Groupon dissected. Merchant beware?

Here's a provocative POV on Groupon from TechCrunch - internet marketing company or small merchant loan sharking scheme?  

A few excerpts:
Groupon is not an Internet marketing business so much as it is the equivalent of a loan sharking business. The $21,000 that the business (up front) for running a Groupon is essentially a very, very expensive loan.  They get the cash up front, but pay for it with deep discounts over time.  Now here’s the crazy part.  Not only is Groupon effectively giving loans to merchants, but it also works the other way around.  The merchant is on the hook for the entire value of those deals until Groupon pays the merchant back its portion.  Unlike other loan providers, the merchant is making a short-term loan to Groupon. (Not technically, but effectively.) They buy inventory in advance of the Groupon run. They also serve the initial rush of customers. The business is in a hole before they get their 30- and 60-day Groupon payouts.


Even more interesting is the squeeze that Google Offers is putting on Groupon.
In (Groupon's payment terms), the first installment is 33% in 5 days. If they have to pay merchants faster, that could lead to problems.  And Google might force that to happen. According to Google Offers’ payment terms, merchants receive 80% of their share in 4 days—more than twice as much, 1 day earlier.  There’s no way that was an accident.  If Groupon matches these payment terms, they’ll need cash faster and need to grow faster.

Happy birthday, David Ogilvy.

David Ogilvy would have been 100 today.

I spent my formative years at Ogilvy & Mather, going there straight from Duquesne University and leaving 15 years later with a grasp of brand strategy, integrated marketing, global branding, and most importantly, the value of big creative ideas.  O&M helped me grow up professionally and personally, and I am forever grateful.

In those days Ogilvy was a "teaching hospital" – you learned while you practiced your craft.  In addition to formal training programs we were inspired by the ever-present Ogilvy-isms – a body of "how to" principles for creating effective advertising.

Even though David had long since retired to his chateau in France by the time I joined O&M, I did have one memorable encounter with the man.  We were pitching Jaguar Cars on the Friday afternoon before the Memorial Day weekend, but half the agency had left early for the long weekend.  So we created the perception of a bustling shop by moving people around the building by walkie-talkie (in the days before cell phones) as we led the clients to various pitch rooms.  In in the midst of this logistically complex pitch I heard that David Ogilvy was in town and wanted to meet the clients.  What could be better than to have the man who penned the famous Rolls Royce ads meet the gentlemen from Jaguar Cars?  David entered the final room on the walking pitch, introduced himself, and asked the clients to leave with him.  For 15 minutes, Charlotte Beers, Graham Phillips, Bill Hamilton, Rick Boyko, Kelly O'Dea and I, sat there with absolutely no clue where he had taken them (fearing that I had not only lost the pitch, but I had literally lost the clients).  We later found them huddled in David's office.  It seems David needed to pee, so he brought them to the men's room, then to his office to hear his wisdom.

We won the account – my first victory leading a pitch.

Thank you, David Ogilvy.

Shazam – The QR code of TV.

Progressive Insurance is running (testing?) TV spots that are Shazam enabled.  When I saw the spot the other day I was excited and jealous at the same time.

I love Shazam – it's a very cool music app.  Last weekend, after tagging "Pumped Up Kicks," I found myself wondering why Shazam hadn't yet positioned itself as a QR code for TV.  TV audio is just like a music track – it's all about ones and zeros.  When I later saw the spot I realized I wasn't alone in pondering this question.

Using Shazam to tag the Progressive spot downloads content from Flo, a link to get a quote, a Flo-isms app, etc.  Is Progressive the best test case of Shazam?  Not sure, but I applaud them for testing it.  It would certainly be good for a brand that needs deeper demonstrations or explanations – e.g., cars, computers, financial services, etc.

Going mobile.

I've long advocated that marketers view mobile as an opt-in response device and not as an advertising medium.  Let's agree on a simple truth:  everyone has their phone in hand or nearby all of the time.  Sad perhaps, but undeniably true.

The huge potential of mobile is captured in this infographic, courtesy of Microsoft.

By including a mobile call to action we blur the tired distinction between offline and online; between traditional and nontraditional; between one-way and opt-in communications.  Is a QR-enabled print ad in Fortune traditional or nontraditional?  Is an outdoor poster with an SMS invitation offline or interactive?

I believe mobile response is best used for bringing sight, sound and motion (an amino acid of brand marketing) to otherwise static media.  For example, for United Airlines BD'M included an SMS response on airport banners to enable smartphone wielding business travelers to watch a video of the airline's new first class sleeper suites; for Compellent we embedded a QR code in their brochure to enable IT managers to immediately see customers raving about "Fluid Data."

The jury is out on the effectiveness of QR codes vs SMS.  I believe simple solutions that require less fiddling around will always win (aka, Occam's razor).  Some people may want to snap a photo of a mobile tag, but most may find it more natural to send a text – something they already do dozens of times a day.  (To that end, check out Zoove.com, a service that makes it even easier to create and own "vanity" numbers which are more memorable than most short codes.)

Multicultural is the new mainstream.

The 2010 Census data released last week further underscores why marketers must begin blurring the distinctions between the general and multicultural markets.

In marketing terms, the multicultural effort is often managed in a silo, funded with the money left over from the general market campaign.  Those days must fade away – population trends and good business sense demand that we think differently.  Multicultural marketing must be central to our thinking.

In many states across the U.S., multicultural markets are increasingly mainstream – not just in California and New York, but also in states like Delaware, Maryland, Louisiana and Nevada.  In each of these states the white population accounts for about two-thirds or less of the total.

