Marketing

Whole Foods may now have to settle for half-a-loaf.

Phillip Nones Branding, Business, Economics, Marketing, Marketing Communications , , , , , , , , , ,

wfThe Whole Foods chain of upscale “healthy grocery” outlets just released its 2016 3rd Quarter results … and things continue to look a little less fresh and a little more droopy for company.

Sales for stores open one year or longer have now declined for the fourth consecutive quarter, and the latest ~2.6% drop is steeper than analysts had been predicting.

Company profits have slid more than 20% since the same time last year.

One bit of good news is that Whole Foods’ total sales have increased by around 2%. It isn’t exactly the double-digit growth experienced up until a couple years ago — but at least it remains a gain.

In a nutshell, the problems faced by Whole Foods, which describes itself as the “World’s Healthiest Grocery Store,” is a maturation of the market for high-end groceries and other foods. In the words of Stephen Tanal, a vice president at Goldman Sachs, as reported by Forbes last week:

“Wellness has gone mass, and it’s not coming back – never again to be relegated to niche specialty retailers serving price-insensitive early adopters.”

Underscoring Tanal’s contention is the fact that ~75% of Whole Foods store locations now have one or more Trader Joe’s located within five miles.  More than half of them have a Kroger store within five miles, and nearly 85% have a Costco outlet located within ten miles.

In response to the heightened competition, Whole Foods is speeding up implementation of its plans to open a line of smaller outlets called 365 by Whole Foods Market. According to the company, these are “value-driven” locations that feature a streamlined operating model while benefiting from centralized buying and auto-replenishment of inventory.

Reportedly, pilot locations in California and Oregon have been positively received, and a third location will be opening soon in the Seattle suburbs.

Other initiatives being undertaken by the company fall under an umbrella described by co-founder and co-CEO John Mackey as a “back to basics” program including refocusing on the customer experience as well as improved store layouts and wayfinding, signage and the like.

… And lower prices, too, one would presume – if the company is serious about reclaiming the mantle of “good for you” food market leader from Kroger, Wegmans, Redners and other “mainstream” chains that have been encroaching on Whole Foods’ turf.

Will Whole Foods regain the momentum … or continue to be on the defensive?  We’ll see how it plays out in the coming quarters.

Online shopping insights: Why is the in-store pick-up option so popular?

Phillip Nones Advertising, Business, Marketing, Marketing Communications, Marketing Research , , , , , , , , ,

With online shopping so popular these days, why are consumers electing to pick up the merchandise they’ve ordered at the store?

spu

While it isn’t a pervasive practice, a study published recently by consumer analytics firm Connexity/Bizrate Insights finds that more than 30% of online shoppers have used in-store pick-up at least once during the past 12 months.

Even more surprising, perhaps, is that ~13% of respondents reported that they had considered abandoning a purchase because in-store pick-up wasn’t offered as an option.

As it turns out, people choose the in-store pick-up option for four major reasons:

  • To avoid paying shipping charges: ~55% cited
  • For the convenience: ~43%
  • Need to receive the order quickly: ~36%
  • Shopping online to ensure the item is available: ~29%

At first blush, I wouldn’t think that “convenience” means having to drive to a store versus having the product delivered right to the house. But perhaps “convenience” in this sense is related to product availability – avoiding a fruitless trip to the store only to find out after-the-fact that the desired product isn’t in stock.

But the other reasons cited make good sense, too. Everyone understands the desire to save money – if not on the product itself, then by avoiding shipping charges.  And if a quick drive to the store gets you the items compared to waiting a few days for the shipment to arrive, that’s understandable as well.

The Connexity findings underscore how important it is for retailers to align their e-commerce setups to allow for in-store pick-up – especially if the economics don’t allow them to offer a free shipping option. There’s simply too much competition from online-only retailers to afford losing sale to them based on any of the four factors listed above.

Digital display advertising: (Still) looking like the weakest online promo tactic.

