Schering-Plough will continue to make, sell and market its Vytorin and Zetia cholesterol-reducing drugs, despite studies questioning their efficacy over other products -- studies company executives said had created "unwarranted confusion" in the market. "The unwarranted confusion in the U.S. about cholesterol management and about our product Vytorin/Zetia that started in January clearly had a big impact on this important franchise," said company Fred Hassan, Schering-Plough's CEO, during a conference call discussing the company's first-quarter earnings. The drugs dominated talk during the call with analysts. The company's net income was $253 million, or 15 cents a share, down from $530 million, or 36 cents a share, from the same period a year ago. Company executives attributed the drop to charges related to the acquisition of Organon BioSciences last year. (Without the charges, the company said it would have had net income of $862 million, or 53 cents a share.) Vytorin and Zetia sales were down 5% in the U.S. over the previous year. However, sales increased 46% in international markets, leading to an overall 6% gain for the drug, for a total of $1.2 billion in global sales for the first quarter. "You can expect us to continue our support of Vytorin and Zetia," said CFO Bob Bertolini. "They're strong global brands with continued safety, efficacy and tolerability profiles." A study released earlier this year showed that Vytorin and Zetia are no more effective than better-known and older medications called statins (a category that includes drugs such as Lipitor and Zocor) at reducing LDL (or "bad" cholesterol). The study led the New England Journal of Medicine to editorialize that the two drugs should only be used after other options proved ineffective for patients. Company executives countered those findings, saying press coverage of the results had been blown "out of proportion," according to Schering-Plough Research Institute president Tom Koestler, who noted efficacy and safety issues had not been raised from the study. "We stand behind our science and the science behind Vytorin and Zetia," he said. "We are concerned the continued uproar undermines patient care," Hassan said. "Vytorin and Zetia continue to be valuable tools for cholesterol management. That is why we are committed to these treatments. And that is why we will continue to advocate their appropriate use." Schering-Plough and Merck, which market the drugs under an equity arrangement, had pulled direct-to-consumer advertising for the drugs after preliminary results of the study were released. However, company executives would not say when DTC advertising for the drugs would resume. "We are committed to continuing to provide full support [for the drugs] and continue to evaluate when is the right time to consider what to do next for DTC," said Carrie Cox, president of global pharmaceuticals. "We are very committed to patient education and to continue to provide substantial support to physicians for patient education materials."
With gasoline at $118 a barrel, it's no surprise that motorists are looking for lighter wheels. According to NADAguides.com, the consumer Web site of the biggest publisher of vehicle pricing and specification information, that's exactly what is happening. The company says that it has seen a recent spike in interest in motorcycles and scooters that can't be explained solely by seasonality. The company says motorcycle-buying interest at NADAguides.com saw a 48% jump in March versus March 2007. While NADA Guides concedes that sales of motorcycles were down more than 7% at the end of 2007, and that sales are also sluggish so far this year, the interest is trending way above normal both for motorcycles and other products tracked by the firm. Lenny Sims, motorcycle editor and VP/operations at NADAguides.com, says he isn't seeing the same lift in interest for big-ticket recreational products with which motorcycles usually compete. "People aren't looking at buying travel-trailers and motor homes. While they aren't buying bikes as their core primary transportation vehicle, we saw attention diverting from other 'nice-to-have' areas in the last six or eight months, and more consideration for motorcycle categories." The company defines an increase in motorcycle-buying interest as the number of new motorcycle prices provided to consumers at its Web site, with analysis for this study comparing data from March 2007 to March 2008. The company also tracks boats, as well as recreation vehicles from ATVs to travel-trailers and RVs, as well as classic and collectible cars. The study comes as gasoline in the Midwest is topping $3.50, with summer driving season (April through September) predicted to be up 61 cents from last year--and with gasoline prices in some parts of the country expected to cross the $4-per-gallon threshold. Ty van Hooydonk, who heads up product communications for Discover Today's Motorcycling, part of the Motorcycle Industry Council, says he predicts sales will strengthen this year. Van Hooydonk, who lives in L.A. but doesn't own a car (preferring his seven motorcycles), says the motorcycle is a perfectly viable alternative. "With gasoline heading to $4 a gallon in more and more places, you can expect people will take good long look at two-wheeling again, as they did when gas prices boosted above $3 in 2005," he says. He says scooters aren't the only realm of the bike market that is seeing a lift. "The other category that has been benefiting from fuel prices has been dual-purpose bikes." That means motorcycles as happy on dirt as on roads. Van Hooydonk says the reason is that in addition to flexibility, dual-purpose bikes get 60 miles per gallon and better. And it is also a growing segment of the market, with new entrants like Honda's CRF 230L, and Yamaha's XT 250. "They are affordable and cheap to maintain," he says. Sims says this increase in buying interest, spurred by the knowledge of motorcycle fuel economy, should help offset sales declines of on-highway bikes in the coming months, as consumers who research motorcycle values at NADAguides.com--and who use the company's motorcycle buying guide to compare bikes and to obtain specification information--start