Marketing, News

Threat to Canadian marketers: CRTC decision on Internet Metering moves Canada back into an Internet Stone Age

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Canadian regulator’s new policy hurts consumers, stifles competition and innovation, and makes the Internet less open


First off, here’s a chuckle from Canada’s “Rick Mercer Report” about the issue…


I wrote about Netflix’s posssibly misguided entry into Canada back in September; misguided due to the most restrictive downloading caps and overage charges, and highest Internet access prices, in OECD countries.  A new Canadian regulatory decision to force all High Speed Internet companies to impose extremely low and restrictive usage caps on consumers effectively kills the Canadian Netflix service and cripples other Internet-based companies and entrepreneurs that use a significant amount  of bandwidth — but which is included in the consumer prices charged by broadband providers in other countries such as the US and in Europe.  Adding insult to injury, the CRTC says that anyone going over these arbitrary caps will pay $1.95 per gigabyte (and even higher in Quebec, since we all know French gigabytes cost more to produce. Yes, I’m being sarcastic).  Most websites and services Canadians use these days are designed on the “American model” that uses bandwidth-intensive graphics and video.  Canada’s regulatory agency apparently is still using dial-up services, or perhaps is more interested in lining the pockets of major Internet providers than providing competitively-priced service to Canadians on par with the rest of the world.

The crux of the decision is “usage based billing.”  All companies will now impose this, which will substantially increase prices to consumers when coupled with the caps already in place.  And, competitive services will now not be able to offer packages with 200GB caps or more, which are not available from the telcos or cable companies.

Frankly, I would love true “UBB.” If customers paid real-world “usage based charges,” each GB would cost a maximum of 4 cents while giving a 100% profit for the internet provider.  My monthly bill would then be about $1.60 for 40 gigabytes! Of course, there are fixed costs related to High Speed Internet service, such as employees, heat, electricity, maintenance, marketing, etc., but a good profit margin of 30-40% can be easily attained at a $30 price point even with all that.  I know, because I’ve done it for companies including Comcast and Suddenlink.  Even so, that does not make any overage charges for going over some arbitrary cap logical.  There’s no sense to it.  What tasks broadband delivery systems and can slow them down is the amount of traffic (i.e. number of customers using the service at one time).  Overall volume used by a particular customer has no — zero — bearing on operational costs.  Caps make no sense unless everyone downloads hundreds and hundreds of GB per month, and that just doesn’t happen; paying for overage makes even less sense.

As a home-based creative professional asked on LinkedIn yesterday: “What happens when Canadians start getting tentative with their natural Internet behaviours because they’re afraid they’ll go over their greatly reduced bandwidth limit? When will they stop watching the videos marketers make, using the apps or shopping on the e-commerce sites? How’s that going affect Canadian content online?  It seems to me it is a short trip between that and a client telling me, ‘we’re not seeing the same traffic as before, so thanks but no thanks.'”

Small businesses and freelancers eat up bandwidth like crazy in the course of doing business, but these companies would not be charged additional costs south of the border and in most other countries.

This idiotic decision automatically gives an unfair advantage to small business owners in the US and elsewhere where there are:

1. no real caps for average users, and

2. no metering whatsoever.

The only people who will see no difference under the new rules are casual Internet users who send an email every few days, play online solitaire and do little surfing (so grandma and grandpa are the only folks who are happy about all this). The Canadian Radio-Television and Telecommunications Commission has excelled at knuckle-headed, non-competitive decisions since its inception, and this is only the latest. It not only will dramatically and unfairly increase many Canadians’ Internet rates, it turns competitors like TekSavvy (which buy service in bulk from the duopolies) into nothing more than revenue collection agencies for the phone and cable companies.

As I wrote in September, Netflix and other Internet companies should not even bother marketing to Canadians, and small businesses using only a typical (well, “typical” in the rest of the world) amount of bandwidth should consider relocating out of Canada (and many will). Even downloading a map update for my Garmin GPS eats up 3 GB. Home-based businesses will very much suffer, especially those in creative design and those exchanging many files between clients and customers or using “cloud” based services such as SalesForce or Google Documents. It’s an ignorant, business-stifling decision that moves Canada and Canadians back towards an Internet Stone Age. Canadians might as well all revert to AOL dial-up.

Americans get very fast Internet speeds with almost unlimited usage (unless a customer is a downloading “hog”) for very economical rates. 250 GB or more of downloads per month at very fast speeds can be enjoyed in the US for around $30 a month, with no contract. Comcast instituted the cap mainly to address an issue related to customers running file sharing services; since Canadian companies have effectively blocked most file sharing, even that reasoning is moot in Canada. Comcast has been so successful at marketing their video, Internet and telephony products that they recently purchased NBC-Universal. Introductory offers in most US cities often approach $19.95 per month for 12 months, again without any contract (Time Warner recently advertised such an offer across the border in Buffalo and other cities). As it stands now, this service is a cash cow in both Canada and the US, but Canadians are paying more than twice or three times non-discounted rates in the US, incidentally where there is no draconian “cap.” Now, with this recent CRTC decision, that reality is getting much, much worse.

