, the oddly already-there ad guru.

He advises them to go online; to place their company on the Yellow Book website. (No, not Yellow Pages, Yellow Book. Are you as confused as I am?) The next quarter, the aloof businessmen are dancing about, while one announces, "Sales are off the charts!"

"Right now we're elated with the results of the campaign," CEO of Yellow Book USA, Joe Walsh says. "The ads are a quantifiable hit. There's no question about it."

Allow me to question it.

In a recent survey, only 9% of people polled thought favorably of the ads. 10% thought they were effective. That's strike one.

The ads are competing solely based on price: we are cheaper than other phone directories. Strike two.

Yellow Book USA is a line-extended brand with a me-too name. If one wants to search anything yellow, it'll likely be the other yellow guy. If one wants to search online, it'll likely be Google. Strike three.

Worse than any of those factors, the ad (and the company) do not exist in a little place I like to call "reality." If all one had to do, in order to generate business, was list themselves on Yellow Book, we all would have done it years ago. We don't need some fancy commercial to teach us this "new" lesson.

Also, if more than one widget company advertises with them, will sales be "off the charts" for all of them? Does the sheer volume of companies advertising in their publication create more demand for their category? Imagine this conversation: "Oh, honey, look at how many paper manufacturing companies are listed here. We need to buy paper from the manufacturer! I'm so glad that I was mindlessly perusing the Yellow Book instead of playing with the kids or paying the bills."

Their entire ad campaign falls apart upon even the most cursory scrutiny.

"Customer know what they want, but not where to find it," says the guru. If the customer has never heard of you, they are still going to pick a known brand over yours, even if the known brand does not fit their needs perfectly.

If they don't know what brand to use, they will most likely ask a friend or trusted business associate.

"Who did you use when your house got infested by spider monkeys?"

"We used Adam's Pest Control in Medina. They were great."

Our inquirer will go directly to Adam's Pest Control. He may use the Yellow Book online (or Google, frankly) to find the number.

Are sales, then, up because of the ad placement, or because of the positive word of mouth?

Is Yellow Book a good place to have your business? Perhaps. If you're a built brand, then yes, it would make sense to have your business listed in this directory, as well as the other Yellow guys down the block.

Will the ad or placement pay for itself? Prolly it won't. One must always think of their ad spends as insurance policies against their competition. If there is equity in their brand to insure or protect, then (smartly) advertise. If not, then focus your efforts on PR.

As a side note, I had to edit this article four times in order to remove the mixed up "Yellow Book" to "Yellow Pages" references. It's like Office Depot and Office Max: what's the difference? Ugh! I'm going to Staples! What's their number? Never mind, I'll Google 'em.

Crocs vs. Line-Extension & Fads

Brands Create Customers wrote here about Crocs extending their brand to include items outside of footwear.

Honestly, why must nearly every strong brand line-extend itself? Crocs has made a strong niche for themselves by being first in their category (whatever it exactly is), and by appealing to smaller venues (like volleyball and folk artists).

Crocs are the categorical generic for spongy flip-flops (or whatever they would call them). If I say “what are Crocs?” they response will come back, 100 times out of 100, “those crazy, ugly flip-flop things.” By expanding their line, they are weakening their core. The idea of Mammoth Crocs could be a winner, but moving north of the foot is uncharted (and frankly unwelcome) territory.

By expanding their base to include the major four sports (baseball, basketball, football, and hockey), they are abandoning the very crowd which has made them into a cultural phenomenon.

Brands die. If Crocs are indeed a pair of Zubaz for your feet, then they will die their natural death. Crocs needs to realize that, and instead of fighting it, pour their money into their next innovation, and into their next brand name.

What should Crocs do? Slow down everything! Feed a fad, it will explode. Starve a fad, and it will stay for a long, long time. Beanie Babies are one of the greatest examples of starving a fad. The “shortage” of Beanie Babies was nothing more than clever marketing, after all! Alas, one can buy Crocs at every turn. They have brought the crash of the fad upon themselves, all in the name of greed and growth! Shame on a brand!

