iTunes Radio – The Great Cross Sell Platform

If you haven’t upgraded to the new iOS7 platform for your iPhone you’re in for a pleasant surprise – iTunes Radio.  As it’s similar to other internet radio platforms such as Pandora, etc. you would think it’s just another music streaming service…but alas, as you dig a bit deeper you’ll find iTunes Radio is the great cross sell platform.

What Apple’s done right with iTunes Radio

-          Access – it’s right there at the bottom of your music library where your playlist, artists, etc. is listed.  Easy to reach, easy to buy.

-          Features – easy navigation from the information graphic to an artist station, for the song, sharing the station (sharing also equals cross selling), ability allow (or not) explicit tracks.

-          Cross Sell – not only is the $1.29 buy button in it’s same graphic and placement you’re use to it… the announcer comes in very naturally/in no way obtrusive and briefly mentions a track you might want to download.

-          Individuality – the ability to “tune” the station from Hits to Variety to Discovery I found great.  If I wanted to hear the familiar – I kept it on the Hits, if I was in a more inquisitive mood I’d tune it to Discovery – more opportunity to Cross Sell. 

-          Clarity – reception via wifi was fine… but 4G seems to stutter a bit.

-          Fresh Music – although the music is probably the same as in my iTunes library, iTunes Radio creates a new playlist of music I normally wouldn’t listen too but fits the category.  And that becomes addictive… to the point, where I’ve downloaded 3 songs which I hadn’t heard for years – again Cross Sell!  And that data about my purchasing history is surely getting mashed up for additional cross sell opportunities in the future.

-          Integration – as all my music is on iTunes – buying integrates right into my catalog as you would expect it to…. keeping me from straying to another music service.

What Needs Improvement

-          Graphics – the same basic music genre has the same graphic images… It makes it tough for you to mental mind graph the music to an image.

-          UI – even after using it for a few days I keep stumbling with the UI trying to navigate my way around.

All marketers can learn another lesson from Apple.  This time, the lesson is subtle but just as powerful – sell horizontally and vertically.

Scott

Redesigning the Stop sign

Humerous -- at times you just have to sit back and laugh....

Scott

Gotcha’s When Hiring an Agency

• Overhead
• This is one of those “hidden” expenses which tend to slip through the cracks when discussing compensation with an agency.  Usually the cost per title/person is discussed and negotiated, but overhead is where the agency makes up or adds profit.  I’ve seen overhead, etc. 32-52% above the cost per person.  The question you should always ask is why am I paying for the electricity when they have a ton of clients…. How is that separated between clients?
• Bonuses
• Look I’m not beyond saying people shouldn’t get a bonus.  But make sure you understand how it’s calculated and the process associated with determining who gets what and the amount.  If it’s not coming out of what you’re paying per person, but the agency profit… they can do and should do what they want.
• Staffing
• Miss-aligned staffing is a big issue.  You have to decide the type of staff you want on the account.  But be wary of high dollar agency executives being billed on the account.  Are they adding value?  Or are they just pressing the flesh?  My starting goal has always been to have 40% on executive billings and the rest on lower level staffers – this way the agency gets off to a good start and transitions quickly.  Then over time, I like to move the percentage split to be 20-25% over one year for executive management and after one year approximately 15% with the rest being staffers. 
• Billing
• Media invoicing usually takes some time to consolidate and validate billing… with some taking 120 days to be completed.  However, having the agency NOT bill you for headcount or media on a consistent basis – or not calling out problems with billing is an issue.  Monthly you should get a list of invoices not paid and the date of the invoice.  If they don’t provide it, make sure you have agreement you won’t be responsible for invoices you haven’t been informed of after 1 year.
• Indemnity
• This is always the “big issue” in all the negotiations.  As clients we want to hold them responsible for everything, and agencies don’t want to be held accountable legally.
• My take – they should be responsible for the work product.  For example if an employee steals code from another company… the agency should take the hit.  However, if the client doesn’t do the appropriate trademark search when the agency wasn’t asked to do so… the client is responsible.
• Also, don’t get so hung up on this… use common sense.  Remember, your legal department is geared to limit as much risk as possible.
• Overstaffing
• Yes, the big issue… let’s get it out on the table.  It’s in the nature of most businesses to add staff to grow.  Frankly, I believe that’s the wrong strategy, especially with the agency.  You should work to decrease the number of staff by 2-7% per year… this forces you and the agency to get more efficient and eliminate non valuable projects or processes.
• Auditing
• You must have the ability to audit at anytime – period.  Naturally, you shouldn’t have access to individual employee’s records, but you should have the ability to look at time cards, etc. 
• It’s a good practice to audit every 18 months – even it’s just a spot audit.
• Also, hiring an audit company experienced in agency audits is a plus – they can ask the tough questions, take the heat with the agency, etc.  Make sure that’s included in the contract as well.
• Reviews
• Quarterly performance reviews are critical!!  Sitting down with the agency team and saying “what could we have all done better?”
• If you don’t do this on a continual basis, improvement won’t happen and you’ll quickly end up in a “blame the agency” situation.  And that usually ends up in an agency review.
• Non-Compete
• Ensure you have a minimum 6 month non-compete regardless of whether you or the agency discontinues the relationship.
• Media
• Consolidated media buying offers clients the benefits of reduced costs as their buys are integrated with other clients.  Here’s the rub… some media outlets will provide additional bonuses back to the media agency buying arm.  Some agencies pocket those bonuses themselves, when they should be split and given back to the client.  Make sure you get those extra media bonuses back in your pocket!
• Make Goods.  Ensure your contract includes the use of make goods prior to utilizing your media budget for the same property.   You’d be surprised how these can become a surprise.  

