A few thoughts about brands/advertsing

It wasn't very long ago when brands ruled the marketplace; examples include Tide, Campbell's Soup, Crest Toothpaste, and so on. But big retailers helped to kill off brands by private labeling and producing generic products that were exactly the same. Now consumers are king, individuals make choices based on price and quality so there is a lot of parity in the market place. So how does a company succeed in this environment? One example is Nike, who created brand loyalty through the use of endorsements with athletes such as Micheal Jordan. We all know how well that worked for Nike but what a lot of people forget is that Nike took a $20.00 shoe, and with the help of Jordan's name, was getting upwards of $200.00 for its new Air Jordan; supply and demand at its finest. Once Jordan retired, Nike began its grassroots marketing campaign that is courting every school it can by creating partnerships. Another company that is great at grassroots marketing is Apple. When we first started our Post Production facility, very few people talked about Final Cut editing software. Today, because of the great discounts that Apple provides colleges, most of the young editors are very proficient on Final Cut, so Powerhouse is now starting to buy Mac's, where we have always been PC based and Avid driven.


Steve Jobs is great at making people fall in love with his products. We don't talk about MP3 players, we talk about iPods. So by creating an emotional connection through its marketing campaigns, Nike, as well as Apple, have been able to demand more for their products in a very competitive marketplace. Like I've always said, people have to want the product more than they love the money in their hand. There is no doubt that you can create brand loyalty through personalities and a sense of interaction with the people and the products they use. Television best allows this interaction and emotional connection. In the years to come, television and electronic media will become even more interactive but right now and in the immediate future, the television is still king. Televisions are accessible, most families have at least two of them, and people know how to use them. Television is the first place people go for information and on average individuals spend 2.5 hours of their day in front of the tube. It has always been our goal at Powerhouse to reach the masses and capture households, all while entertaining our viewers and educating them on a personal level. The programs we produce have been successful and the companies that have chosen us to promote their products have all benefited.


We feel in order to have insight into consumer behavior you need to fully understand your customer - advertising agencies should understand your customer as well, not just advertising trends, etc. When you understand the customer you can have the foresight to act before the competition does. Even though there is a lot of parity now in the marketplace with quality and price often being equal, it's important to establish an emotional connection to your product - and this can happen when television ad campaigns are done right.

THE ECONOMY AND ADVERTSING

If you’ve heard me talk about the economy lately, then you could probably quote me as saying, “I think consumers are concentrating on two things right now; gas prices and groceries.” But consumers aren’t the only ones feeling the pain of inflation fueled by rising gasoline and grocery prices. Inflationary pressures and a rocky economy are forcing businesses to adjust as well. Some companies are really suffering, such as trucking companies, while others are adapting and some are even profiting, like Wal-Mart and other discount chains.
The average inflation rate for all products in February was 4 percent, according to the U.S. Department of Labor’s Bureau of Labor Statistics. The food and beverage inflation rate was slightly higher at 4.5 percent but both pale in comparison to the spike in gasoline prices during the last year. The average price of all gas soared 33 percent during the past 12 months based on a sample of prices in 80 cities.
The soar in gas prices definitely has an adverse effect on the auto industry which spends more than half of its ad revenue on TV. Auto industry analysts have lowered U.S. car industry unit sales forecasts several percentage points to around 15 million light vehicles (passenger cars and small trucks). That compares to more than 16 million sold vehicles last year and a recent high mark of 17.3 million units in 2000. The much discussed economic slowdown, falling home values and rising commodity prices, particularly for gasoline, aren’t helping.
This doesn’t look good for the nation’s TV networks. Automotive is crucial as the largest category in U.S. Advertising, accounting for 10.2% of total U.S. advertising in 2007, according to TNS Media Intelligence, while second-place financial services weighs in at 6.1%. While expectations are low for automotive –a category whose fortunes ride a roller coaster- there are some bright spots emerging, according to B&C’s Robert Marich. For starters, TV is expected to keep its share of automotive ad spending despite carmakers’ infatuation with the web. “There is little evidence that advertisers are shifting budgets away from television,” says a recent report about U.S. online automotive advertising from consultant JupiterResearch. While forecasting that automotive new media spending will soar from $1.1 billion in 2007 to $3.4 billion by 2012, JupiterResearch notes consumers still watch plenty of TV.
“Research shows that TV advertising drives a lot of Web usage, so I think TV will remain important for automakers,” adds Charlie Rutman, CEO of MPG North America, the media buying agency that places $3 billion in North America ad buys annually. The places you are seeing a decline are in magazines and radio, as well as declines in out-of-home, such as conventional billboards and transit ads. Indeed, auto TV advertising seems to be holding ground even as automotive internet spending alone rose 20% in 2007 to $750 million.

Even though the economy seems weak, unemployment remains low and parts of the economy are strong, such as technology and export manufacturing (helped by the weak dollar). As families start to cut back on extra expenditures, such as movie rentals, eating out, etc, HH impressions should increase and benefit those companies that are aggressively seeking market share through consistent television exposure. I’ve often said during tough times, those companies that continue to run commercials and generate interest in a declining market will slowly gain market share from their competitors. I’ve used the car companies with their significant research dollars to prove the point that television advertising should be where you are spending the majority of you ad dollars. I also want to reiterate how important your website presence is and the fact you should consider running banners on different sites besides the ones you’re already on. For instance, Waterfowler TV receives over 300,000 unique hits each month the program is on the air. All of Powerhouse’s programs drive viewers to the web and ultimately delivers proven consumers to our advertisers.