A new forecast isn't just predicting a lousy holiday for retailers, it's calling for the weakest Christmas in 17 years, since the financial meltdown of 1991. Even with gas and fuel costs declining a bit, "there's a financial retrenchment going on in households that hasn't been felt since the early 1990s," says Frank Badillo, senior economist for the Columbus, Ohio-based TNS Retail Forward. "While the recession in 2001 hurt investors, it didn't affect consumers the way this economy is--there's still of lot of pain from the credit crisis, more people are unable to sell their homes or delinquent on mortgages. They're worried about job loss." As a result, consumers will likely be saying no-ho-ho: TNS predicts sales growth of just 1.5% compared to 2.7% last year, 3.8% in 2006, and 7% in 2005. Back in 1991, he says, growth was 1.2%. The retail winners, he says, are likely to be supercenters, warehouse clubs, and dollar stores that have been outperforming other channels in recent months, as well as the consumer electronics category. And the losers are likely to be luxury marketers, mainstream department stores, and home furnishings. Even online shopping is going to soften, the company predicts. "We expect to see a gain of 9% in Internet sales, to $42.5 billion, the first time it's been in the single digits since 1999," he says. Last year, Internet sales increased 19%. The company expects to see a decline of 1.3% in apparel and accessories, compared to flat results last year, with the biggest drag on department stores, "as upper-income households become increasingly vulnerable to economic pressures." In furniture and home improvement stores, still pressured by an increasingly troubled real-estate market, it expects downturns as well. One bright spot, he says, is likely to be consumer electronics, with a gain of 4%, compared to 3.5% last year (That's not just fueled by gadget-loving gift givers, he says, but also by the conversion to digital TV signals.) The fourth quarter is likely to be especially blue for upscale department stores, he says, particularly Saks, Neiman, and Nordstrom: "They held their own last year, but now, we're even seeing these upscale shoppers pull back." How marketers will win these shoppers over, he says, remains to be seen, but it likely won't be with massive markdowns on the cashmere rack. "Retailers are going into this season with much leaner inventories, and I'm not sure that retailers are going to be that aggressive, since it's unlikely that deep discounts will generate a strong response." A forecast from Deloitte Services LP is also predicting bad news-- looking for an increase of between 2.5 to 3% in retail sales during the November-to-January period, "less than last year's 3.4% increase, and one of the smallest gains since 1991's 2% uptick." Pam Danziger, whose Unity Marketing tracks the spending and consumer confidence levels of the luxury market, agrees that high-end retailers are going to have to work harder to tempt shoppers. "Yes, the value of their home is declining, and their portfolio took a hit. But these people still have plenty of money in their pockets, and earn hefty salaries," she points out. "The issue is that none of them need anything. Their basements are full, their closets are full. They are only going to buy what really excites them--and having another sale isn't going to do it," she says of the nation's 28 million affluent households. Unity's Luxury Index "has been declining steadily since mid-2007, and now, about 80% of these affluent consumers feel the economy is going in the wrong direction." For now, higher-demographic consumers are content to sit out for a few shopping seasons. "Consumers can find excellent quality products at all price points. But luxury marketers have stopped talking about the quality of their materials or craftsmanship, and stopped making a case for the value of their products. Why is that Dolce & Gabbana handbag worth five times a comparable one from Coach or Dooney & Bourke?" she says. "Luxury is the easiest thing to do without."