What a Drummer Can Teach Us About Business?

So that headline grabbed you.... if you look at other areas of the world you can see bits of brilliance which can be transferred to marketing.  Take for instance Fede Rabaquino -- a drummer from Europe.

If you check out his video channel, you'll see he takes current or old songs and adds his own "drumming flavor" to each song.  Not only does is change the way you experience the song, but in my opinion makes the songs sound fresh -- in otherwards, utilize what's already worked and just put a new spin on it.

In an age of business budget constraints, pressure on margins, etc.   Why do we insist on coming up with a "new" campaign or initiative everytime?  Why not be like Fede and look at the work from a different perspective...

Enjoy his latest video.... a new take on AC/DC's "You Shook Me All Night Long"

Scott

What Kind of Business Should You Strive to Be?

It’s questionable today whether the economy is actually getting better.  But regardless, one thing I was taught was how you should focus your business for not only the short but long term. 

Good Companies -- cut costs

Great Companies -- cut costs AND increase gross revenue AT the same time

Outstanding Companies -- cut costs AND increase gross revenue AT the same time AND CONTIOUSLY over time.

Which are you today?  And more importantly what kind of company do you want to be?

Scott

Are Our Metrics Focusing on the Right Things?

It seems like every other email newsletter I receive has articles regarding metrics about social, mobile, engagement, likes, content views, GRP’s and the like.  And I’m not disputing the point of each of these are important in their own universe…. And if you can connect them, all the better.

However, let’s go back to the fundamental reason for marketing.

“All marketing investments, across ALL areas/functions/businesses, etc. is to do one thing…SELL”

     

If the above weren’t true, why would the board of directors, management and shareholders agree to marketing budgets?  Marketing is a fundamental investment with both short and long-term financial goals.  Short-term – sell product immediately, drive leads for sales, increase eCommerce traffic…. Long-term – build the brand, create advocates for the brand, drive high value leads, increase price, etc.

Which brings me to my concern…it seems to me we’ve taken our eye off the ball on the metrics which truly matter and support the reason for marketing investments.  So what top-level investment metrics should we regain focus on?  My key ones include:       

1.  Incremental Gross/Net Revenue per total marketing dollars spent

2.  Customer Acquisition Cost

3.   Both #1 and #2 but revenue per marketing employee

4.  Customer Cross Sell Ratio

5.       Recency/Frequency/Monetary Value customer model – check out Don Libey’s extensive research on this model

6.       Customer Satisfaction Levels – get down to specific detail items you’re working on and track them consistently

7.       Customer Lifetime Value

8.       Marketing Investment Payback Time

9.       Customer Attrition Rate

10.   Customer Segmentation Model and Marketing Investment

Certainly, I have additional ones I could list, but keeping things simple--the above 10 help focus your investments, strategy and executions on the things which matter.  In addition, when the boss calls you in the office, you speak management language vs. the marketing babble.

Scott

What Does Bezos See in the Washington Post?

Why would the king of online buy an “old school” media property?  Everyone is scratching their heads – from Wallstreet to Ad Agencies. 

However, look deeper and you can begin to see opportunity:

1. The Washington Post is a household name after the Watergate Scandal – and that is relevant to the older demographics who value the journalism

2. The Post has tons of content – which the younger demographics (and many older demos) flock too.

3. Amazon has the distribution tool – The Kindle… which it has leveraged to drive digital book/content sales

You put those together and you get brand, content and distribution.  Revenue opportunities abound:  

-          white branded content to sell to others

-          firewalled and valuable content sales model

-          free content to drive the sales of more Kindles

-          cross sell opportunities – too many to even think of

-          potential to create advertising sales on Amazon.com company based stores

Bezos is brilliant.  Don’t underestimate this buy out.

Scott

Publicis & Omnicom

Publicis & Omnicom

$23B in revenue;  130K employees – that’s the anticipated top line numbers on the proposed Publicis and Omnicom merger.  Compare it to WPP at $16.5B in revenue.  And the rest of the players, at 50% less in revenue to WPP.

The combined company gives Publicis/Omnicom a gigantic footprint in every area core area:  creative, media buying/planning, digital, events, direct response, ecommerce, web management, etc.