OpenMedia.ca has accurately pointed out that the incumbent telecoms and cable multiple system operators (MSOs) would have everyone believe that the cost of providing services is very close to the charges being implemented under “usage based billing.” The truth is that the variable costs for transmission of data are so low as to be effectively zero. The typical cost to transmit 1GB of data across a fiber-optic network is $0.02 or less. The regional duopolies have falsely claimed the cost is $1/GB, and sometimes as high as $2/GB.  The companies claim these overage charges are for network maintenance, network expansion and so forth.  However, incumbent Canadian providers have done very little to improve their networks over the years despite huge profits, unlike many providers in the United States.  Last-mile telco networks in Canada are often using legacy technology that was first implemented in the mid-1900s; there is very little “fiber to the home,” unlike with Verizon and other providers in US metro areas where services like FiOS are available.

As it happens, Verizon announced today that it pumped $2.8 billion into it’s northeast US operations to expand fiber-to-the-home in the past year, and it has only one broadband competitor in each market, just like the situation in Canada.  Canadian telcos have invested next to nothing.   Cable broadband is newer technology, so has higher capacity than the “twisted wire pair” the telcos use.  Canadian phone companies have done little (or nothing) to upgrade last-mile networks to modern fiber-optic technology capable of meeting the future’s needs.  Furthermore, the copper infrastructure of the last mile network was mostly not paid for by the big telcos. The original facilities were often subsidized by the government or pre-competition long distance rates, or are being paid for by the construction companies in new subdivisions as part of development costs.

Canada’s Internet rates and caps were extreme even before this CRTC ruling compared to anywhere in the western world, but they will now be horrendous. Considering it costs providers a maximum of 2 cents per GB (and that rate is pushing it, as a well-managed broadband operator has that rate much below a penny), the expected markup will be effectively 10,000% (or 20,000% at their realistic costs). Such a regulatory decision in the US would be immediately hit with Congressional action, as it is truly anti-competitive and anti-consumer, and certainly not net-neutral.  Canadian broadband providers often play the “Canada is a big place” card, but most providers have huge metropolitan clusters, and have left the small and rural markets to other players, just like in the US.  There is no effective difference.

Again from my September blog: bandwidth is not like buying beans at the Bulk Barn. If bandwidth was a huge bin of beans, selling 10 kilograms of beans would not cost the company much more than selling one kilogram, and the broadband company doesn’t have to buy the beans in the first place; it’s a conduit — a pipe. The infrastructure is in place to handle this amount of traffic already. Unlike increased speeds, additional overall bandwidth costs the operator next to nothing, as most customers use very little of their allowance. So, the existing and new overage charges on Canadians’ Rogers or Bell bills are essentially pure profit.

UPDATE February 4, 2011:  400,000 Canadians (including me) have signed the petition at OpenMedia.ca to demand Minister of Industry Tony Clement force the CRTC to reverse the decision.  Obviously, gouging by Canadian broadband companies has finally hit a nerve with Canadian consumers.  I’ve also written to my member of Parliament and Minister Clement.  I hope readers of this column will do the same.

Yesterday, Minister Tony Clement instructed the CRTC to review and reverse the decision, which delays any implementation until May.  He said that if the CRTC does not reverse the decision, the Canadian government will.  Time will tell.  Even so, caps for the vast majority of Canadians subscribing to Bell, Rogers, Shaw, Videotron, etc., are likely to remain and continue to be huge profit centres for the companies.

UPDATE February 11: Obviously feeling the wind at its back, TekSavvy increased the cheaper service from 200 GB to 300 GB, and made it available to all existing customers.  Let’s hope this “disease” is catching and this is the beginning of all providers easing or eliminating caps.

Marketing

Study: Celebrity Ads Not So Effective. Perhaps even a Top 10 Celebrity can’t put lipstick on a pig.

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According to BrandWeek, a study from ad tracker Ace Metrix found that celebrities aren’t as influential in hawking products as many marketers think they are.  Ace Metrix “analyzed celebrity ads that broke in 2010, and found that in most cases, spots featuring celebs weren’t any more effective than regular ads in the same categories. And in many cases the celebrity ads “performed less effectively.”

I’m wondering if something like expensive “cold-fighter” Cold-fX (which is somewhat of a failure in the US compared to Canada) could be as much of a success in Canada even with its Top Tier Canadian celebrity endorsements if Health Canada was as stringent as the US’ Food and Drug Administration in regulating what the company could say about the dietary supplement. Canadian Winter Olympic silver medalist figure skater Joannie Rochette is one of these celebs appearing in Cold-fX advertisements, along with hockey commentator Don Cherry.  See a current Canadian ad on YouTube.