Accessing the Internet at faster speeds is the premise behind two new AT&T Mobility 30-second ads running on a variety of cable television stations through Oct. 19. The ads target professionals who tote laptops that provide Internet access to download presentations, submit orders, or send emails. These road warriors want the freedom to wirelessly connect to the Internet beyond the capabilities of today's cellular phones. The series puts Bill Kurtis, the acclaimed journalist credited with covering the Charles Manson trials and breaking the story on Agent Orange during the Vietnam War, in the midst of another grandiose news story, discovering the Internet. The latest spots, "Rainbow" and "Yeti," were created by BBDO. Whether finding a pot of gold at the end of a rainbow on a grassy countryside or discovering Yeti in the Arctic, the two ads continue the theme from earlier this year when Kurtis discovered "Amelia" Earhart and the "Fountain of Youth." At the close of each ad, he says: "I'm Bill Kurtis, and I've just found the Internet." That discovery, says Vance Overbey, executive marketing director at AT&T Mobility, was made possible by AT&T's 3G cellular laptop modem. Aside from the 3G mobility ads, AT&T also launched "Beat City" to target 18- to-34-year-olds. In that ad produced by Stardust Productions, the digital character listens through headphones to a variety of music--from rock to hip-hop to techno--on a Sony Ericsson W350 Walkman phone as the song morphs into various musical beats as the landscapes changes to convey moods. The phone's colors--red, blue and black--and music features aim to reinforce the idea that phones make a statement about the person carrying them, says Overbey. "It's the thinnest flip phone in the U.S. that comes with a Walkman 2.0 music player and FM radio," he says. The colors of AT&T's phones are typically blue, black, white or red--although the company's print and television spots focus on the color orange, so consumers can easily relate the phone in the ad to the company. "We did a red promotion around Valentine's Day for the BlackBerry," he says. "The phones may come in a variety of colors, but we typically stick with orange in print ads, so people know the ad is from AT&T." The "Beat City" ad will run on network and cable television stations through Sept. 28, followed by a campaign that could promote the LG Shine, but plans have not been finalized, Overbey says.
For all the hundreds of millions of dollars companies spend on advertising their car insurance policies, they're not getting a very high conversion rate. According to a new study from J.D. Power and Associates, auto insurance companies on average are successfully signing only 2% of all shoppers. For the most part, the companies lose prospective customers before even offering them a quote, says Jeremy Bowler, senior director of the insurance practice. "It's a good thing the industry has a phenomenal policy retention rate," Bowler says. The reasons that many people don't request a quote are varied, Bowler says. Some consumers are put off by a company's lack of bundling options (i.e., the ability to have home and auto insurance through one company), while others have received negative word of mouth about a company from friends or family. Or the process involved to get a quote may be too cumbersome. "Some companies are rooted to traditional sales processes," Bowler says. "That's sort of an inhibitor; you're making it hard to get a quote." According to the survey of nearly 8,500 people, 36% of auto insurance customers have actively shopped for a new insurer in the past year. When asked about various companies, 38% of those shoppers did not recognize many of the country's 26 largest auto insurers, and an additional 39% don't care about the brands. "What's left is a group of people who have strong feelings about certain companies, and some of those are negative," Bowler says. After eliminating the 6% of shoppers who said they would avoid certain insurance companies, the pool of prospective customers is down to 18% of auto insurance shoppers, he says. Of those 18% who might be willing to switch, only 10% ask for a quote (and only half of them make the switch), Bowler says. With many insurance companies gathering most of their personal data through the quote process, insurance companies are leaving a lot of leads that are not followed up on, Bowler says. "[Insurance companies] spend all this money advertising to get people to come to the door, and they only follow up if the customer has filled out an application," he says. "Insurance companies have no way to measure how many more prospects escaped earlier in the shopping process--whether they were driven away by a cumbersome quote process, a non-responsive agency or misconceptions about price or service quality." The study found that many people (60%) are researching insurance policies online, although the channel loses more customers than traditional in-person or phone channels. Only 20% of Internet sales are closed successfully, versus 52% of traditional channels, Bowler says. However, one tactic has been very successful online: offering quotes for other competitors. According to Bowler, one in three shoppers who get a competitive quote from a car insurance company don't bother to follow up to see if that quote is accurate. "If the ambition is to head people off [before researching a competitor], they seem to be hugely successful," Bowler says.