Phillip Nones Advertising, Creative and Production, Marketing, Marketing Communications, Media, Media Consumption, Publishing , , , , , , ,

untitledI’ve blogged before about the lack of engagement with online banner advertising, and as time goes on … the picture doesn’t change much at all.

When you break it down, online banner advertising is a bust on several levels:

 

  • As of the most recent stats, clickthrough rates on online banner advertising are running about 0.08%. That translates to fewer than one click for every 1,000 times the ad is served.

 

  • Based on current pricing for online banner ads, that one click might be costing anywhere from $5 to $10 (and it might have even been an accidental click).

 

Despite these “inconvenient truths,” nearly two-thirds of digital ad spending continues to go to online banner advertising based on a “cost per impression” pricing model. Why?

One answer is that it’s an easy way to advertise a product or service. Simply supply ad creative to the publisher and let it be served online.

Another may be that advertisers consider banner advertising to be a basic component of any promotional campaign: prepare a mix of direct marketing, some search engine marketing, some print advertising and some digital display advertising, and you’re off to the races.

A third reason — related to the one above and I suspect one big reason why so much digital display advertising persists in the B-to-B realm in particular — is that publishers who offer a suite of promo tactics as part of a specially priced integrated program always throw in digital display advertising as part of the mix. It becomes the default option for advertisers as they approve bundled programs and the discount rates that come along with them.

Here’s a suggestion for advertisers going forward: Push back a bit and ask publishers to come up with alternative program options that don’t include digital display advertising.  The revised program might not look as promising at first blush, but then remember the stats above and you may well see the attributes of the alternative program in a more positive light.

Tech meets traditional: Digital marketing drives more phone calls by far.

Phillip Nones Advertising, Business, Direct Marketing, Marketing, Marketing Communications, Marketing Research, Media, Media Consumption , , , , ,

CCIn a classic case of marrying tech with traditional marketing, digital channels are driving more calls to businesses than ever before.

What’s more, digital channels are now responsible for nine out of ten phone calls made to companies as a result of promotional efforts using the ten most popular marketing channels.

These findings come from the 2016 Call Intelligence Index published by Invoca, a phone call tracking and analytics firm that evaluates phone call activity across 40 industry segments.

Invoca’s 2016 evaluation covers more than 58 million phone calls generated from ten marketing channels — six of them digital and four of them “traditional offline” channels.

According to Invoca’s analysis, the biggest single source of phone queries is mobile search — representing nearly half of all phone call volume. But the next five channels that follow in line are all digital as well, as can be seen in this list:

  • INMobile search: Drives 48% of phone calls to businesses from marketing channels
  • Desktop search: 17%
  • Desktop display advertising: 11%
  • Content / review websites: 9%
  • Mobile display advertising: 3%
  • E-mail marketing: 3%
  • Total digital channels: 91%

 

  • Radio advertising: 3%
  • TV advertising/infomercials: 2%
  • Newspaper advertising: 2%
  • Directory advertising: 2%
  • Total non-digital channels: 9%

Comparing the 2016 results against a similar analysis conducted by Invoca in 2014, digital marketing channels have continued to rise in prominence — from representing 84% of the total phone call activity to 91% today.

The Invoca research also finds that phone calls are supplementing digital interactions, which is the result of consumers shifting between various different digital channels as they go about their research — often employing several different ones during the same mission task.

One of the biggest jumps in digital channel usage is in the automotive segment, where it’s clear that a big shift is underway from offline to digital channels — particularly mobile. The automotive industry experienced nearly a 120% increase in digital sources driving phone calls in the current Invoca research compared to the previous one.

So there’s no question that digital now “rules” when it comes to marketing channels. But far from causing the demise of a traditional channel like a phone call — as some people predicted not so long ago — digital channels have simply changed where the consumer might be just prior to heading for the (smart)phone.

Online ad blocking grows ever-more popular.

Phillip Nones Advertising, Business, Marketing, Marketing Communications, Marketing Research, Media, Media Consumption, Publishing , , , ,

abThe ad blocking phenomenon on the Internet shows no signs of abating.