The product is apparently nothing more than American ginseng (which has not been proven to stop or prevent any cold virus, nor its symptoms, in extensive double-blind studies).  The University of Maryland Medical Center says “Ginseng is sometimes called an ‘adaptogen,’ an herb that helps the body deal with various kinds of stress, although there is no scientific evidence of adaptogens.” Although some studies suggest — but certainly do not prove — it can help improve the immunity system, so can an apple or inexpensive multivitamin once a day.  If a consumer believes the unproven advertising, ginseng can be obtained for much less without the Cold-fX label ($7 for 50 tablets on Amazon.com and I’ve seen it available for much cheaper in stores; Cold-fX retails for around $25-$30).  But, most Canadians opt for the celebrity-hyped, extensively marketed brand.  Sales would likely plummet if Canada required similar labelling as the US does: “This statement has not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease.”  In Canada, for some odd reason, Health Canada allows manufacturers to pretty much claim anything.  A consumer will see “clinically proven” on advertisements for a multitude of products and perhaps think that it is true, even when science was lacking in the “clinical” study.

So, I wonder if a celebrity endorsement would effectively counteract the government’s advice in this case, especially if the company could not depict germs/viruses in a sneeze being halted by the product (as is allowed in Canada but not in the US). This study suggests that such endorsements cannot overcome deficient product benefits.

Peter Daboll, CEO of Ace Metrix: “It is the advertising message that creates the connection with the viewer in areas such as relevance, information and attention, and this remains the most important driver of ad effectiveness.”  Ace found that fewer than 12 percent of the spots using celebrities achieved a 10 percent effectiveness “lift” versus regular ads.

A few years ago, the US cable television industry hired comedian Chris Elliot of Late Night with David Letterman as a spokesman, although much of America had no idea who he was.  You may remember him yelling at Dave as the “The Guy Under the Seats.”  The guy is just plain weird, and obviously detracted from the message.  I fear he was about the only “celebrity” the ad budget could afford, although he was decidedly 3rd tier.  The money could likely have been used much better.  Wasn’t Larry “Bud” Melman available??

Takeaway to consider:  If you do not have a top tier product with a top tier celebrity endorser, perhaps you need to put that celebrity paycheque into something more effective and measurable.

Marketing

Canadian Grocery Retailers confusing customers while fracturing & fragmenting their own brands

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OK, Loblaws, Metro and Sobeys: it’s time to drop all your silly sub-brands & go with one name. It works very well for Kroger, Publix and Albertsons.

As I leafed through the weekly poundage (kilogramage?) of grocery store flyers today — with not many “sales,” mind you — I found myself missing the simplicity of Kroger, Publix and Albertsons. If I wanted to go get all Loblaws sale items, I’d be forced to go to the Real Canadian Superstore, Fortino’s and NoFrills. Ditto with Metro and Food Basics. Oh, and then there’s Sobeys with their FreshCo and Price Chopper.  I’d also have to get there very early the first day of the sale, as I’ve discovered hungry-for-bargains Canadians clear out all the deals by 2:00 PM.  In most instances south of the border, I could safely pick up the deals most days of the week.

My Kroger key tag (yes, a convenient tag, not an inconvenient wallet card that Canadian retailers seem to be in love with — my wallet is about to explode due to all the cards!) saved me immediate big time dollars every time I shopped almost anywhere in the eastern US (and did not give me almost worthless points that I will likely never use). That single thing, accompanied with a “You saved 38% with your Kroger Plus Card” shown at the bottom of the receipt, made me a loyal Kroger customer.  Oh, and double coupons.  The company also added niche products and store sections where there was demand.  One Kroger, or Publix, looked like another, and every item was usually in the same place, whether I was in Atlanta, Louisville, Cincinnati or Nashville.  There was consistency, even in the store design.  I see things all over the road with Canadian chains.

Rant Warning! Whoever approved the Fortinos store design should be fired: parking out front, but all the customers have to walk to the end of the huge building and around the corner.  Then, when you grab a cart, it rattles and bangs along a raised tile cobblestone-like foyer that goes on forever.  It’s a wonder the carts last more than a week.  Oh, and the frozen hamburger meat is at the other end of the huge store from the other frozen food.  If there’s ever a coffee table book about poorly designed stores, Fortinos will be on the cover.

Loblaws, Sobeys and Metro seem to be intentionally fragmenting their own business. Gee, why not just one brand, one floor layout, immediate gratification and real savings all in one store? Or is that too much of a stretch, or is it too simple and logical? By far, the worst offender is Loblaws.  I count 17 — yes, SEVENTEEN — store brands on the Loblaws website. Each chain’s marketing and advertising expenses just might decrease by half or two-thirds — or more — just in my neighbourhood if they needed to market just one brand.  Granted, Kroger owns a few other branded grocery stores, but none of them compete with their Kroger brand, and none are in the same geographic regions.