General Mills is resurrecting former professional football players in a bid to remind fathers that the Chex Mix in the pantry makes a great football-watching snack. In its first online effort to reach dads, the brand is posting ads on fantasy football sites on Yahoo that are designed to tap into the nostalgia nerve. LeRoy Butler, Desmond Howard, Billy "White Shoes" Johnson, Barry Sanders, "He Hate Me" (Rod Smart) and Ickey Woods perform touchdown celebrations in videos every week through Nov. 24. "These guys were big in, say, 1989, 1990," says Steve Finnie, Chex Mix marketing manager. "They were early leaders in touchdown celebrations. These aren't the guys you see on TV every Sunday." The six players go head to head for 10 weeks performing end-zone celebrations, followed by a two-week playoff, Nov. 11 to 24. For example, one week players will dance Johnson's Funky Chicken; another week they will attempt Butler's famous leap, and yet another they will imitate the "Ickey Shuffle." Football fans opposed to end-zone celebrations will want to see if Sanders strays from his trademark move of simply tossing the ball to the official. Fans can go to www.CelebrationLegends.com to watch video and cast their votes to determine which player is the ultimate end-zone celebrator. At the conclusion of the end-zone celebration playoffs, Chex Mix will donate $10,000 to the winning player's favorite charity. Finnie says that in households with kids, Chex Mix is an all-family snack, although it was mainly the mom and the kids who were partaking. "We saw a big opportunity to get Dad involved with Chex Mix," he says. "Dads love to eat healthy snacks, and what better way to get them in the game than to reach them when they're doing fantasy football, snacking online, while watching football." WWW.CelebrationLegends.com also features a smack talk section. Consumers can send pre-recorded messages from the players to their fantasy football opponent's phone or email a link to a smack talk video message. Another feature of the site is interviews with each player. Consumers also can enter the weekly online sweepstakes drawing to win a large-screen HDTV and a season supply of Chex Mix to enjoy while watching football. General Mills on Wednesday reported that sales in the first quarter of fiscal year '09 rose 14%, to $3.5 million. Drivers included Small Planet Foods, up 56%, and baking products, up 25%. Consumer marketing support rose 17% in Q1 09 over '08. It had been up 11% in Q1 '08 over the same period in 2007. Fiscal guidance was raised, to $3.81-$3.85 per share.
It's not the best time to buy an SUV, what with gas prices still in the stratosphere, but Kia Motors America is hoping its first body-on-frame SUV, Borrego, takes wing. The company launched Borrego with an ad push during the Olympics, pitching the vehicle as a luxury utility with up-market features at a mass market price. Now the company is hitting the road with grassroots efforts to get potential customers behind the wheel of the new vehicle. The "BorregoExperience" includes both an exhibition in Los Angeles, Dallas and Phoenix, and a test-drive program in which the company will deliver a Borrego to selected homes in those markets, giving consumers full use of the vehicle for 48 hours. A company rep says Kia chose those markets because of their high concentration of Kia dealers and owners. The vehicle loans are going to early hand-raisers who have expressed interest. The company will do market research on the test-drive customers via post-use surveys, and use the effort to expand reach to people who are unfamiliar with the Kia brand. < The BorregoExperience also includes an exhibition that visits several national markets, wherein consumers can test-drive the vehicle and engage in "Luxury for Less" activities, including a "Cool Zone" to beat the heat; the Gourmet for Less cafe with cooking demonstrations; and personalized "Living Rich" postcards where visitors can have their photos taken against exotic backgrounds. Also, Kia has launched a national sweepstakes that gives away five Borregos per month through the end of the year. Entry is at any of the tour stops or at BorregoExperience.com/win. And as part of its sponsorship of the National Basketball Association, a deal signed last year, Kia touted the Borrego during the NBA Nation touring program--and awarded a new Borrego to the overall competition winner. And Kia will be the official NBA partner of the upcoming NBA pre-season outdoor exhibition between the Phoenix Suns and Denver Nuggets taking place in Indian Wells, Calif., on Oct. 11.
