High-End Hype

 

Summary:

            According to the WSJ, the incredibly well advertised Target and Neiman Marcus holiday collection has surprised shoppers and analysts alike. The 50-piece collection created by 24 high-end designers debuted on Saturday with less than spectacular sales. Even though the collection was designed to last throughout the season, stores prepared for a larger volume of traffic than actually occurred. Both companies have reported brisk online business and still express confidence in their partnership.

Personal Interest:

            As a fan of the show Revenge, the commercials for this collection peaked my interest a few weeks ago. I commend the media planners for selecting such an appropriate show to complement their promotion. Although I am not a designer-conscious shopper, the partnership caught me by surprise. I never expected a high-end super market to collaborate with a high-end department store. After looking over the items offered, it is not surprising to see that some products have sold out on the Neiman-Marcus website but it was surprising to see those same items still available on the Target website.

Industry implications:

            This collection has helped position both brands in front of new markets. The fact that affordable luxury is accessible to virtually everyone should theoretically boast sales for both companies. The participating designers also increase their notoriety outside of the fashion community. Considering the present state of the economy, high-end designers need to find ways to stay relevant and maintain holiday demand. The expensive primetime ad spots also proved to be an effective medium for building awareness.

Close-Minded Creativity

            For an industry that prides itself on its creative abilities, creative solutions to add diversity to the workplace seem to be few and far between. By coincidence, diversity became the topic of conversation in two of my courses this week. According to frist hand reports, the sterotypical advertising "Boy's Club" is still present and powerful.

During a Law & Ethics lecture, Professor Drumwright discussed the 2006 NYC Commission on Human Rights investigation of 16 advertising agencies. After significant pressure, each company signed agreements with diversity commitments and most exceeded their goals by 2010. Having worked as a professor at Harvard, Drumwright was able to personally describe the environment as “white, male, and protestant.” She also introduced an article from AdAge titled New York City Comptroller Pressures Ad Holding Firms to Release Diversity Stats (adage.com/u/gwLD9a ).  Omnicom Group was noted for refusing to release a diversity report earlier this year. Their chief diversity officer mentioned it was not in the company’s best interest to reveal this information and referenced a proxy statement to answer further questions. The company’s own statement describedthe data as an unreliable “measure for their commitment to equal opportunity” and believe it is “susceptible to misinterpretation.” The fact that such a prestigious holding company went to such length to conceal their employment records was alarming to me. I understand statistics are easily manipulated but diversity is diversity.

In our Integrated Communications Management course, Dr. Lewis invited +Stefani Zellmer to discuss her career in advertising. As a graduate of the UT Advertising Program, she was incredibly relatable and described the struggles she encountered as a female copywriter. At the time, women creatives were a rarity. Even as research began to show that women made the majority of household purchases, men were hired to fill creative positions. After building an impressive list of agency experience, she wanted to move up in management and encountered evidence of gender discrimination for creative director positions. In response, she stopped searching the illusive “equal opportunity” workplace and two agencies in Austin with the purpose of empowering women. She cited that only 3% of Creative Director positions were held by women… in 2011. 

Although I am an advocate for diversity within the industry, I am cautious to offer a solution to this problem. I feel that hiring initiatives or cultural audits alone will not make a significant difference when combatting this problem. Resistant to public outcry even during the Civil Rights Movement, the "traditions" that have influenced agency composition appear too strong to break.

The Most Important Man on the Field

            As an avid sports lover in a football dominant state, I enjoy attending collegiate and professional football games. While visiting family in Houston, I had the opportunity to cheer for the Texans from a Luxury Suite on the 8^th Floor.  From that height, we had an impressive aerial view of the field. Although it was difficult to distinguish one player from another, I could very clearly see the offensive and defensive formations taking shape. From that experience, I gained a greater respect for the head coach because he must be able to visualize what is happening on the field without the ability to see it for himself. He then must communicate that vision to his players in order to effectively match the opponent. That being said, the head coach is still not the most important man on the field. That title belongs to the network television coordinator.

Most football fans love to watch the game but don’t actually pay attention to what is happening along the periphery. The network television coordinator is the man standing on the sideline with neon orange sleeves over his arms and he instructs when referees when to allow for a commercial break... without ever saying a word. All he has to do is step onto the field and cross his neon arms. During every NFL game, the coordinator steps onto the field ten times during each half. Only two of these are strictly scheduled, the other eight are placed at the discretion of the coordinator. 

There are very specific times when the league allows the networks to take a commercial break. Most of these opportunities occur during regular game stoppage, including a timeout called by either team. This means the coordinator has the ability to make the coach’s thirty second timeout last for two minutes if he chooses. In a sport with a limited number of timeouts per half, awarding the head coach an additional 90 seconds to organize his players can have a huge impact on the outcome of the game. This extra time can make or break a drive and directly alter the pace of the game. In my opinion, having this kind of control over the referees and coaches makes the network television coordinator the most important person on the field.