Underscoring this, marketing research and forecasting firm eMarketer has just published its most recent ad blocking stats and forecasts for the United States. It projects that ad blocking adoption will continue to rise by a double digit rate in 2016 to reach nearly 70 million users.

If those projections turn out to be accurate, it will mean that ad blocking will now be used by more than 26% of all Internet users in the United States, up from ~20% just a year earlier.

And for 2017? Those forecasts are looking a whole lot like this year, too; eMarketer forecasts that ad blocker adoption will grow to more than 86 million users by the end of 2017.

[For the record, eMarketer defines a user as an Internet user of any age who accesses the ‘net at least once per month via a desktop or laptop computer, tablet, smartphone or other mobile device that has an ad blocker enabled.]

eab

According to the eMarketer analysis, the incidence of ad blocking is substantially more common on desktops and laptops; ~63 million people will use an ad blocker on these types of devices this year compared to ~21 million who will do so on a smartphone.

One reason for this is that ad blockers typically don’t work on apps, which is where mobile users spend much of their time. Moreover, some of the most irritating aspects of desktop/laptops advertising, such as ads with video and sound, are the kinds of advertising less likely to be served on mobile devices.

eMarketer expects many more people to begin installing ad blockers on their smartphones, however — to the tune of an increase of over 60% this year.

These projections must be alarming to publishers and advertisers. Paul Verna, a senior analyst at eMarketer, notes this:

“They’re seeing immediate revenue losses and [they] would be remiss to downplay what amounts to a large-scale rejection of their main monetization model.”

Separately, an analysis by Juniper Research sees more than $27 billion in advertising revenues lost over the next five years as a result of ad blockers.

Of course, that’s a far cry from the estimated ~$160 billion that digital advertising represents today.  But significant nonetheless.

As if on cue, The New York Times has just announced that it will introduce an ad-free subscription option. Reportedly, the publication will begin to offer subscriptions that cost more than a regular digital subscription, along with giving subscribers the option of opting out of seeing advertising if they wish to do so.

At present, NYT subscribers who use ad blockers are technically violating the publisher’s Terms of Use agreement — although I seriously doubt many people have had their knuckles rapped for doing so.

For now, all the Times does is kindly request that users “white-list” the NYT site so that the ads will appear even though an ad blocker has been installed.  According to news reports, about 40% of the people notified have actually done so.

Presumably, the new subscription option is targeted at people who really do wish to avoid seeing online advertising — and are willing to pay a premium for the benefit.

One wonders how much of a dollar premium subscribers will be asked to shell out for the privilege of keeping their screens from being inundated with advertising. (At present, annual NYT digital subscriptions range from ~$140 to ~$200.)  Will users balk at the higher rates?

Clearly, we’re in the middle of this movie … and it’ll be some time before we see how things shake out in the online media advertising game.  What are your thoughts about spending more for an ad-free subscription … and do you even have any online pay subscriptions at all?  (Many of my friends and business colleagues don’t.)

Online Shopping Trends: Going from “Go-Go” to “No-No”?

Phillip Nones Advertising, Business, Economics, Marketing, Marketing Communications, Sales, Social Commentary , , , ,

The easy growth for online shopping appears to be over, according to new research findings published by Boston Consulting Group.

bcgBCG just completed surveying ~3,300 Americans aged 15 to 85 about their online shopping habits across 41 merchandise categories. In every category, a clear majority of respondents report that they don’t plan to increase their online spending in the next three years.

Depending on the category, the percentage of people who do not plan to increase their online spending ranges from 78% to 92%.

And in some disparate categories ranging from food and beverages to packaged goods, fine jewelry, news media and automobiles, more than a quarter of the people already shopping online said that they actually plan to decrease their online spend over the upcoming three years.

opsoPerhaps even more surprising, the BCG survey results show similar findings regardless of generational groups — Baby Boomers, Gen-Xers and Millennials alike.

