Executives at Activision, Electronic Arts and Double Fusion issued a call to action Tuesday during a panel discussion at the OMMA Global Hollywood conference in Los Angeles. The move invites key ad agencies and video game publishers to form an organization that would assist in driving collaboration across the industry. Panelists stood divided on whether the current consortium, the Interactive Advertising Bureau (IAB), has adequately supported--or could provide future support for--ads in video games. "If we are to have success in organizing the industry, we need someone dynamic to lead the efforts," says Jonathan Epstein, CEO at Double Fusion, a rival to Microsoft's Massive, which places ads in video games. "In the last two years we've come out with a glossary, and I think we can do better than that." The challenges to creating an organization that would support industry studies that move the in-game video ad industry forward include requiring companies to fund the projects and people to donate their time. Video game designers and publishers recognize the challenge. "We do need the big brands and the agencies to get involved," says Shelby Cox, senior director of in-game advertising at Electronic Arts. "Even though we are slowly becoming media companies, it takes a lot for organizations like the IAB to create mindshare. If we had more focus from the industry pushing the agenda to help us fix the problem, we would get there quickly." Activision has conducted market research campaigns, and finds that measuring the benefits of ads in video games has become easier than measuring the same on television or radio, according to Dave Anderson, senior director of business development at Activision. "There's no wasted frequency; you only pay for impressions that have been delivered," he says. The ability to gather statistics on the length of time video game characters stand in front of billboards has long been the promise of in-game advertising, and game publishers and distributors have been working overtime to provide data that adds credibility to the medium. Aside from studies that prove worth, executives say the industry needs simple rules and common terms to communicate business transactions, as well as a method for advertisers to purchase ads in several gaming platforms with one transaction. Looking to purchase ad space in video games, such as "Guitar Hero," for example, media buyers must write several insertion orders to span across several gaming platforms--one for Microsoft's video game ad company Massive for the Xbox 360, another that represents Sony's PlayStation--and if Nintendo's Wii supports the game, that too. Some believe the "walled garden approach" required to reach across multiple platforms creates disruption, holding back advertisements in video games from becoming more popular among those who buy ad space. Panelists said it's inefficient to expect buyers to purchase media insertions from several sources. Electronic Arts' Cox says the high-tech games can cost between $50 million and $70 million to build.
General Motors' Buick division used its yearly New York Auto Show luncheon at Cipriani to talk about art and design: the former being the theme of a pair of new TV spots featuring golfer Tiger Woods, the latter a key to Buick's design continuity since the '40s and the direction for forthcoming global products. On hand were GM's global VP of design, Ed Welburn, and his subaltern, David Lyon, formerly design chief at GM's Shanghai studio and currently executive director, interior design. Also on hand was the Buick Riviera concept coupe that Lyons and his team developed in GM's Shanghai lab, as well as its forebear, the 2004 Velite concept. Welburn offered a primer on Buick design cues, beginning with the YJob, a '50s-era design experiment by legendary GM designer Harley Earl. He said elements of cars like the Enclave SUV, the Lucerne sedan, as well as the Velite and Riviera concept sustain the trend. "China is a growth area, but we need a single design aesthetic for both Asia [and the West]," he said--"a single vision for Buick's future, globally." That vision--at least as far as the new Riviera design expresses it--keeps the trademark waterfall grill, portholes, and "a hint of boat-tail," said Welburn, referring to a design cue going back to the Y-Job. It also avoids so-called block parallel lines. "All lines have sweep and flair," he explained, adding that the knife-edge headlights and taillights reflect Chinese white jade sculpture. The next iteration of Buick's direction will be the Invicta, to be unveiled later this year. Maria Rohr, Buick marketing director, said the Riviera concept--with its flowing lines, trademark waterfall grill, and rear slightly reminiscent of the boat-stern statement in the Y-Job--speaks to Buick's future design direction and reflects current vehicles. She said the Enclave SUV has proven popular. "It epitomizes where we want to be heading, and it was a catalyst last year." She said Enclave sales, around 36,000 vehicles in the first 10 month of 2007, were 35% greater than the company had anticipated. The new TV spots offer an interesting take on Buick's art and design focus. The spot has Tiger Woods standing beside a stack of golf balls staring at a blank canvas. He grabs clubs off of a rack and fires ball after ball--each filled with paint--into the canvas. When he hits them they explode in color, creating a kind of Jackson Pollock design on the sheet. Rohr said there are two versions of the spot: one showing the current Buick lineup and the other showing the Riviera concept car. The ads, with the tag "Drive Beautiful," begin running today on a variety of network placements. Three of the canvases, signed by Woods, will be sold at charity auctions as "Tiger Art." Rohr said that Buick is benefiting from GM's strategy of uniting Buick, GMC and Pontiac under a single dealership roof. "We help each other from a traffic perspective," she said, explaining that new vehicles from Pontiac and GMC draw people to dealers who might not otherwise see Buick vehicles, and vice versa. "Seventy percent of our dealers are in the [Buick-Pontiac-GMC] channel."