I’ve read that some stores’ names were not changed following acquisitions for “customer loyalty.”  That is likely folly, and expensive.  Other brands are being created to add even more expense, and perhaps take business away from the same company’s different-bannered store down the street.  Here’s an idea: if there is a problem or a niche you’re not filling, fix your current stores, add niche product where marketing intelligence says you should and provide good value and service.  People will come.

Loblaws is supporting 17 disparate brands and, in my neighbourhood, 3 separate weekly advertising efforts.  Weighing that ongoing extra expense against a one-time well-run rebranding effort is a no-brainer.  I’m wondering what the company could do with all those saved resources, such as higher margins across the board, more national and regional media ads to drive traffic, fewer price errors, lower prices for customers and being able to better use five-P marketing science with something as simple as a shopper key tag to target consumers with specific offers.

Oh, and they’d likely save a lot of trees.

If I’m way out in left field on this, please enlighten me…

Marketing, News

How to tarnish your personal brand: MSNBC suspends Keith Olberman over political donations

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On November 5, the same day Keith Olberman was suspended for making political donations against NBC News policy, Rachel Maddow noted that the NBC News rules forbidding political contributions are part of what distinguishes MSNBC from Fox News, whose anchors regularly contribute to political campaigns and solicit Republican financial support on-air.

Watch Maddow’s (somewhat long-winded) comments at: http://www.msnbc.msn.com/id/21134540/vp/40036897#40036897

Simply, Olberman screwed up. He didn’t announce his donations on air when he made them, which is a good thing. He was not soliciting funds (at least directly) for Democrats, although perhaps his on-air comments might get a viewer to dip into his or her wallet. His donations were apparently intended to be private. However, according to his employer’s policy, it was still wrong.  Olberman reportedly said he did not know about the policy.  Punishment short of firing should arguably be sufficient, especially if he was simply ignorant of the policy.  I won’t comment on the ethics of the donations here, other than to say the journalists I have known take great pains to be neutral and would never donate to any party or politician; the “opinionators” of Fox News and MSNBC are certainly not journalists.

He should be allowed back after a short unpaid suspension — a suspension to send a signal throughout NBC News — simply because he is an entertainer preaching to his own choir, not a journalist, just like the other primetime talking heads on Fox and MSNBC. MSNBC at least must realize that and let him back in.

How is this related to marketing?

If and when Olberman is reinstated, his reputation will be somewhat tarnished. One of the network’s headlining brands — Olberman — has dropped in stature. It will take much effort to make people forget or forgive, and he is now a target for right wing commentators more than he was a week ago. Some of his loyal viewers will now lump him into the “oh, he’s just another cable network political shill” group that has been largely made up by the so-called “journalists” at Fox News. Brands — whether a logo or a person — must be protected at all costs. Olberman did not consider this. He damaged his own brand and his network’s, although perhaps he thought it wasn’t much of a big deal at the time.

Marketing

Netflix launches Canadian Internet movie service. Good business model or wasted effort?

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Having worked for more than a decade as a senior marketer with some of the largest US telecom companies (Comcast and Verizon, among others) and previously in Calgary with what is now part of Shaw Communications, I’m surprised Canadians are not raising holy hell about the draconian bandwidth limits and extra “overage” charges they pay for “High Speed Internet,” while US cable and DSL customers by and large don’t.

Case in point: today’s Canadian launch of Netflix movies delivered over the Internet.

Netflix Canada is a pretty useless service compared to the offering in the US. That uselessness is not due to the product, which, granted, is weak out of the box but may improve. Today’s first looks by those testing Netflix Canada report that the offerings are not that great. That should have been expected, as Netflix shows only older and less popular product in the US, since its customers get their new releases through the mail. And Netflix does not have the Canadian rights to many titles available on its US service. Anyway, Netflix in the US augments its mail service with the broadband product as an “added value.” Its bread and butter is still DVD rentals.

The real problem: The Canadian product will likely fail or limp along with measly customer penetration due to the extremely limited pipeline in Canada imposed by broadband providers. Canadians suffer “some of the most restrictive broadband caps on the planet,” according to Carmi Levy, a London, Ontario tech analyst as quoted in the National Post. Levy continued, “Consumers routinely log on to find warnings that they are about to exceed their monthly bandwidth cap. And when they do, they are punished with overage charges. Making a bad situation worse, over the past year most ISPs have tightened these caps — a move which runs directly counter to the rapid expansion of bandwidth-heavy video and multimedia content.”

The first time I encountered that kind of a message was a year ago when visiting family, who live on a Rogers cable system. The only place I was ever billed for extra bandwidth was in Ukraine. Yes, in Ukraine!! And that was 3 years ago. A transplanted American friend who lives there tells me that is no longer the situation, and that he has cheaper, faster service in his small eastern Ukrainian city than that of many Canadians. In the US, paying extra for extra bandwidth was never a concern.

