Bono has launched Red brand where a % of profits go to fight poverty in Africa. Sponsors include AMEX and Gap. This is a big idea as it combines consumerism with "savetheworldism". It's good for business and it's good for the world. This joins fair trade coffeee from Starbucks, Sundance film festivals commitment to the environment and many more. In a world gone mad with terrorism and war it just seems right that business commit to helping the world in their own way. Bono and Red are an inspiration to marketers worldwide.
General Mills to Let Agencies Call the Shots
By STUART ELLIOTT
New York Times
Advertising
ONE of the nation's largest marketers, General Mills, is seeking to transform the way it works with its agencies — and vice versa — in a shift that underlines the changes that are remaking the advertising industry.
The moves by General Mills, which sells products under brand names like Betty Crocker, Big G cereals, Green Giant, Nature Valley, Pillsbury and Yoplait, give new authority to the agencies and revamp compensation. They are taking effect with the company's 2007 fiscal year, which began June 1.
General Mills, which is based in Minneapolis, spent $529.9 million to advertise in major media last year, according to TNS Media Intelligence, a unit of Taylor Nelson Sofres that tracks ad spending, compared with $576.9 million in 2004.
The changes show how marketers are confronting challenges like increased competition, the fragmentation of the mass market and the rise of new media.
The shifts are intended to "completely overhaul the way we work with our agencies," said Mark Addicks, chief marketing officer at General Mills.
They are part of "a really strong push for growth" in revenue and profit at the company, he added, and a desire "to be the growth leader" in the packaged-foods categories in which General Mills competes.
One change is meant to help General Mills adapt to the new-media landscape as it tries to reach consumers using nontraditional approaches like the Internet, e-mail marketing and branded entertainment.
"The old media are alive and well, but the new media are in a very steep growth curve," said Jeffrey Merrihue, chief executive at Accenture Marketing Sciences in London, a unit of Accenture.
"You need to plan to take advantage of the opportunities and prepare for a future when the new media are more and more important," Mr. Merrihue said.
General Mills will let its two principal agencies, Campbell Mithun and Saatchi & Saatchi, determine the media in which ads run and which agencies will create them, in a bottom-up approach. Previously, the approach was top-down as brand managers at General Mills coordinated those efforts, working not only with the principal agencies but also with agencies that produced online, retail and minority campaigns.
The goal is "to make sure a campaign, from the get-go, is media neutral, going to the best place for that brand," Mr. Addicks said. Media neutral means that ads run where they belong most, rather than in outlets predetermined by tradition or the size of a commission.
Campbell Mithun, part of the Interpublic Group of Companies, and Saatchi & Saatchi, part of the Publicis Groupe, will become what Mr. Addicks and Doug Moore, vice president for advertising and branding, are calling "brand navigators." That is, they gain the authority to decide how to produce all types of campaigns that are integrated across all forms of media outlets.
According to an annual survey by Nancy L. Salz Consulting in New York, only about a quarter of advertisers allow agencies to be the primary coordinators for accounts. Executives at General Mills said the agencies requested the shift.
Peter Hubbell, executive vice president and general manager for the General Mills account at Saatchi & Saatchi in New York, said he believed the rewards would outweigh the risks. "Trepidation comes into play only when we're given responsibility for an outcome but not authority," he said. "Call it what you want, holistic marketing, integrated communications; everyone is talking about the right way to do it," Mr. Hubbell said. "General Mills saying to us, 'You guys decide who you want at the table' — that's pretty powerful."
Mr. Hubbell's counterpart at Campbell Mithun in Minneapolis, Mike Nelson, said he liked to think of the new method as "upstream planning."
"This is a key difference from the past, when the client said, 'This is what we want to do; come back to us with something,' " said Mr. Nelson, who is executive vice president and worldwide account director at Campbell Mithun. "This involves us earlier and gives us the ability to steward teams and lead."
General Mills is also changing how it will pay its agencies. The company is adopting what is called pay for performance or performance-based compensation — that is, payments based on results in the marketplace for the brands being advertised.
Previously, General Mills had paid its agencies using a mix of methods, which included commissions based on the amount of money spent on ads regardless of their effectiveness, performance incentives and the results of annual evaluations.
"There's a lot of skepticism at agencies when you try to introduce performance-based compensation that you're trying to take money off the table," Mr. Moore said. "This is absolutely not the case."
Rather, Mr. Moore said, "when we beat plan, the agencies will make more money; when we make plan, the agencies will make a certain amount of money; and when we miss plan, the agencies will make less money."
The benchmark for measurement will be what General Mills refers to as reported net sales, which subtracts the effects of retailer incentives, coupons and other discounts on prices of products.
There is a floor below which compensation cannot fall, Mr. Moore said, and a ceiling that he described as "a generous incentive to try to hit."
About half of all advertisers have adopted some form of pay for performance, according to the annual Salz surveys, which date back to 1986.
"It's a big opportunity for the agencies," said Nancy L. Salz, president of the consultancy. "They can lose big, but they can also win big."
"Advertisers using performance-based compensation report many positives and almost no negatives," Ms. Salz said. "Agencies are pretty much happy with it, although many report a negative effect on compensation."
Mr. Hubbell of Saatchi & Saatchi summarized all the changes this way: "It's a more intelligent way of having us work and a more intelligent way of paying us for that work."
Saatchi & Saatchi's work for General Mills dates to the 1920's, through a predecessor agency, Dancer Fitzgerald Sample. The brands the agency handles now include Cheerios, Green Giant, Pillsbury and Yoplait.
Among the agencies being overseen by Saatchi & Saatchi are Bromley Communications, for Hispanic campaigns; Burrell Communications, African-American ads; Publicis Dialog, interactive; and Zenith Media, media planning and buying.