Wal-Mart Stores has come up with its most energy-efficient store design yet, and says the new prototype will use up to 45% less energy than its baseline Supercenter. And experts say that Wal-Mart, which has aggressively pursued energy-saving innovations, may finally be winning the perception war. Although environmental groups often accuse it of being the consummate corporate green washer, its energy efficiencies are undeniably cutting-edge, and will be tough for many retailers to replicate. This prototype, for example, called the HE.5, draws on lessons the retailer learned from previous high-efficiency stores, and is the first in a "new series of prototypes designed for specific climates," the company says. Geared specifically toward the western U.S., it "features advancements in heating, cooling, refrigeration and lighting to conserve energy and reduce greenhouse gas emissions," using "an integrated water-source format system." Water is cooled naturally by pumping it through roof-mounted cooling towers, which is then piped under the floors to lower the temperature in the store. Such innovations give Wal-Mart plenty of competitive advantages, says Jerry Yudelson, a Tucson, Ariz.-based green building consultant and author of The Green Building Revolution. "Wal-Mart is an aggressive cost-cutter, and once it realized there were potentially tens of millions of savings in operations, energy efficiency had great appeal," he says. "And it gives Wal-Mart an opportunity--both in terms of public relations and political relations--to be seen as a different kind of company." Besides, he says, while Wal-Mart has been a leader, more and more retailers are taking a pragmatic, forward-looking approach to green building. "No matter who gets elected in November," he says, "it's likely we'll see some introduction of carbon controls. And for multinationals doing business in Europe, as Wal-Mart is, where controls are more strict than in the U.S., it makes sense to get ahead of the curve--what's happening in the EU will drive what happens in the U.S." Many other retailers are hurrying their greener designs along. Some, such as Best Buy and PNC banks, have already made some form of LEED certification--the highest standard for green buildings--part of their building goals. And, he says, "I wouldn't be surprised if by 2010, Wal-Mart was involved, in some way, in the LEED program." Wal-Mart says its new store will "ultimately help Wal-Mart reach its goal to design and open a viable store prototype that is 25-30% more energy efficient by 2009." Its initiatives come as environmentalism becomes more and more mainstream. Market researcher Mintel, for example, says that more than one third of adults (36%) claim to "regularly" buy green products, compared with 12% just 16 months ago. And the number of people who "never" purchase green products has been cut in half in that period, with only 10% of American shoppers falling into that category, down from 20%.
A combined one-two punch of recession and changing consumer behavior is producing one of the toughest business environments in decades for the restaurant industry, according to a new report from The NPD Group, titled "Why This Downturn Will Be Different for Restaurants." During two of the four recession-related downturns in the industry during the last three decades (1983 and 1990-91), the growth of restaurant traffic slowed, but did not actually decrease. During the 2001-03 recession, traffic growth slowed more substantially, but stayed in the positive column except for 2002, when it declined by less than 1%. But in 1979, when exceptionally high inflation came into play, restaurants experienced a nearly 4% drop in traffic, followed by another dip of over 1% in '80. While energy and food inflation have not yet come close to reaching the levels they reached in '79-'80, NPD's analysts say that today's economic dynamics are more similar to that period than to those of the other recent recessions. They also point out that 2007 restaurant traffic saw no organic growth last year. Traffic was up by just 0.7%--and that was driven primarily by unit expansion, which suggests that traffic was flat on a comparable-store basis. This was the smallest traffic gain since the 2000-03 recession. Obviously, inflation and economic uncertainty are forcing consumer spending cutbacks. And although supermarket food inflation is higher than it's been in 17 years, restaurant meals still cost about three times as much. Customer traffic may stay positive in '08, "but will likely come in below '07 levels," says Bonnie Riggs, author of the report. Riggs says that the economic stimulus package may help, as a package did in 2001. "While it was a short-term boost, it did keep the industry in a positive position," she notes. But this time, the economic downturn is being exacerbated by existing trends that are having a negative impact on restaurants. "While the economy is a major factor here, this particular slowdown goes beyond just plain economics," Riggs says. "NPD is seeing consumer behavior at restaurants changing" as a result of shifting lifestyles. One factor is a slowdown in the growth of women entering the workforce. "Over the last several decades, the restaurant industry's growth was heavily driven by a greater percentage of women joining the workforce, but that trend is over," comments Harry Balzer, VP and author of NPD Group's annual "Eating Patterns in America" report. This trend "may be more of a long-term issue for the industry than the current economic situation," he adds. Population survey data show that the number of women ages 25 to 54 in the workforce jumped from 31% in 1948 to 76.8% by 1999. But this growth has hit a plateau since, and a "relatively flat trajectory" is also expected going forward, according to an analysis by the Federal Reserve Bank of San Francisco. Other factors contributing to restaurant challenges: * While dinner traffic held up during previous recessions, the number of restaurant diners was in decline before the economy headed south. Restaurant breakfasts and snacks are increasing, but it's difficult to grow in the face of lost main-meal revenue. * There is much greater competition now from ready-to-eat, frozen and other meals available in supermarkets. Despite the challenges ahead for 2008, opportunities do exist. Riggs says restaurant operators and marketers need to understand what drives consumer behavior and how they manage their costs when they visit a restaurant. What can restaurants do? Understand what drives consumer behavior and how they manage their costs when they visit a restaurant, and look for new ways to offer value and make the restaurant experience as pleasant as possible, says Riggs. "In the current environment, there are more restaurant companies going after fewer dollars. To drive traffic, they're going to have to establish a competitive point of difference in terms of a value proposition," she notes. And given that many majors are already competing head to head with pricing tactics like price/value menus, they may need to look at how to add food quality/variety and service differentiators into the price/value relationship, she adds.