Even the worst cable and telco broadband suppliers in the US don’t pillage customers’ bank accounts (i.e. cap bandwidth or charge ridiculous monthly fees over bandwidth usage) like Canadian companies do with their different levels of monthly usage caps and limits — and overage fees — that only serve to reduce Canadians’ use of the Internet. So, with a big, almost unrestricted delivery pipeline, Netflix has a pretty good business model south of the 49th Parallel.

Since a standard definition streaming movie eats up to 3 GB (high-def video consumes perhaps double that), and many Canadians have very low download limits imposed by their broadband providers — a practice which is arguably years behind the times during this video-heavy and bandwidth-rich Internet atmosphere — watching only a couple or handful of movies may result in an expensive unexpected bill from Rogers or Bell for “overage charges.” Other uses of the Internet exacerbate the problem; for example, downloading a map update for my Garmin GPS devours 3 GB of bandwidth, and I have no idea how much my Vonage phone service uses, but it’s likely substantial.

Only one Canadian reseller, TekSavvy, provides 200 GB of monthly bandwidth for a reasonable price, while the major operators’ standard fare is 60 GB or under — woefully inadequate for a connected world. Many of the same websites and services Canadians enjoy (or need to access for work and school) are designed on the US “unlimited” model. Canadians are being mistreated by their providers, as there are no “barebones” versions of these sites without all the broadband-devouring flashy graphics. Most operators in the US limit only the speed, and provide unlimited amounts of data (although you might get slapped if you’re a bandwidth hog).

Bandwidth is not like buying beans at the Bulk Barn. If bandwidth was a huge bin of beans, selling 10 kilograms of beans would not cost the company much more than selling one kilogram, and the company didn’t have to buy the beans in the first place; they’re a conduit — a pipe. The infrastructure is in place to handle this amount of traffic already. Unlike increased speeds, additional overall bandwidth costs the operator next to nothing, as most customers use very little of their allowance. So, those overage charges on Canadians’ Rogers or Bell bills are essentially pure profit.

Comcast recently imposed a limit of 250 GB, but that is more than 4 times the amount of data allowed for a similarly priced service from Rogers or Bell. If you go over that limit with Comcast, the company will not charge you overage fees, but may cut your service off if you are a repeat offender, and after they give you a courtesy call. Or, it may not do anything at all depending on the amount of Internet traffic in your neighbourhood. Canadian broadband operaters could learn a thing or two from that customer-centric policy.

If Comcast and Time Warner capped bandwidth usage in the US as Rogers, Bell, et al, do in Canada — and played favourites with their own content — there would likely be many significant lawsuits along with federal and Congressional/regulatory involvement, as that action would likely be deemed anti-competitive under US law and arguably not net-neutral.

There is no “competition” if Rogers or Bell or Telus or Videotron or Shaw meter legal services like Netflix or YouTube but do not do the same with their own content delivered via the same pipe. Otherwise, that would entail a level playing field, something Ottawa and the CRTC are in a self-imposed fog about. And if there truly was competition — as there is in the US — Canadians would be enjoying new customer offers of extremely fast 15 MB/second service for $19.99 per month for an entire year without any contracts before it increases to a reasonable $34.99, just like many American broadband customers are doing this minute.

If you think there is free enterprise and real competition in Canadian cable, satellite and telecom, you drank the Kool-Aid brewed by the industries and Ottawa.

Takeaways to consider:

1. If you want to deliver passengers or goods via jumbo jet, but the owner of the airport allows only your Cessnas to land, limits the width of the runways, and gives their own Boeing 767s a hugely better deal — and the federal regulators not only allow it but nod in approval — you should think twice about expanding business to that airport. Perhaps you should land your planes in another airport in an entirely different country.

2. If you advertise speed, don’t limit Customer Satisfaction. Canadian broadband companies are selling a 200 MPH Ferrari that has a tiny 10 litre gas tank that can be filled only once monthly.

PS… I could write about the high wireless phone rates in Canada compared to the US, but that’s a whole other column! That’s another example of Ottawa-sanctioned and approved profiteering by Canada’s telecom companies on the backs of Canadian consumers.

Marketing

Dear Marketing or Ad Agency Owner…

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I came across this site today for a marketing agency in Toronto. I won’t say which one, but they’ll know it when the see this… Or I hope they will.

Dear _____________, CEO,

Yeah, I know video is all the rage.

But if you’re a creative agency and you have nothing on your website other than 5 to 7-minute videos, many potential clients wouldn’t even stick around to hear your wonderful story. Especially if you’re not a pure video production agency and actually have a direct marketing, fulfillment and call centre operation, as you apparently do.