Campbell Mithun has worked for General Mills since the 1970's. The brands it handles include Betty Crocker, Cinnamon Toast Crunch, Hamburger Helper and Nature Valley. Campbell Mithun is a partner of another Interpublic agency, the McCann Worldgroup, which handles General Mills brands in overseas markets.
Among the agencies that Campbell Mithun will oversee are Casanova Pendrill Publicidad, for Hispanic campaigns; Marketing Drive, retail ads; MRM, interactive; and Carol H. Williams Advertising, African-American campaigns.
Cereal marketing like spoiled milk
http://www.cheerios.com/ourCereals/FruityCheerios/FruityCheerios_home.aspx
What drives great marketers to moments of madness? Both Kellogg’s and General Mills are highly respected marketers who have weathered the Atkins diet with grace and generally launch cool new products like Nutri-grain bars (Big K) and Froot Roll ups (Big G). So how to explain a recent bout of mutual marketing madness? First up was Big K launching the atrociously named “Tiger power” where they pasted Tony the Tiger on a box of imitation Cheerios to attack – yes – Cheerios. The re-badging was completely flimsy. Did anyone truly believe that such a sham would topple the mighty Cheerios?
The product came and went as any decent marketer would have predicted and one would expect the category to return to regular, every day good marketing practice. But no, Here comes the big G. Thay have re-badged healthy Cheerios with sugar and artificial colors to attack the legendary Froot Loops with ….Aaaaaaaaaaaargh…Fruity Cheerios. How is it possible? It is such a bad idea. It not only will fail to dent Froot Loops, but it will cast a nasty halo on the parent brand.
Right as usual
Understanding Marketing Psychology and The Halo Effect
What Apple's iPod and Motorola's RAZR Can Teach Us
Marketing and psychology are closely related. If psychology is the "systematic study of human behavior," then marketing is the "systematic study of human behavior in the marketplace."
After broad marketing campaigns heavily focused on a single produce -- the iPod -- Apple's overall fiscal 2005 sales were up 68%, profits were up 384%, and the company stock had jumped 177%.
The halo effect
Good-looking people, for example, tend to be perceived as more intelligent, more successful and more popular. That's the halo effect in psychology.
The halo effect also works in marketing. What's behind the phenomenal success of Apple Computer? In a word, the iPod.
In fiscal 2005, Apple Computer sales were up 68% over the previous year. Profits were up 384%. And the stock was up 177%. And Apple's net profit margin increased from 3.3% to 9.6%, an astonishing jump.
The good news from Apple Computer wasn't just the success of the iPod. As a matter of fact in fiscal 2005, the iPod and iTunes together accounted for only 39% of Apple's sales. The other 61% of Apple (computers, software and services) also did well.
Apple's computer and related businesses were up 27% in fiscal 2005 over the previous year. And, according to industry reports, Apple increased its share of the personal computer market from 3 to 4%. That's the halo effect in marketing.
73.9% market share
During the year, Apple bombarded the public with television advertising, print ads and billboards touting its iPod. Very effectively, too. Apple share of the digital music market is 73.9%. The iPod brand is so dominant that almost nobody knows which brand is in second place. (For the record, it's iRiver with a miniscule 4.8% share.)
What about the marketing support for Apple's line of personal computers? The company can't have spent very much. I can't remember seeing a Macintosh advertisement during the year, can you?
Which is exactly the point. Apple put the bulk of its marketing budget behind the iPod creating a halo effect that helped the entire Apple product line.
Motorola has done something similar by putting its emphasis on its RAZR line of cellphones. In the third quarter of last year, for example, Motorola shipped 38.7 million cellphones. Revenues for the quarter were up 26%.
But only 6.5 million, or 17% of those cellphones, were RAZR phones. Obviously the RAZR became a halo for the rest of the line.
Go with your best horse
Focusing your marketing message on a single word or concept has been our mantra for years. But taking this idea one step further can also produce dramatic results. To cut through the clutter in today's overcommunicated society, place your marketing dollars on your best horse. Then let that product or service serve as a "halo effect" for the rest of the line.
Not an easy idea to sell in the boardroom. "What? You want to spend most of the marketing budget on a product that accounts for only 39% of our sales?" (It's even worse than that. Presumably Apple Computer's 2005 marketing budget was prepared in 2004 when iPod and iTunes accounted for only 19% of sales.)
One of the best examples of the halo effect is Sirius Satellite Radio and Howard Stern. Sirius has 120 channels, but they promote only the shock jock. Results have been phenomenal. The day they announced the hiring of Stern in 2004, Sirius had just 660,000 subscribers. Today they have 3.3 million.
Stern is not for everybody. Probably half of the new Sirius subscribers will never listen to his channel. But the focus on Stern has generated enormous PR and created a halo over the entire satellite radio system. (Much like the effect the Sopranos have had on HBO.)
Halo effect in marketing history
The halo effect has a long history in marketing. In 1930, Michael Cullen created the first supermarket chain which he called "King Kullen." His breakthrough idea was his method of pricing. He decided to price 300 items at cost. Another 300 items barely above cost. And the remaining 600 or so items at very healthy margins.
Guess which items he chose to advertise? The ones he sold at cost. What you advertise and what you make money on can be two different things. Virtually every principle of psychology has an application in marketing. Take "imprinting," for example.
The first brand in a new category will imprint itself in human minds as the original, the authentic, the real thing. Kleenex in tissue. Hertz in rent-a-cars. Heinz in ketchup. Starbucks in coffee shops.
The study of marketing begins with the study of psychology.
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Al Ries is the author or co-author of 11 books on marketing, including his latest, The Origin of Brands. He and his daughter Laura run the Atlanta-based marketing strategy firm Ries & Ries. Their website: www.ries.com.
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