BCG has conducted other studies on this topic in the past, but reportedly this is the first time such low “future intention” figures have been collected, and it suggests that future e-commerce growth will be a good deal more challenging for many companies who offer their products and services for online purchase.

Here’s a quote from Michael Silverstein, a BCG senior partner and specialist in consumer shopping behaviors, speaking about the new research findings:

“Consumers are notoriously unable to predict their spending patterns. However, the findings from this research certainly pour cold water on everyone’s expectations for a continuously rising e-commerce world.  E-commerce winners will have to earn new dollars and new spending by providing new value.  That means me-too players will suffer — and leaders will need to provide more user-friendly websites, lower prices, and offers tailored to individual customers.”

There remain a few categories where people are planning to spend more online in the coming years.  However, they don’t represent physical products. Instead, those categories are airline tickets, hotel reservations, and entertainment ticket reservations.

Still, it’s interesting to see online commerce now entering its “mature” phase.  Those rapid, double-digit growth rates couldn’t go on forever — and indeed, they now look to be a thing of the past.

What’s behind Microsoft’s $26 billion purchase of LinkedIn?

Phillip Nones Business, Economics, Employment, Human Resources, Marketing, Marketing Communications, Marketing Research, Media Consumption, Publishing , , , , , , , , , , ,

LI MCAt first blush, it appears almost ludicrous that Microsoft Corporation is offering an eye-popping $26 billion+ to acquire LinkedIn Corporation.

The dollar figure far eclipses any previous Microsoft acquisition — including the $9 billion+ it paid for Nokia Corporation in 2014, not to mention what the company paid for Yammer and Skype.

What’s also acknowledged is that none of those earlier acquisitions did all that much to further Microsoft’s digital and social credentials — and in the case of Nokia, the financial write-downs Microsoft has recorded have actually exceeded Nokia’s purchase price.

So what’s different about LinkedIn — and why does Microsoft feel that the synergies will work to its advantage better this time?

In a recent Wall Street Journal column, technology journalist Christopher Mims noted that such synergies do exist — and in a much bigger way.

That includes Microsoft Office, the productivity suite that’s now delivered almost exclusively online. And then there’s LinkedIn’s database of over 400 million subscriber professionals.

Put those two elements together with a strong strategic vision, and you have the potential for some pretty amazing synergies.

When you think about it, LinkedIn’s users are essentially Microsoft’s core demographic. And it isn’t something that’s replicated anywhere else in Cyberspace.  Here’s Microsoft’s CEO Satya Nadella talking:  “It’s really the coming together of the professional cloud and the professional network.”

Acting on its own, LinkedIn hasn’t been all that successful in leveraging what is arguably the most comprehensive and powerful database of business professionals ever compiled in the history of mankind.

While it consists of self-contributed information that hasn’t been “vetted” by outside parties, it’s still the single most comprehensive and valuable repository of information about business professionals — anywhere in the world.

I view the dynamics of LinkedIn as something like the Wikipedia. Wikipedia has become so pervasive, it has driven traditional encyclopedias from the scene.  And while we all know that there can be misstatements of fact — or omissions of facts — from Wikipedia entries, it’s also become the quickest and easiest place to go for information that’s “accurate enough and complete enough” for most any type of informational query.

In similar fashion, LinkedIn is making personnel databases like Dun & Bradstreet that are less robust and accessible only by subscription increasingly obsolete.

And yet … with all of this powerful data at its fingertips, up to now LinkedIn hasn’t been all that effective in leveraging its vast trove of data in way that goes much beyond using it as a personnel recruitment tool.

Try as LinkedIn might to create “stickiness” by offering communities of users based on job function, shared industry involvement and the like, to this day only about one-fourth of LinkedIn’s ~400 million users come to the site on a monthly basis.

The reality is that the vast majority of people continue to access LinkedIn only when they’re in the job market — either as a seeker of talent or seeking a new position for themselves.