Fluff vs. Focus

"John Teets, former Greyhound Corp. chairman and current CEO at Viad once said, 'Management's job is to see the company not as it is, but as it can become.'" (Brand Autopsy)

That's exactly the kind of fluffy, ambiguous feel-goodery that leads management down the terrible – yet terribly enticing – path of line-extension. How many a great (great?) manager has eroded the core brand by adding conflicting brands, simply in the name of "seeing the business as it can become"?

My quote: management's job is to focus everyone involved with the brand on a single objective: what made us strong; what will make us strong in the future. If the answers to those two questions are not the same, then their brand could very well be headed for trouble.

McDonald's vs. Starbucks

McDonald’s announced today that they are “readying the rollout of a line of lattes, cappuccinos and other specialty drinks in all of its outlets,” according to BrandWeek and Crain’s Business Chicago. Management boldly predicts $1 billion in sales. This comes at an enormous initial cost, which will be incurred largely by the revamping of 14,000 US stores.

So the question is: who sells high-end coffee? Starbucks, of course. Do people want a steaming cup of coffee with their Egg McMuffin? Sure. But the breakfast and coffee addition was among the first of the line-extensions that have cost McDonald’s a large part of their profitability.

I’m not arguing against the convenience of these things, of course. McDonald’s has slowly shifted their focus from the position of “hamburger” to the position of “fast food, not matter the desire.” And with each added menu item, their brand has suffered.

White Castle and In-N-Out both focus on hamburgers solely. White Castle owns the position of “ulta-cheap hamburger” with their Sliders. In-N-Out, on the west coast, owns the position of “hamburger” over McDonald’s. Both brands are profitable in ways that rival (and quite often outperform) the Golden Arches. While McDonald’s is busy looking for ways to extend their brand, narrowly focused competitors have burrowed into the niche left unguarded.

I can just hear the battle cry from the boardroom: let’s go get Starbucks! Bad idea! Does anybody remember when McDonald’s tried to kill Pizza Hut personal-style? The McPizza is now just a multi-million dollar faded memory. Expensive coffee? McDonald’s? Excuse me, but I don’t understand.

Previous line-extensions to the McDonald’s brand have hurt their bottom line. The majority of these extensions have followed the inexpensive nature of McDonald’s pricing structure. A cup of coffee? Cheap. A burger? Cheap.

So it would seem that McDonald’s is chasing “inexpensive” to become the Wal-Mart of the fast food world. Still, nothing about their brand says “premium”. An expensive cup of coffee from McDonald’s? What?!

The price of a Starbucks cup of latte or coffee reflects the prestige of the Starbucks brand. The ubiquitous green goddess of alertness is plastered proudly on each cup. People will proudly display their Starbucks cup on their desktop while they sluck and sip away their midmorning yawns.

Would anyone in their right mind display a McDonald’s cup of latte that they purchased for a big price tag? In the mind, the perception is that Starbucks makes premium coffee; McDonald’s makes cheap coffee.

Al Ries wrote, “High price is a benefit to the customers. It allows affluent the customer to obtain psychic satisfaction from the public purchase and consumption of the high-end brand.” He goes on to mention brands such as Rolex, Diesel jeans, Callaway, and Montblanc. Would people pay premium prices for these brands if they didn’t have the outward appearance of being more expensive? No, no, no; a million times no.

Rolex has a heavy, thick wristband in order to assure that its wearer will receive proper credit for their premium taste. Diesel jeans has their logo smacked proudly on the jeans. Callaway makes the largest driver on the market. And Montblanc makes a fat pen.