A brand with strong customer engagement has customers who (any or all of the following): promote the brand, come back in the future, go out of their way to do business with the company, and feel strongly for a brand. That's according to PeopleMetrics, a market research firm based in Philadelphia. The company polled 10,000 U.S. consumers over several weeks last year to get a pulse on which brands do the best job of engaging consumers. The firm rated 100 brands together, then by their respective categories: hotel, retail, banking and casual dining. The leaders in apparel: J. Crew, Nine West, Ann Taylor, Aeropostale, Chico's, Guess and American Eagle Outfitters. The PeopleMetrics study also looked at links between Customer Engagement and financial performance. Overall, companies with more engaged customers outperformed those with less-engaged customers in terms of gross margin, earnings per share and return on equity. Ranked together, J. Crew was fourth overall, per Frank Rowe, vice president of the firm. "The number one company was The Four Seasons," he says, adding that Williams Sonoma and Texas Roadhouse Grill were also number one in their respective categories. He said that not surprisingly, luxury brands dominated the top of the lists (Ritz Carlton was No. 3 overall). Still, "One big surprise was Texas Roadhouse, a restaurant chain, which was in the top three in customer engagement. That's very interesting to us because there is clearly a connection between what your employees are saying and doing about the brand," says Rowe. PeopleMetrics' study also considered what retail chains can do to build more engaged customers. In particular, the study revealed a strong link between engaged customers and engaged employees. "Partly, it's based on expectation of customer: if you go to The Four Seasons and get Texas Roadhouse service, you won't be happy. But consumers who go to Texas Roadhouse like the energy around their service--the experience part of the dynamic is related to expectation of customers." Other apparel retailers in the study were: Abercrombie & Fitch, Foot Locker, Men's Warehouse, The Gap, The Limited, and Urban Outfitters.
Marketers can leverage the Web to raise brand awareness, but the campaign needs to be part of an integrated strategy that is benchmarked using diverse metrics and multiple forms of media, including TV, print and out-of-home. That's according to Scott Symonds, executive media director at AKQA, one of the execs on the "Online Brand Awareness Simplified" panel at OMMA Global Hollywood. "I don't think anyone tries to build a brand exclusively with TV or print, so I don't know why you'd want to try it with the Web," Symonds said. "We're as good as anybody in the world at creating brand awareness, but we don't like using the Web exclusively. It's an exciting opportunity, but not the only one out there." Symonds and others on the panel said that integration is non-negotiable when it comes to generating online brand awareness successfully. For example, Scion used buzz tracking to help generate online awareness of an offline event, according to Bill Stephenson, Nielsen Online's VP/client services. "Scion is Toyota's youth brand, and they'd planned an offline event--a party with DJs--and instead of putting an ad online, they asked us to identify the influencers in their segment and reach out to them." Stephenson said that Scion contacted those influencers and turned them into brand advocates by inviting them to the party. "The message intended to make recipients feel like 'the brand came online to where I hang to invite me to a VIP party' so that they'd go to blogs, message boards and offline hangouts telling their friends about the party and spread the news about how cool Scion is," Stephenson said. This integration also extends to the metrics and mediums marketers use to measure the campaign's effectiveness. According to Drew Lipner, SVP/group director at Digital Measurement Group, the metrics don't have to be transactional just because the campaign is running on the Web. "You don't have to analyze an online campaign with conversion-specific metrics. It really depends on what the brands' goals and objectives are, and things like whether they're trying to communicate with a broad or niche audience," Lipner said. "You can use attitudinal barometers like purchase intent, and make metrics like click-throughs or page views secondary." Lipner also said that some brands were interested in linking transactional stats like keyword searches or site visits to lifts in brand awareness after the fact. The panelists also said that there was an opportunity to use social media properties like MySpace to assess the efficacy of a branding campaign. "You can use them to measure what we call a 'buzz sentiment'--or the perceptions and attitudes about the brand," Stephenson said. For example, General Motors could compare itself against Toyota in terms of perceived "greenness" by monitoring how many times the brand name was blogged about and what kinds of statements were made on user profiles and discussion boards. "Brands can listen to consumers online and then analyze whether the campaign performed as it was intended, whether to scrap it, or even how to proceed before a campaign even gets started," Stephenson said.