Yes, videos are nice, but most business people want to “get” what you do in 10 seconds. And how can I print a video to show to The Big Guy?… Or a series of them that takes 30 minutes to view? He certainly wouldn’t stop to view them.

I found no descriptive text — nada — zero — on your site about what it is that you can do for a potential client. In fact, excellent verbiage is on your LinkedIn page. So, why not put that on your website?

Video (or Flash, for that matter) should augment your message, not take it over… Or how’s this for an idea: Give the viewer a choice to watch it. Amazing concept, eh!? That advice comes from a guy with a broadcasting background.

And while you’re at it, make sure people can reach your site without typing www in front of it (or without it). Yours doesn’t. And it’s likely about a 30-second fix via a setting in your web host’s control panel.
http://__________.com
“Not Found
HTTP Error 404. The requested resource is not found.”
Ouch.

Sincerest regards,

Jonathan

direct mail, direct marketing, Marketing

Is Direct Mail Marketing Dying?

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On May 17, 2010, DMNews mused: “Is Direct Mail on its Deathbed?”: As consumers communicate more via e-mail, the US Postal Service is considering cutting Saturday home delivery altogether.

I was at an Atlanta DMA meeting a few months ago when many people were complaining and fretting (and some almost having conniptions) about the possibility of the loss of Saturday delivery, and the potential negative effects on their business. Frankly, I didn’t get it. I hail from Canada where there has been no Saturday delivery for decades. Business still works there.

As Ford Prefect told Arthur Dent: “Don’t Panic!” (yes, an obscure Hitchhiker’s Guide to the Galaxy reference I haven’t been able to work into a blog entry until now). Companies will simply need to rejigger how they staff and fulfill orders without Saturday delivery.

Potential Reason to Panic!: The more important conundrum, I thought, is how these companies are going to survive and thrive, since many of their competitors are moving to alternate marketing delivery methods that don’t include using a postage stamp.

Direct Mail has paid much of my grocery bill over the years. However, direct mail as we historically know it is dying in the USA. Then again, many companies thought direct mail was personalizing one letter or postcard for all and shooting it out with a figurative shotgun (or a blunderbuss) at passing geese and hoping they hit something: “spray and pray.” Some companies, such as much of the cable tv and consumer telecom industry, still use that approach.

Direct mail cannot be a stand-alone thing any more. It needs to be an integral part of “Integrated Marketing,” and scientifically delivered via sniper rifle: consistency of message and the complementary use of media. Direct mail, when properly implemented, can still be a powerful way to acquire new customers and increase revenues from existing customers.

Those companies that insist on the old model will be regretting it. The fat lady is warming up for those that depend on these for survival or growth:
– catalogs
– post cards and self-mailers
– non-targeted non-CRM databases
– one-way marketing messaging instead of two-way conversations
– “junk” mailers
– companies not adding the 5th P (People) to the existing 4.

Going forward, companies succeeding with direct mail will need to be more like scientists than the creatives, accountants or direct marketing wannabe advertisers that have dominated the industry.

Uncategorized

BP up to its old shenanigans. They just don’t get it.

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Obviously under the US news radar, but related to the BP story, and a great commentary on BP’s real long-term intentions:
BP had the gall to ask Canada to relax drilling safety standards in the Arctic AFTER the Gulf of Mexico disaster. Currently, Canada requires a second drill hole as a safety-shut-off, which would have prevented the problem in the Gulf. BP wants to eliminate this safety relief well in Arctic drilling.

CBC News report: Could it happen here?

direct marketing

Should you use email to make sales? Or Twitter, for that matter?

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Acquisition: only permission based, and by that I mean these customers explicitly requested you contact them. And only when relevant, timely and targeted. The only other time is when it is a referral, and that must be a one time mailing that explicitly states where the lead came from. Otherwise, you’re spamming.

Retention: Excellent. Again, timely, targeted and relevant. But don’t overdo it. Because you don’t want to lose them as customers via your “retention” efforts if they’re more of a sales pitch. Too many marketers confuse retention with “Let’s sell them more stuff!”

Email’s Biggest Positive:   One thing many marketers miss: selling in ancillary product to existing satisfied customers, which may be it’s biggest benefit. But don’t overdo it. Many companies simply send too many emails, and don’t give customers control on how many they’d like to get… daily? weekly? monthly? If you don’t have those controls in place, and simply have an on/off switch, you risk losing a good customer.

Just because it’s cheap doesn’t mean it’s good.  Don’t rely on email or Twitter for all the heavy lifting. Depending on the product and audience, direct mail, social marketing (such as Facebook fan pages for consumer marketing and LinkedIn networking for B2B), business blogs, newsletters and personal contact (in-person or telephone in B2B) work well. Even things like Twitter if used smartly.