Pressing onward into its fall marketing season, CBS will feature a promotion on dry cleaners' "green" hangers for some of its shows. Starting this month, CBS will promote seven shows with specific clever messages displayed on the hangers. For "The Early Show," there is "A lot happens early...so hang out with us." "How I Met Your Mother" has the already-popular show catch phrase "Suit Up." New shows include "The Mentalist," which features "Hang on every clue"; "The Ex List" notes that "Every date has a few wrinkles," while the "Eleventh Hour" favors "Get dressed. It's later than you think." "Worst Week" says "Clothes make the man," and "Gary Unmarried" fosters a "Hang in there" theme. CBS notes that these aren't just any hangers--they are "EcoHangers" from the Hanger Network, made from 100% recyclable and recycled paperboard in EPA-regulated factories in the United States. Several years ago, ABC promoted "Desperate Housewives" on plastic dry cleaner bags. CBS also will market its programming on the rooftops of buildings that are visible from flights that descend into Los Angeles' LAX airport--a first for any network, according to CBS. New CBS comedies can also be screened on American Airlines flights. CBS has had a longtime deal with American Airlines. CBS will be running its "CBS Fall Preview Show," showcasing the network's five new series, on Friday, Sept. 5. It is also available on TV Guide Channel and to customers of Comcast, AT&T U-verse and Verizon FiOS. CBS affiliates can also run the show any number of times prior to the start of the new season.
I read about a study designed to discover the causes of anxiety in 7-to 11-year-olds. There were three groups researched: anxious kids; non-anxious kids with anxious parents; and a third group in which neither progeny or parents were anxious. The researchers said that the third group was "surprisingly hard to find." Clearly, these were academics, not businesspeople, because the latter would not be so startled. Advertisers and agencies are all too familiar with the neurotics that pass for citizens in this country. It's astounding, really, that it took this long for major marketers to question the methodology by which they determine what these twitching blockheads think about anything. So I was heartened to read in Ad Age that the Advertising Research Foundation, Procter & Gamble and Unilever don't think traditional Q&A consumer surveys can survive another five years. Now, we all know how often a prediction like this actually comes to pass, so let's not hold our breath. But at least it's a start. Consumers are half-crazy. All of them. And they lie to you. About everything. Turnabout is fair play, I guess. But the point is that they never tell you what they really believe. Older consumers are desperate to please. Younger ones are gleefully screwing with you. Anyway, the death of Q&A surveys is not entirely good news for ad and media shops. They need this kind of misleading and useless marketing data to convince their clients that they're not as clueless as the clients themselves. But it's even worse for public relations. If the world's largest PR agencies are still doing what they were doing when I worked for them or was regularly pitched by them, this will be a crushing blow. The PR shops constantly used quickie Q&As fielded by third-tier vendors that asked basic questions designed to elicit trumped-up data as evidence for whatever asinine thing the shops wanted to claim on behalf of their clients. Then, they pitched the results to the media. This is just one small example of how persuaded communications is as intellectually bankrupt as its paid communications cousins. (I'd add the Democratic Party to the list, but they are in a class by themselves when it comes to ineptitude.) And I applaud the ARF and the packaged-goods empires for looking for research tools that actually reveal something. But I fear their solutions will cause more harm than good. Inevitably, they claim that they will attempt to mine marketplace wisdom from digital media--including, one presumes, such gushing fountains of verity as crowd-sourcing sites, blogs and social networks. Which, as we all know, encourage consumers to be paragons of honesty and open-mindedness. So you know where this is going to go. Older users will try to be helpful. Younger ones will gleefully screw with the researchers. YouTube videos will create a viral whirlwind of ridicule for the companies that fund the research. Nothing that is learned will be true, nothing that is tried will work, and a university study will reveal that, to its great surprise, every kid in America is riddled with anxiety. Especially the ones whose parents are marketing executives.