If you had $50,000 with which to buy a car, what would you buy? A Mercedes, most likely. But almost certainly not a Cadillac. Why? What’s the prestige of driving a Cadillac into your driveway and letting your neighbors see it? Hardly any at all. But a Mercedes…

We are not all strictly motivated by outward opinions. But, we are far more motivated by them than we let on. It’s called the herd theory. If the herd travels this way, most people tend to as well. There will always be a minority who refuse to follow the herd; in that, there is a profitable niche: in computers, think Apple and Firefox. Both have made wildly profitable brands by antagonizing the #1: Microsoft.

Is McDonald’s likely to do to Starbucks with their premium roasts? No. What’s a better strategy? Since they will never go back to their strongly held “hamburger” position, they should focus on “inexpensive,” and antagonize the high-price of Starbucks’ beverages.

AT&T vs. It's Own Claims

AT&T (formerly Cingular, who was formerly AT&T) has decided to drop their dropped calls message. After stomping on America with their $1 billion message, the mobile service provider has shifted gears.

The problem, claim many industry insiders, is that the data can be skewed to show a lot of companies having the fewest dropped calls. The problem, dear industry insiders, is much deeper and simpler than that: AT&T is known for dropping calls. Once a brand stands for something in the mind, it rarely wants to change.

A Consumer Report survey done in 20 US cities ranks AT&T worst in dropped calls. As for AT&T's new approach, "More Bars in More Places," the provider ranked below average in every city except Dallas. The article whimsically announces that AT&T should change their motto to "No Service."

Oy vey!

Motorola vs. Razr

There really are no shortcuts to creating a winning brand. If there were, believe you me, they would be readily exploited. Motorola, who makes over four dozen products, got trounced again, recording their worst quarter to date. They also fell to third in the category of mobile phones.

According to an article by Macworld, "The company is suffering today from its strategy of cutting prices to win market share. In the short run, that helped it gain high visibility with the popular Razr, but excess inventory has allowed competitors to swoop in and gain share."

Where did they go wrong? For one, a lack of focus. Who is number one in mobile phones? Nokia. When I say mobile phone, what comes to the mind? Nokia. What is a Nokia? It's a mobile phone. Years ago, they made everything from truck tires to (of all things) toilet paper. They were also losing close to $1.5 million a year. When they spun off their other companies and focused on mobile phones, they soon became number one in mobile phones in Europe. Now, they are number one in the world.

What is a Motorola? It's a Bluetooth headset, mobile phone, wireless Internet, pager, data solution. The list goes on and on.

In mobile phones, their big winner, the Razr, became commoditized to death and treated like a product, not a brand.

Moto has struggled to harvest another "it" phone (the serendipitous blessing bestowed upon the once mighty Razr). And so, copycat phones such as the Krzr and the Rizr were released. But all they did was remind people of the Razr.

What Moto should have done was treat the Razr as a brand unto itself. The Razr brand needs constant innovation and updates. It should not be commoditized, as they did with the first one. Once everyone could get a Razr for free, the fun was gone. Those who paid several hundred for it were bummed, because the phone's elitist soul had been sucked right out of it.

Moto should not have asked, "How can we sell as many units as possibly, no matter what the cost?" They should have asked, "How can we deepen our market penetration with this expensive, elite phone?"

But now the Razr brand has been tainted. The Razr 2, which will retail for $300 (or so) in September will likely have a very quick, very short-lived surge in sales. And Moto, desperate to win back their market share, will again slice the price of the Razr (a funny concept: slicing a Razr). Once gone, clients rarely return.

Perhaps Motorola's Razr should take a clue from Occam's razor: entities should not be multiplied beyond necessity. (The simplest answer is usually the best, in other words.)

The Razr did not need a Krzr or a Rizr, it needed the Razr 2, sans the destroyed brand image that Moto managed to craft.

Wow. Krzy.

Wal-Mart vs. iTunes

Wal-Mart, the world's largest retailer, announced Tuesday that Wal-Mart Music will now sell music sans copy-protection, also known as DRM (Digital Rights Management). This is a mimicking move to iTunes, who began selling DRM-free music earlier this year.