Marketing

Marketing Via Fear: US & Canadian governments doing a bang-up job selling dubious “security” at airports

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Here we go again, with another Hollywood-style plot containing ridiculous reaction, such as the previous totally useless requirements to stay in your seats for the last hour of your flight, and now we have Canadian Keystone Cops installing scanners that will see through your clothes but will have almost no chance of finding PETN (or any powder), which was the explosive in the last two airline bombing attempts. All of this, of course, is to appease the Government Fear Mongers in the USA. The “sitting in your seat” requirement would have been useless on Christmas day, as the guy could have gone to the bathroom 70 minutes before landing. Where is Jack Bauer, as this requirement was about as logical as a 24 episode?

Then, for a few days following this attempt, politicians on both sides of the 49th Parallel thought they had to grandstand by preventing Canadians from entering the US unless they all got frisked Starsky and Hutch Style after 6 to 9 hours of waiting. Give me a break!

This knee-jerk reaction by both US and Canadian governments is all “security theatre” according to security expert Bruce Schneier. In fact, these expensive and intrusive machines will likely not find the explosive that was used in the last two attempts: Christmas and the Shoe Bomber. So, these will not keep you “safer.” UPDATE 11 January 2010: EPIC, a privacy group, revealed that these machines can store images and transfer them via USB; the TSA has been denying this since Day 1. If not a bald-faced lie, it is a gross inaccuracy. In fact, the TSA required the manufacturers to include a hard drive, USB port and ability to network via Ethernet in the design.

It’s all a smokescreen to make you feel safer. If you don’t realize that, and meekly say (as many do), “well, if it makes passengers safer, OK…” you are as much at fault as the government in losing your rights and privacy. On PBS Newshour, former US Senator Slade Gordon, who was on the 9/11 Commission, said that we cannot rely on security screenings at the airport — which he says should be the last hurdle for any terrorist — to be where we catch bad guys, but that is what has been occurring. He said these people should be barred from even getting through the security gate, let alone walk through any scanners, but that our current Intelligence is failing at that.

This week, we learned that TSA neglected to turn on the videotape recorder in Newark airport for more than a week. True story: I was once chased down in Louisville KY airport because my luggage, which was secured by a special TSA-approved lock that only TSA could open, was selected for inspection, but the dummies lost their master key. These people are protecting us? Trained monkeys could likely do better.

The Australian newspaper calls this Mickey Mouse Air Security: “The TSA engages in bumbling pretend-steps that treat all passengers equally rather than risk offending anyone by focusing, say, on religion. The alternative approach is Israelification, defined by Toronto’s Star newspaper as ‘a system that protects life and limb without annoying you to death.'”

Ben Gurion airport is arguably the safest in the world due to their use of Behavioral Screening, a system El Al Airlines uses in other airports, including those on this side of the Atlantic. But in politically correct Canada and the US, we need to treat Grandma and the war veteran with the artificial leg as if they they are potential terrorists, just because their number came up? That is ridiculous. A retired teacher from Peoria has about as much chance as my cat as being a danger. You are also being hassled due to the Intelligence community’s colossal failures. The airport cannot be the place where the bad guys get stopped, and we cannot rely on technology to do so, as the TSA chimpanzees do.

These new expensive scanners will not easily detect explosives such as PETN. Conventional chemical testing, sniffer dogs, “puffer” machines, x-rays and well-trained staff are the only methods that would. As Schneier pointed out on CBS’ 60 Minutes a few months ago, the ban on liquids is silly as it is now performed: If TSA finds liquids, they simply throw them into a bin that sits there all day until it’s emptied into the garbage. They’re not tested, nor even inspected by a TSA agent to determine if it’s nasty stuff. In a large airport, a bad guy could simply exit, get some more explosive from a buddy, and get re-screened via different screening points with no chance of discovery until TSA misses it… and government audits say they likely will.

Governments know all this! It’s just an illusion to make you feel safe. So, if it’s an illusion, then the validity of prostrating yourself naked before these machines needs to be questioned. If the use of these multi-million dollar machines has no security or safety merits, then why would we agree to it?

In fact, we are much more safe in an airport or airplane than we are walking our streets, even with pre-Christmas TSA policies. There was a robbery involving a handgun on the street not 200 yards from the entrance to my suburban Atlanta townhouse complex Monday night, and now the Georgia government is considering allowing concealed firearms on university campuses. The US government doesn’t do much to curtail this kind of home grown terrorism and fear. We have found the terrorist, and it is us.

Eerily timely; from an essay published a month ago by Bruce Schneier: “Terrorism is rare, far rarer than many people think. It’s rare because very few people want to commit acts of terrorism, and executing a terrorist plot is much harder than television makes it appear. The best defenses against terrorism are largely invisible: investigation, intelligence, and emergency response. But even these are less effective at keeping us safe than our social and political policies, both at home and abroad. However, our elected leaders don’t think this way: they are far more likely to implement security theater against movie-plot threats… If we spend billions defending our rail systems, and the terrorists bomb a shopping mall instead, we’ve wasted our money. If we concentrate airport security on screening shoes and confiscating liquids, and the terrorists hide explosives in their brassieres and use solids, we’ve wasted our money.” When will this end? Body cavity searches? A 300 foot wall around the USA?