In the wake of the pending Microsoft acquisition, those dynamics could change quickly — and in a big way.

One way is in how LinkedIn could begin to provide a big boost to Microsoft’s CRM services. Many companies use such products to identify and track sales leads; in fact, having such a tool is almost a prerequisite for any successful business of any size at all.

As of today, Microsoft languishes behind three other CRM software providers (Salesforce.com, SAP and Oracle). LinkedIn’s own product (LinkedIn Sales Navigator) is essentially an also-ran in the category.

But bringing together LinkedIn’s extensive personnel database with Microsoft’s CRM capabilities looks to deliver data and reach that would be the envy of anyone in the market.

So … it is certainly possible to understand why Microsoft might see LinkedIn as its strategic “ticket to ride” in the coming decades. But two questions remain:

  • Does the acquisition business potential match with the $26 billion+ Microsoft is paying for the buying LinkedIn?
  •  Will Microsoft do a better job of integrating LinkedIn with its other products and services when compared to the disappointing results resulting from its other acquisitions?

We’ll need to check back over the coming months to see how things are come together.

Brands and “cause marketing”: How much is too much?

Phillip Nones Advertising, Branding, Business, Marketing, Marketing Communications, Marketing Research, Social Commentary , , , , , ,

cmWhen brands conduct attitudinal studies of their customer base, the research often finds that people respond favorably to so-called “positive” or “progressive” causes.

The ALS “Ice-Bucket Challenge” is probably Exhibit A for the potency of such an initiative — including its fantastically successful viral component.

So it’s only natural that brand managers would think in terms of tying their brands to high-profile events such as Earth Day or popular health causes such as efforts to cure cancer or heart disease.

Perhaps the activity is doing a highly publicized community initiative … hosting a well-publicized 5K run or similar event … or donating funds for the cause in a new and attention-grabbing way.

But here’s the rub: With so many national brands doing precisely these sorts of things, it’s become something of an echo chamber.  What once was fresh and novel now seems decidedly ho-hum.

Besides, with so much breathless “cause activity” happening, it’s little wonder that many consumers are seeing through all the hype and attaching near-zero attribution to the brands involved.

The situation is even more problematic when there’s little or no connection between the brand’s products or services and the cause being supported.  The problem is, when brands start vying for attention — especially allying with causes that have nothing at all to do with their core business — “authenticity” goes out the window.

In the process, the brands may telegraph something even worse than irrelevancy; they look desperate for attention.

Of course, all of this evidence doesn’t mean that major brands aren’t continuing to try to attach themselves to the positive vibes of social action. Some recent examples are these:

More problematic than these campaigns was the Starbucks initiative last year in which its baristas were encouraged to start conversations about race relations, interacting with customers waiting in line for their espressos and muffins.

Let’s just say that the idea looked better on paper compared to how it panned out in real life — with more than a few Starbucks customers finding the initiative awkward, intrusive and off-putting (and taking to Twitter to vent their feelings).

Thinking about the good and the not-so-good of “cause marketing,” it appears that the more successful of these initiatives are ones which hew more closely to a brand’s own essence.

Patagonia is a good example of this. Its mission has always been to design and manufacture quality products in an environmentally responsible way, and it promotes proper stewardship of the land and of material possessions through many initiatives that just “feel right” for this particular brand.

And in the realm of apparel and cosmetics, a whole bevy of brands have jumped into conversations about “positive self-image.” While to some people it may seem self-serving for brands like Dove® soap, American Eagle lingerie and Lane Bryant plus-size apparel to become active in such causes, one can also see the logical connection between the products these brands sell and the themes they are spotlighting in these campaigns.

Authenticity and genuineness: Not only are they the hallmark of successful brands, they’re the acid test for successfully grabbing a share of the “social good” pie.  Who’s doing it right … and who’s missing the mark?  Let us know your nominations.

Rising credit card balances: A double-edged sword?