Traditionally, iTunes charged $0.99 per song. Their new, DRM-free music has been sold at $1.29 a track. Initial reactions to this move have been positive from nearly every consumer, while labels (still stuck in the past–but that's a different story) continue to fight change.

CD sales have been on a continuous downward slide over the past several years, yet the digital music industry has been booming. iTunes is now the third largest music retailer in the United States, behind Wal-Mart (15.8%), and Best Buy (13.8%) with 9.8% of the market.

iTunes did not enter the music retail category as an also-ran. They created the category of digital music retailer. As Tom Peters once wrote, "They say, 'market share.' I say 'market creation.'"

When a brand enters an established category, they must contend with powerful category leaders. When a brand creates a new category, they have no competition, thus becoming the category leaders. Their task, then, becomes creating the new category, rather than trying to dislodge consumers from already well-established brand leaders.

In 1923, a survey was conducted of the top 25 brands. In 1983, the same survey was executed. 23 of the top 25 brands were the same. 19 of the top 25 brands from 1923 still held their leadership position in their category.

What does this mean? Minds don't change; leader's lead. To enter a well-established category against mature category leaders is maniacal and suicidal. And yet, everyday, thousands of companies across the U.S. do exactly that.

Apple is far more adroit than most brands. They took hold of the emerging digital music trend. In 2001, they launched iTunes, becoming first to the market, and, more importantly, first in the mind. Now, in the digital music retailer category, iTunes owns 70% of the market.

iTunes imposed their new category, digital music retail, on the existing category, music retail. They did as Dell did: change the distribution medium.

Their new category went from a 0% market share in 2001 to 14% in 2007. Not bad, considering that the music retail market runs an annual tab of nearly $4.8 billion in the United States alone.

In 2003, Wal-Mart launched their also-ran Wal-Mart Music. At the time, the retailer held 20% of the music retail industry. Wal-Mart Music, despite costing $0.88 per song (a full $0.11 cheaper), has had almost no impact on iTunes’ numbers.

Now, Wal-Mart will sell their DRM-free offering for $0.94, a whopping $0.33 cheaper than iTunes.

Wal-Mart stands for low-prices retail store, not digital music. Even the power of the Wal-Mart name is not enough to save them in the digital music arena.

"Wal-Mart has been behind on the issue of digital music," said Tim Bajarin, an analyst with Creative Strategies. "Making this move allows them to leapfrog to the front."

But does their price-cutting strategy really give them an edge? No. In the long run, history drastically favors iTunes. Wal-Mart’s move will only serve to call more attention to iTunes’ category leadership and DRM-free sales.

If people bought music were a commodity, such as eggs, then Wal-Mart Music’s price-cutting strategy would have iTunes in a heap of trouble. But music is hardly a commodity.

And therein lies one of the greatest powers of proper positioning: premium pricing. Improperly positioned, a brand faces market rate growth and commodity pricing.

Without a strong brand, iTunes would never have taken such a large share of business away from related categories, and they would certainly never stand strong against the onslaught of me-too competitors such as Real Rhapsody, Napster, and Wal-Mart Music.

And, just for fun (it seems), Amazon has put their hat into digital music ring. It appears that Jeff Bezos is suffering from severe delusions of grandeur, or rather, “delusions of brandeur.”

Jeff once said, "A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well." No, Jeff, you don't. The quarterback doesn't earn a positive reputation by trying to do math well, he earns a positive reputation by throwing the ball well and scoring touchdowns. Perhaps that is why Amazon sells digital music now, too.

Wal-Mart=low-price retail store
Amazon=online bookstore
iTunes=digital music

Wal-Mart and Amazon making digital music stores makes as much sense as iTunes selling laundry detergent and shipping hardcover copies of Harry Potter. Pretty insane, yes? Yes.