Diane Francis on Business Issues

Tuesday, July 11, 2006

Madison Avenue Buzz

Diane Francis column Friday Post July 7:

Procter & Gamble is the world's biggest advertiser, spending US$4.6 billion in 2005, or as much as a small Canadian province.
This giant has stayed ahead of the curve, and its competition, for decades by clever marketing which has turned its brands into household words. Its mega-sellers include Crest toothpaste, Tide, Clairol, Pampers, Pantene and Mr. Clean.
But worrisome to the advrtising world - and the media companies it subsidizes -- is the fact that for the past two years P&G has cut spending by more than the rate of inflation.
This is due to a number of reasons. For starters, marketing shifts online which is cheaper than traditional media outlets. And advertising cuts also occur after merger activity. Last year, P&G's overall advertising budget fell 3.7% as it absorbed gigantic Gillette, took on more overheads and rationalized marketing efforts.
But P&G has also just undertaken an initiative that bypasses advertising agencies and media alike and competes with them. It is called Vocalpoint and is a unique word-of-mouth network created in order to sell and research products.
P&G has recruited 600,000 "moms", who have visited its website, Vocalpoint.com and signed on as volunteers. They are handpicked because of their extensive social connections, through volunteer, theatre, sports, church, work or other activities. They must have children under the age of 19 years. They are called "connectors".
They are given products for free to test, then asked to comment online weekly. Some unlaunched products are being tested by these "Moms".
"Vocalpoint is a word-of-mouth advocacy program that focuses on the thoughts and opinions of `Moms'," said P&G spokesperson Robyn Schroeder in a recent telephone interview. "It was nationally launched in February following test markets in Buffalo, Tulsa and Columbus. At P&G, we know that moms express terrific ideas and want to communicate with companies in a way that will allow their point-of-view to be heard. Vocalpoint provides them with that vehicle, as well as, gives them a first hand look at products or services to share with their social networks."
P&G won't say how big their budget is to create this network, or how many people are employed recruiting, training and dealing with this giant army of "Moms".
But the subsidiary, Vocalpoint, is also becoming a profit center because it is selling its word-of-mouth and research services to other corporations.
"About 50% of our effort is as an outsource advocacy program for other companies," she said.
Vocalpoint came out of our successful word-of-mouth marketing program involving teens called Tremor.
"It began five years ago and is still in existence today to provide teens with cool new products and services that allows them to influence marketers and manufacturers," she said. "We have 250,000 teens in our database."

Dollars follow Eyeballs

The name of the game in advertising is determining how to get your message in front of as many "eyeballs" as possible. That's why research into how people spend time with various forms of media is critical.
PriceWaterhouseCoopers and Knowledge Networks came up with some interesting research recently.
Currently, consumers spend 51% of their media time watching television; 23% listening to radio; 15% on the Internet; 3% reading magazines; 3% playing videogames and 4% reading newspapers.
Over time, this pie has been divided up differently and obviously the eyeballs focused on the Internet have been followed by an increase in online advertising. In 1997, online advertising revenue in the U.S. was only US$1 billion and last year exceeded US$12.5 billion. That figure still represents only 5% of the total amount spent on advertising but is expected to grow dramatically.

The British are Coming

The British media has been characterized by a broadcast oligopoly, dominated by the BBC, and, at the same time, wild and healthy competition in the print media with a plethora of newspapers and magazines.
But the old dowager of broadcasters, the BeeB, has certainly taken a page from its print cousins in the UK and launched an aggressive global branding initiative that is starting to position it as a worldbeater in many markets.
Recently, a giant billboard in Times Square heralded to the marketing mavens in this city, the BBC's arrival and ambition in this huge economy.
The network's also been very successful already. Its radio news and feature broadcasts are now heard daily throughout the United States on most National Public Radio affiliates. Its television coverage has insinuated itself on cable line-ups in most regions of the U.S. and around the world.
Most impressive, is the fact that its website has become one of the top ten worldwide, in terms of hits - bigger than any of the U.S. networks.
Besides that, it just launched an Arab-language television service to tap into that half-a-billion-plus marketplace.
Also interesting to note, and unconnected, is a milestone recently passed by another British media institution - the venerable, wonderful Economist magazine. It just surpassed the one million circulation mark worldwide.


Post a Comment

<< Home