If you want a glimpse of the future, look no further than the ethnicity of the youth market:  among people under 18 years old, whites make up only 57% of this cohort.  Millennials have grown up during a time marked by dramatic growth in immigration and racial integration.  Multiculturalism is simply a fact of life for this group, reinforced early on by Sesame Street, and later in the classroom, as well as in film and music.

Moreover, those who view multicultural marketing in black and white terms need to think again.  The 2010 Census shows that the U.S. Hispanic population jumped 42% over the past decade and now accounts for 1-in-6 Americans.  Hispanics are now the dominant minority group in 191 of the nation's 366 metro markets – and not just in the Sun Belt.  This trend will likely keep growing, if for no other reason than the simple fact that the median age of Latino women is 28 years old, whereas the median age of white women is 42.

This multimedia tool from USA Today offers a nice summary.

(PS:  penned by a Pakistani-born son of Irish immigrants...aka a census category of one.)

Anantomy of a successful viral video campaign.

Guess which brand's YouTube channel gets more views than BMW.  Even more than Disney.  Did you guess Orabrush?  Nah, didn't think so.

The story of Orabrush's success with its YouTube video campaign is very instructive.  Even the NY Times has covered it in an attempt to decode its success. 

Orabrush's YouTube channel has received more than 33 million views and is the seventh-most subscribed channel, beating brands like BMW, Disney and Nintendo Wii.  Why?  After reading the NY Times article and viewing a bunch of Orabrush's videos, I think their success in going viral can be attributed to a few factors which many marketers would be wise to consider:

1. Be funny, even slightly outrageous.
2. Don't be slick.  YouTube is not TV or web.
3. Be prolific. Program the channel. Make a lot of videos and release them over time to build a following.
4. Cede creative control.  Persuade the community's "alpha-producers" to make parodies of your video.
5. Be authentic.  Don't let the dark magic of Madison Avenue be seen or felt.  
6. Cross your fingers.

Relatedly, check out Ad Age's list of the top viral videos, with commentary on why they were so successful.  

Is Facebook becoming The Internet?

I read a couple of items tonight that helped bring into sharp focus the sheer magnitude of Facebook's market influence.

First, some data and insights from a talk given by NYU professor Scott Galloway :

• Facebook now accounts for 10% of all time spent on the internet.  More people around the world spend more time on Facebook that any other site.
• "People are leaving the internet and spending more time on social media platforms.  There's an emerging generation for which Facebook is their OS.  They don't leave it all day."
• Currently, Facebook has 580m users.  If we apply Moore's Law to this we can envision this user group doubling in 18 months to 1 billion – perhaps exceeding 20% of all time spent online.  And as we've witnessed so far, as Facebook gets bigger, it tends to grow even faster.
• If Facebook were to account for 40%-50% of time spent online, then effectively Facebook has become the internet.

Then there's this factoid from today's Wall Street Journal: In February, more than one-third of all online display ads in the U.S. appeared on Facebook – more than 3x Yahoo, its closest rival.

Perhaps this is why I chuckle every time I receive an email from classmates.com.  

Medtronic selects BD'M

Minneapolis based Medtronic has selected BD'M to help tell its corporate story.  And what a story it is:  from two guys in a garage in 1955; the first pacemaker; to a $15 billion leader in medical technology.

Beyond its commitment to innovation, what strikes me as special about Medtronic is its culture – they haven't changed a single word in their mission statement since it was penned in 1960 by the founder, and every employee can recite it by heart.  You don't usually find that in companies of this size.  (I'm a student of corporate cultures.  It brings out the wannabe anthropologist in me, because great cultures tend to be tribal in nature, unified by shared legend, lore, symbols and rituals.)

In January, Dell enlisted BD'M as its global agency of record for its Public Sector business unit, followed shortly by Chamilia.  The momentum feels good.

How to be a social brand.

Here are some good insights from Headstream Consulting's  recently published Social Brands 100 ranking of the top social media brands.  While the rankings will likely ebb and flow, just like social media conversations, I found Headstream's insights into the traits of truly social brands to be instructive and useful.


Ten key insights from Social Brands 100:

1. Social brands don’t just send messages, they create value for people and communities.
2. Social brands are happy to exchange rigid control of their brand for greater involvement with people.
3. Social brands manage their brands in a more human context. It is less about the word of the brand guidelines and more about the spirit of the brand, often replacing formality around tone of voice in favour of expressing brand character, values, purpose and cause.
4. The types of content that social brands create can be categorised as providing information, utility, entertainment, reward, incentive or something that reflects a person’s character and what they value. Brands are still totems to what we believe, reflecting our personality.
5. Timeliness of response is a critical indicator of social enablement. Social brands are agile and responsive to the needs of people, relishing opportunities as they arise.
6. Being appropriate in social doesn’t mean using a lot of brand outposts. The use of brand outposts is driven by what is most relevant for the community.
7. Negative and positive sentiment is acknowledged and accepted by social brands
8. Social brands create, develop and encourage behaviours that mirror community or individual behaviours. They meet and exceed expectations, often delighting people in doing so.
9. Social brands are true, compelling, authentic and transparent.
10. Social brands simplify their intent and continually act against it. They have established what they want to achieve and ensure everything builds towards this commitment. To be a social brand you have to be a good brand, a good employer, make good products, provide good customer service and have a moral centre to your purpose by those that represent you.

Are you a typical human being?

National Geographic, as part of its look into our 7 billion strong planet, offers this summary of the average human being, circa 2011.

So next time you think you're just a face in the crowd, remember how unique you are – unless, of course, you are an educated Mandarin-speaking Chinese Christian male who lives in the city and works in a service-related job.