buying. The company divided the most-researched bikes into short-range, mid-range and long-range commuters. In the first group, scooters and smaller bikes predominated with Yamaha Majesty 400, Honda Silver Wing and Suzuki's Burgman scooter dominating. Among mid-range bikes, Honda Shadow Spirit 750, Suzuki Boulevard S50 and Kawasaki Vulcan 500 were the top bikes. For long-range bikes, cruisers like Harley-Davidson Electra Glide, Honda Gold Wing (with airbag) and Yamaha Royal Star Venture were the top bikes sought. Sims says scooters and short-range commuter bikes are seeing the most activity. "We can't quantify sales yet, but the thing that stood out was that there's an increase in interest, [more so] in short-range commuter bikes than mid- and long-range." Sims says the increase for motorcycles is not a merely cyclical lift as warmer weather gets people thinking about the motorcycle, car, RV or boat they've always wanted. "We have been trending this for 10 years, but typically the increase is across the board, across all products. But, while all of the other verticals we can compare this to--boats, cars and other items we have on site--are trending normally, we saw extreme spike in motorcycles." He predicts that interest will translate to sales 30 to 90 days down the road.
Unilever's Caress is going to Rio. No matter that the average Caress user couldn't pick Simon LeBon out of a lineup, and probably wasn't even born when Duran Duran's "Rio" rocked the charts back in 1982: The company has remade the song with Nicole from the Pussycat Dolls, the popular burlesque group, to launch its Caress Brazilian Exotic Oil Infusions body wash. The new song, which debuted online earlier this month, is part of a broader campaign to encourage women to "unleash the spirit of Brazil onto their skin," the company says. While the campaign also includes national radio, TV and print support, the Web plays a major role. At caressbrazilian.com, users can download a free version of the song, view behind-the-scenes footage, TV ads, and register for free product samples, as well as dabble with the site's tools, and create their own videos to show how "they live out the charm and spirit of the country." Prizes include a trip to Rio, iPods full of Brazilian music, spa treatments, and a year's supply of Caress. But it's also possible that the product launch--by invoking Brazil and its rainforests--could find itself generating a different kind of buzz. Greenpeace, the environmental activist group, has just published a report called "Burning Up Borneo," lambasting the company for its palm oil policy. Protesters scaled the company's headquarters in Rotterdam, The Netherlands, and hung a banner saying: "Unilever, don't destroy the forests," according to press reports, while 60 volunteers, dressed as orangutans staged protests at Unilever offices throughout Europe, jumping out of boxes and confronting Unilever employees as they entered work. (The orangutans' last forest habitat is in Borneo.) And a video--closely mimicking Unilever's hugely popular "Onslaught" ad for Dove, called "Onslaught(er)"--pops up first when the term Dove is typed into YouTube, and has been viewed about 90,000 times in its first two days. Instead of the onslaught of beauty images, the girl is faced with vivid flashes of chainsaws, forest destruction, and vanishing apes.
When Microsoft reports earnings today, analysts don't expect to hear much on the Yahoo deal--but they hope to hear about the online ad biz, and at the very least get the lowdown on the usual software and operating system metrics. Brent Williams, analyst at The Benchmark Company, says that for legal reasons, the Redmond, Calif. powerhouse will stick to the playbook--and avoid saying anything that could change the landscape or jeopardize the deal, which has an April 26 deadline. He warns investors not to get sucked into the Yahoo saga because it will only drive short-term, not long-term results. Instead, consider key metrics like PC unit shipments, which fundamentally drive the Windows operating system business. Microsoft may talk about the ad network in passing because it wants to point toward its ad network as cool and magical, Williams says, and at the same time highlight exciting similarities in case the Yahoo deal goes through. "You can't say our stuff is horrid today and we're desperate to buy Yahoo because that will save us," he says. "On the other hand, you can't say our stuff is utterly fabulous and there's no value to the Yahoo stuff because then investors want to know why they are spending more than $40 billion for the company." Dawn Talbot, principal at One-On-One Research, plans to look for insight on aQuantive, the advertising company Microsoft purchased last year for $6 billion, to see if large brand names have signed on since the acquisition. That type of detail could provide some indication of whether the ad market sees Microsoft's technology as the driving factor behind increasing sales--or similar to Google, the brand name becomes just as important as the platform to drive revenue. "The business division will drive the majority of revenue, followed by client server and tools," Talbot says, expecting to hear Microsoft justify investments in online ad networks. "The online segment is about 6.2% of total revenue for this quarter, approximately $14.6 billion." Analysts say when considering advertising momentum, anecdotal evidence becomes more important than percentage, or contributions, to total revenue when talking about companies the size of Microsoft. Microsoft's Atlas ad network, for example, serves about 8 billion ads daily, or 200,000 per second. Sid Parakh, analyst at McAdams Wright Ragen, says that last quarter, the Redmond, Wash. company reported online advertising grew 26%, including search and display, from the prior year. Ad sales rose about 38%, including business from aQuantive. "For the Online Services Group, we estimate $885 million for the quarter, which includes aQuantive this year--up from $623 for the year ago," he says. "We're looking for them to beat the street this quarter." Analysts expect Microsoft to report earnings for the quarter of about 44 cents per share on revenue of approximately $14.5 billion.