 

Newsweek is Newsworthy

As a prestigious and respected news outlet, Newsweek is making a statement about the plunging percent of advertising dollars for this category. Since 2005, readers have been turning to online sources for news updates. Although the magazine was founded in 1933, ownership has changed hands twice over the past few years. These changes contributed to earlier talks of becoming a digital-only magazine but nothing had been confirmed until recently. At the end of December, Newsweek magazine will stop printing its publication for good.

According to an article from the Wall Street Journal titled Newsweek Quits Print, only a small portion of their subscribers are currently online-only which provides a lot of opportunity for growth within 2013. The printed version of the article also featured images from past magazine covers to emphasize the role Newsweek has played as a credible source of news for almost 80 years. The faces of General Patton, Neil Armstrong, John F Kennedy Jr., and Steve Jobs were all included in the collage. The writer quoted Baba Shetty, CEO of the Newsweek Daily Beast Co, this decision will save the magazine “tens of millions of dollars” from printing and distribution costs. US News and World Report made the shift in 2008 and found it was a profitable decision since their popular college rankings draw millions of unique visits each month.

As a media student, you hear about the decline in advertising spending on traditional media but you never expect market leaders to experience extreme plunges in circulation and profit. This is incredibly significant because now Time Magazine is only remaining newsweekly being printed given them complete control of the category. Having such a big name join the digital movement will significantly increase online competition. While they are experimenting with pricing, Newsweek will also have to find something that differentiates their product from others in this space since news is easily distributed in the digital space. Hopefully their current online-only subscribers have helped them develop an understanding of what readers what to see and how they want to see it. I’m intrigued to see how many of their current subscribers remain brand loyal after the switch in December.  

http://online.wsj.com/article/SB10000872396390444734804578064300216922258.html

Frozen and Barren

            Thanks to the efforts of Senior Lecturer Lisa Dobias, my media cohort was granted the opportunity to complete an external project for LatinWorks in Austin. Having just been named the 2012 Hispanic Agency of the Year by AdWeek, LatinWorks asked us to develop a media plan targeting Hispanics in Los Angeles and Houston for an existing frozen potato company. After dividing into teams, I was asked to conduct primary research in Houston neighborhoods with a high Hispanic-concentration.

            Although field observations are not generalizable, the purpose of my research was to gain insights about our target audience and the environments they shop in. As a team, we determined it was important to learn about Hispanic consumption from Hispanic consumers if possible. Therefore, I spent several hours driving around the city and locating grocery stores that already carried our client’s frozen potatoes.
 

            The absence of traffic in the frozen food section was something that caught me by surprise. I expected the convenience of frozen vegetables and prepared meals would bring a number of shoppers into the aisle since Houston is notorious as busy city. After several minutes without any visitors, I classified this area of the store as “barren” in my notes. It’s easy to understand the rationale for walking through quickly in response to the colder temperatures but it alarmed me to see shoppers skip over this aisle as if it did not exist. This happened at all 4 of the groceries I went to that day.

 

            With this in mind, I returned to Austin and found secondary research that supported my observations. According to the Mintel report titled Hispanics and the Perimeter of the Grocery,   more than 80% of Spanish-dominant Hispanics feel that frozen and canned vegetables are not as nutritious as fresh vegetables. In the real world, this translates in low sales and barren grocery aisles. Therefore our recommendation would have to address some of the misconceptions about the product category in order to successfully position the brand in the Hispanic market.
 

            As supporters of the cliché, “the media is the message,” we recommended doing several in-store guerilla promotions specifically designed to increase traffic to the frozen vegetables aisle. In addition to floor and door decals in front of our client’s products, we wanted place a stand up display in the produce section adjacent to the fresh potatoes with coupons and nutritional information about our brand.

Battle for the Buses

Shocking Fact: Two national outdoor advertising companies control the content placed on public transportation in nearly every major metropolitan area within the United States.

 At the moment, these companies are currently battling to secure a contract with the Los Angeles County Metropolitan Transportation Authority.  CBS Outdoor Group, the 32 year incumbent contractor, has offered a slightly lower bid than newcomer Titan Outdoor. After being outbid in several other cities, Titan hopes to secure the LA Metro by offering a higher guarantee plus a share of their revenue over the course of the 5 year contract.

 

The ethical decisions that each company has made during the recent economic recession will definitely be considered during the bidding process. Although CBS Outdoor failed to cover minimum annual guarantees in the current contract, Titan Outdoor also experienced similar contract struggles during but renegotiated with the transit authorities when they are unable to meet obligations.  By winning against the incumbent, Titan would become the most powerful outdoor advertising company in metropolitan transportation seeing as the company currently holds contracts for 5 of the 8 largest transit authorities. Since CBS Outdoor is responsible for 13% of its parent company’s annual revenue, CBS Corp stakeholders could interpret losing this contract as instability and previous talks of selling the division may reemerge.