Phillip Nones Banking, Business, Economics, Employment, Marketing, Marketing Communications , , , , , , , ,

Sure, it signifies growing economic strength and confidence … but what about the downside?

WPRAccording to the latest estimates, U.S. credit card balances are expected to hit $1 trillion by the end of 2016.

It’s a milestone of sorts.  After all, the last time Americans’ total credit card balances exceeded $1 trillion was in 2008, just before the onset of the “Great Recession” as the housing/financial crisis intensified.

Does this new peak herald the end of the frugal consumer spending habits which transpired in the wake of the recession?

Perhaps so … but a good deal of the explanation reflects on the financial institutions themselves, who began opening the spigot by relaxing restrictions on signing up subprime consumers.

They’ve also begun raising credit limit amounts.

All this is a change from before, when credit-tightening was the name of the game from 2009 onwards.

Part of what’s driving the new policies is the fact that credit cards represent one of the few bright spots in consumer finance at the moment.

To illustrate the point, large credit-card issuer Capital One reports a year-over-year gain of nearly 15% in the 1st quarter of 2016 compared to a year earlier.  Other major issuers — Citigroup, J.P. Morgan Chase and Discover Financial Services among them — also have experienced significant gains.

By contrast, other consumer lending activities are far less lucrative, because low interest rates make margins on traditional lending very low.

I wonder if the rush to ply subprime borrowers with new general-purpose credit cards is a smart long-term proposition, however. Nearly 11 million such cards were issued in 2015.  That’s ~25% higher than in 2014 and the highest number of such cards issued annually since 2007.

Couldn’t the next bout of economic turbulence put us right back into a bevy of defaults as before?  And aren’t we seeing hints of this already?

Here’s a clue:  defaults rates appear to be rising along with the issuing activity — including a steady uptick in each of the first four months of this year.

And let’s not forget automobile loans, either.  They’re up significantly as well — along with delinquency rates.

I think history can help guide us here — and with a lot more caution than was the case back in those halcyon days of 2007.  If there are problems, no one can say that we weren’t forewarned, based on recent history.

What are your thoughts?  Please share them for the benefit of other readers.

Ad blocking goes big-time.

Phillip Nones Advertising, Marketing, Marketing Communications, Media, Media Consumption , , , , , , , ,

Adblock-PlusA new milestone of sorts has been reached in the ad blocking realm. Adblock Plus, the leading ad blocking tool, has just announced that it’s just passed the 100 million marker in active installations.

An earlier milestone – 500 million downloads – was reached at the beginning of this year. That means the active user base has now doubled in less than half a year.

If these figures are accurate – and there’s little reason to think that they aren’t – it’s a pretty big deal. No longer is ad blocking an exotic functionality that’s the exclusive preserve of techies or other geeky subgroups.  It’s gone majorly mainstream.

What’s driving the ad blocking business is the ubiquity of online advertising. For many viewers, it’s nothing short of intolerable:  obtrusive, irritating, and sometimes creepy (hello, retargeting).

So once a well-functioning and reputable tool like Adblock came along, it was only a matter of time before it would take on “snowball-rolling-down-a-mountainside” proportions.

AdBlock Plus promises “annoyance-free web surfing.”  But as with most any innovation, there are one or two hitches. For Adblock Plus, it’s something called “Acceptable Ads.”

untitled“What’s that?” you might ask. It’s a white-list program that allows certain advertisers through Adblock’s screen.  The company receives a cut of publishers’ revenues through that program.

Fundamentally, it’s how Adblock Plus makes money. But it’s also how advertisers can do an end-run around the very service Adblock provides.

AdBlock goes to great pains to “explain” its rationale and why the Acceptable Ads program makes sense for everyone.

But it isn’t difficult to see where this might end up.  Larger advertisers will see fit to exempt themselves from ad blocking by paying for the privilege of their ads being served.

Which gets us right back to where we were with advertising in the first place, doesn’t it? Pay to play.

What’s old is new again, I guess. And meanwhile, the online ads just keep coming …