And we can prognosticate all day about the merger, whether Publicis/Omnicom can keep focused, not erode their customer base, get the estimated $500M in savings out of the combination. 

But what intrigues me is what happens to the rest of the players.  

1. A WPP/Interpublic merger would put WPP back on top in terms of revenue by a $1B or so.  However, it would shift the possible merger revenue back to the US.  WPP has consistently said, and frankly done a great job, moving revenue overseas, thus going to higher growth markets.  Chances of a merger between the two giants – 40% Interpublic is large, but it has been well documented the agency holding company has had…is that too much of a distraction for the laser focused Sir Martin Sorrell?  China is the big bet… who owns the market and more importantly who can drive additional revenue share in the country.  My gut, WPP wins… WPP has had a longer time to focus and invest in China.

2. Japan – Dentsu and Hakuhodo continue to have a lock on the country.  They won’t necessarily gain revenue, but they won’t lose it either.  The bigger question is whether Hakuhodo is able to drive a wedge between the big players and Dentsu on any internal client competitive issues.

3. Wildcard – WPP’s international focus could make Dentsu a very interesting combination.  Owning Dentsu completely locks all media inventory with Dentsu and provides a WPP/Dentsu merger with the ability to gain media revenue every time Publicis/Omnicom purchases media in Japan.  Leveraging Dentsu’s model in China and across Asia Pacific could allow WPP to gain big market share in Asia.  It also fills the appetite clients have to continue to drive business in Asia.

This one is a power struggle in my view.  Dentsu is a very, very private agency and sharing information isn’t a strong point of the agency.  Then there are the diverse cultural differences with the Japanese.  But, if anyone can pull off a large international deal in Japan its Sir Martin.

4. Rest of the Bunch – given scale, the rest will need to settle with their place at the table, prove they can provide better creative, service and prices and fight for the scraps.  But let me say this…. You can make a ton of money picking up the “scraps” from the big dogs.

Scott

   

How Far We’ve Come….

Today, none of us could imagine not having email, the internet, being able to shop online, do our banking, watch videos and share our thoughts, etc.  But go back to the 1990’s and you can see how far technology, and the use of it, have come.  I love this clip from the

TodayShow in which they are trying to figure out what the @ sign meant.

That was less than 20 years ago!  Just think what the next 20 years will bring.

Scott

LinkedIn – The New Reverse “Spam-a-Lot”

LinkedIn.com has become the latest digital spam system.  I noticed this issue a little more than 18 months ago, when I began to get numerous s solicitations from a host of odd individuals and companies.

We all know the purpose of LinkedIn is to connect people across business lines, regions, etc.  And I concur this is a great business value.  However, I’ve found a few disturbing issues as well.

-          Reverse Invitations -- Is where someone contacts you and asks you to send them a LinkedIn request.   So you ask yourself, “Why wouldn’t they invite me?”  More than likely the answer is LinkedIn has flagged them as spammers so they can no longer send invitations without knowing the email address of the invitee. 

-          Invitation Bait and Switch – where you receive an invitation from someone who claims to be a “student” or such with very low current LinkedIn.com connections.  They also seem to all have graduated from schools in EMEA. 

So I tested both situations over the past 6 months by complying with only 1 request from each of the above. 

What happened next nearly stunned me… within 72 hours’ both my email spam folder and LinkedIn profile were overwhelmed with offers, reverse invitations and the like.

Fast forward to today, the number of spam emails is still high, but the number of LinkedIn reverse invitations has decreased by ~40% my conclusion, these dubious invitations are merely a way to consolidate and sell email addresses to fast moving email spammers.

So beware of those invitations…

Scott

Pixel Renting

Location, location, location -- we've all heard it before, it's the key to the Real Estate Industry.  And yes location is critical for eCommerce and web sites.  Where we put our copy, focus points, purchase buttons, etc.

One of the challenges we face is multiple clients who want to be on the "home page" or want to take over specific high value areas of the site.  And in some companies the ownership of the site is assigned to the business... in which they can do whatever they want with their portion of the site.

However, if you're like many, the webmaster or eCommerce Manager owns the site and works with the businesses to align objectives, etc.  But you have the problem as everyone wants that valuable location.

A thought to begin instilling into clients as the owner is the idea of "Pixel Renting."  If you think of your site just like a piece of real estate, you're renting the locations to your clients.  I like to tell folks, I'll put the most successful businesses or campaigns in the locations which have the best revenue.  So, how do you determine this and level the playing field?  I do it by determing the "Revenue per Pixel" measurement.  Just like retailers figure the revenue per square foot... so should digital marketers.

Revenue per Pixel is calculated by taking the amount of revenue and dividing it by the number of pixels.

When you use this simple calculation you can create value based on location and drive the businesses to create impactful campaigns, etc.  You can run A/B tests between different business groups and use the calculation to be your tie-breaker on who gets what.

Give it a try.

Scott