Politicians, are you listening to the experts? And I’m not talking about the paid talking heads on CNN and Fox. Obviously our governments are not listening after the Christmas weekend’s panicked fiasco from the Obama administration. Nobody in Washington even controls the “lists.” They have no idea who is on it, or why.  A 4-year-old girl was identified as a terrorist last year, and 8 year old Mikey Hicks is frisked every time he flies. This has been happening with Michael for 6 years. Before the government inconveniences everyone by frisking every foreign inbound passenger — with no result — the US must fix its Intelligence infrastructure, which is hopelessly broken.

Otherwise, “Panic Nation” will continue.

In their 8 years of existence, the US TSA has yet to find one single terrorist, although they excel at harassing 80-year-old ladies and children. During the only two occasions where there was an attempt, they and their so-called “Intelligence” brethren screwed up badly, and often miss things when tested by other government agencies or John Q. Public when he later discovers he forgot about the Swiss Army Knife in the bottom of his carry-on that TSA completely missed. I dare say Boy Scouts could be better TSA agents, with the Dutch guy on the plane as their boss, and a high school computer science class controlling the lists.

Now, the US and Canada plan to inconvenience all passengers with intrusive, degrading technology, and the Americans are even trying to force the Canadian government to provide the names of passengers boarding planes directly bound for other countries that only overfly the US without landing, which is a direct, conscious affront to Canada’s sovereignty.

“The price of liberty is too high,” said Kate Hanni, founder of FlyersRights.org in a January 4 2010 Washington Post article. She shuttles regularly between her California home and Washington to lobby Congress. Hanni said many of her group’s 25,000 members are concerned that “the full-body scanners may not catch the criminals and will subject the rest of us to intrusive and virtual strip searches.” The TSA says the image covers up the naughty bits, but that is exactly where the Christmas Bomber had the stuff stashed. So, what’s the point?

As many security analysts have mentioned, people bent on killing people should and must be discovered even before they get to the airport, but the US Intelligence community is so bureaucratically disjointed and competitive, and their so-called security lists are so inaccurate and incomplete, that they can’t be trusted.

So, to those of you saying, “do this, do that, buy this equipment,” we will spend more billions, and then the terrorists will find another vulnerability. The window dressing continues. Did you know that the National Guard troops “guarding” US airports after 9/11 had no bullets? Yes, really. It’s all a ruse to deflect government criticism, and to beat their chests while saying “Yes, We Are Your Defenders!” It’s all a smokescreen. If you don’t realize that, and say, “well, yes, if will keep me safer,” you are a sheep. Or a lemming.

According to CNN, the government says there was enough explosive to blow a hole in the side of the plane. However, they don’t say how — such as how it would need to be packaged to do so or if it was even possible by being strapped to a human in underwear. PETN is extremely stable. Flicking your Bic won’t do it.

The top levels of the US Department of Homeland Security and their counterparts in the US Intelligence agencies, whether under Bush or Obama, are a bunch of politicized fools, while the non-thinking automatons at TSA carry out their silly but oh-so-public regulations.

Now, Canada has joined the Mickey Mouse ranks with this expensive, politicized and unnecessary purchase of these machines. Inspector Clouseau is now running Canadian air safety, just as he has been doing in the USA for 8 years.

UPDATE November 16 2011:  Effective today, the European Union has banned these same machines for serious health concerns — effectively, they can cause skin cancer.  Gee, we were told they were perfectly safe.  The US and Canadian governments wouldn’t lie to us about our travel safety.  Would they?

Takeaways to consider…

Why is this related to marketing? Fear is one of the best ways to sell someone on a product. Fear is what is driving Americans and Canadians towards giving up their freedoms.

Fear marketers paint the picture of what your life might be like if you don’t get their product. They play into already existing fears, or paint new ones that consumers may never have considered. The end result is the consumer perception that the advertised product or service is a necessity to keep their family safe, make their life less dangerous, or avoid a situation they dread. But should we do it? Doesn’t this type of marketing just add to the plague of society, fostering fear and making us a weaker people as a result? Probably – but the problem with fear marketing is that it often works. – Influential Marketing Blog

Scaring people (scaring good customers) to make $100 is stupid. It hurts your brand. It makes it less likely they’ll open the envelope next time. And most of all, it’s wrong.  You can do it, no one can stop you. You shouldn’t do it, though, because you burn brand trust and you can’t get it back. – Seth Godin

Seven key emotional drivers that change human behavior: flattery, fear, greed, anger, guilt, exclusivity and salvation.
– Denny Hatch

Government by fear is no government at all. –  John Adams