Even with content expanding rapidly on mobile devices, many questions remain about whether consumers will be receptive to advertising. A Silicon Valley company, which believes it has a solution to the retention challenge, is offering mobile TV programmers and service providers what it believes is a unique way to gauge that effectiveness. GoldSpotMedia believes that targeted and interactive ads have the best chance of resonating on mobile TV. In turn, it has developed a product that allows dynamic ad insertion within the content, hoping to better match marketers with interested consumers. Interactive ads--prompting a consumer to receive a coupon or receive crucial info--can also be staged. GoldSpot is now offering programmers and service providers a "Trial-in-a-Box" product that enables them to test the effectiveness of various mobile TV ad models themselves. GoldSpot believes the findings can lead to determinations about the potential profitability of targeted and interactive mobile advertising. The product intends to gauge the effectiveness of how traditional TV inventory functions in mobile TV. In short, does a 30-second spot work in both? If not, what works better on mobile? Programmers and service providers can also test what kind of content--live sports or news, movies or TV shows, or made-for-mobile content--brings the highest ad receptivity. "Virtually everything is in place today, including mature broadcast technologies ... high-quality content and consumer acceptance, to make interactive mobile broadcast TV a reality," said Staffan Nilsson, senior vice president, business development at GoldSpot. "The glaring exception is proof that it can be profitable to the entire value-chain."
Two weeks ago, in the hope that a new "signature" blend would help revive coffee sales and consumption, Starbucks served up a new "everyday" java called Pike Place Roast. To promote the launch, Starbucks gave away coupons for free coffee and hosted free tastings, hoping that a new product formulation would reinvigorate its U.S. business. The brand has suffered in the past 18 months due to some brand equity deterioration on the part of Starbucks' service and surroundings, and growing competition from rivals ranging from McDonald's and Dunkin' Donuts to independent coffee shops. Starbucks was rated No. 3 in the Coffee category the 2008 Brand Keys Customer Loyalty Engagement Survey, having lost its brand equity over recent years in the "Service & Surroundings" loyalty driver. In assessing Starbucks among consumers who had tried the new blend, Brand Keys found that Pikes Place Roast didn't give much support to the brand. The introduction of the new blend quite logically made itself felt on the "Variety and Selection" driver. All increases in brand loyalty are welcome but "Variety and Selection" is the least important driver and it is where Starbucks is already strong. Benchmarked against 100, the Category Ideal is rated 125. Starbucks, pre-Pike Place introduction, was rated at 112. After the introduction it was rated a 113.5. And that's by people who actually tried the new blend. The increase in strength on that driver did not move the Starbucks brand out of third place (behind first-place Dunkin Donuts, and second-place McDonald's), and these metrics correlate highly with consumer behavior. This is a good example of a brand mistaking a marketing opportunity for a brand strategy. While a marketing opportunity exists to sell an 'everyday' coffee to compete with Dunkin' and McDonald's, this is not a strategy for a brand built on the customized cool of the Starbucks' experience. While adding another variety is not damaging, triage for the brand will come from finding new ways to connect back to the service and surroundings that consumers want, a consumer who is five times more driven today by customized experience than 10 years ago. Starbucks has admitted consumers are interested in a coffee they "can count on every day, all day, all week." That's the marketing opportunity. Get the consumers who weren't interested in the stronger varieties Starbucks is known for and have them come in and buy something closer to the traditional cup of coffee they're buying elsewhere. But if consumers don't believe the new offering is going to meet or exceed their expectations, they're not going to change their current loyalties. Virtually nobody turns down anything that's free!