Each company has a lot at stake but regardless who wins, the rivalry between CBS Outdoor and Titan Outdoor has helped facilitate industry wide growth and highlights the advantages of outdoor advertising. According to the Wall Street Journal, outdoor advertising has grown 17% since 2009. Much of the growth for this medium is attributed to the fact that advertisers have a captive audience while people are riding on subways and buses. Even though we are living in the digital age, it is reassuring to know that traditional media outlets are still profitable and effective when targeting urban dwellers.  

 

http://online.wsj.com/article/SB10000872396390443890304578010800059502028.html

Classic Sports or Classic Mistake

Although the Classic Sports Network was started in 1995, ESPN was intrigued by the concept before the cable networks creation. ESPN programmed archived sports footage numerous times on its current cable networks but was uncertain this was a profitable niche market. Since Classic Sports Network was able to reach 11 million subscribers within the first two years of operation, ESPN was convinced that this was a profitable venture to pursue. Having the rights to an expansive sports library featuring games from NFL Films and ABC’s Wide World of Sports, the sports programmer intended to optimize the stations content and distribution. Costing $175 million in 1997, ESPN added its fourth cable sports network, paying homage to the former Classic Sports Network by incorporating part of the network’s logo into its own. Upon this acquisition, Time Warner cable agreed to carry the product and increase its reach 4 million subscribers. Bundling all four of ESPN’s cable networks when making distribution deals provided ESPN Classic the opportunity to reach a subscriber base that otherwise would be unachievable, roughly 60 million subscribers in 2010. Although live sporting events have been aired on ESPN Classic, the cable network started to put heightened emphasis on original programming around 2005 as a result of other networks airing classic sporting events. ESPN no longer airs original programming but occasionally will feature a live sporting event. Regardless, ratings have been consistently low for the cable network over the past couple years.

 

I would argue that the acquisition of Classic Sports Network was an initial success for ESPN, providing an outlet for its large quantity of archived sporting events and increasing the presence of the ESPN brand within the cable and sports communities. Having a fourth cable network devoted to sports programming gave ESPN a clear advantage over competitors when bidding on sports rights. Unfortunately, due to the increased availability of classic sporting events, popular interest in ESPN Classic peaked relatively early in its life cycle and since then has been virtually stagnant. The overwhelmingly majority of ESPN subscribers passionate about sports did not prove loyal to ESPN Classic when watching past sporting events. The technological revolution and diversity of multimedia platforms has hurt the classic sports network. The internet has met consumers need for on-demand footage. Without original programming anymore, ESPN was able to reduce the expenses associated with ESPN Classic but consequently devalued their product. The remaining programming is also publicly mocked through a series of skits produced by Saturday Night Live. In order to regain interest for the cable network, consumer insights need to be closer matched with the increasing dependence on digital video. The initial success earned in the 1990’s has tampered and long-term analysis proves that the acquisition of Classic Sports Network may not have been in the ESPN’s best interest.

Back Nine or Hang Ten

New York City recently earned the title of “fastest growing tech sector in the nation.” Since some of the most successful tech firms are located along the West Coast, the New York sector is being strongly influenced its counterparts in the Silicon Valley. Regardless of their location, professionals in this industry use similar business models. They are also attempting to recruit and network the same on both coasts. Instead of conducting informal meetings at swanky lounges or pristine golf courses, tech sector employees prefer to talk in the ocean. At the moment, the appeal of networking in the ocean is currently limited to a very small group of people within this market.

Surfing is very much part of the West Coast culture but the increasing number of California transplants has contributed to its growing popularity in the northeast. Over the past few years, enrollment in a New York surf school has quadrupled and in 2011 an international surf competition was held just an hour outside of Manhattan at Long Beach, NY.  Many people view the sport as a cleansing, sometimes even religious experience so it is very important to understand unspoken rules and use good surf etiquette; being a “wave hog” could prevent future business transactions from taking place. Additionally, it is very difficult to gain the listeners full attention because approaching waves frequently interrupt conversations.

In my opinon, it’s important for newcomers to recognize and adapt to an existing culture. Personal surfing, if accessible, could easily replace Yoga or mediation but corporate surfing will struggle for acceptance when golf and cocktails are so deeply ingrained in professional attitudes.  Michael Adler, business partner for AC Lion, said that surfing is “the only time that no one can get a hold of me.” Therefore it is counterintuitive to take business to an environment seen as an escape from business. 

            Many of the Millennials that moved to NYC also chose to live there because they are seeking the high-energy, fast-paced, glamorous lifestyle that the city embodies. Laidback, casual business is part of the West Coast culture that many of these professionals are not attracted to.  These stereotypes exist because there is a level of truth to them but highlighting coastal differences will further separate the two opposing mentalities. Although ping-pong tables and beer refrigerators are becoming more popular in tech and advertising offices nationally, it is not very likely that wetsuits will replace traditional suits in a networking capacity for upwardly-mobile New Yorkers.

http://online.wsj.com/article/SB10000872396390444223104578034713717683392.html