Archive for January, 2011

Were State Farm Ad Makers Born in a Barn?

January 30th, 2011

Granted, insurance isn’t the most exciting topic in the world, but that’s no excuse for the consistently lame advertising America’s largest–and my–insurance company keeps putting out there.  Their main “Check with Your Neighbors” campaign contains not a shred of cleverness or memorability.

It essentially consists of a young, attractive, totally uninteresting guy saying a bunch of uninteresting things about an uninteresting topic. Then he tells us to ask our friends about how much they love having State Farm as their insurance company.  (Gee, the next time I’m in need of an icebreaker at a cocktail party, I have just the line!)

In addition, the visuals have very little to do with the spokesman’s words, which only serves to make these ads not just uninteresting but confusing to boot.  To make matters worse, the campaign also does what no #1 brand should ever do:  it mentions the competition, which is a sure sign of an advertiser that has lost its way.

Recently they’ve added a new “Magic Jingle” campaign that’s not as much uninteresting as it is annoying.  At least this campaign shows banged up cars and other damaged goods  to visually reinforce that this is an insurance ad.  Unfortunately, they then have the actors sing the “Like a Good Neighbor, State Farm Is There” to have their State Farm agent magically appear to save the day.  I presume the intent is to suggest that State Farm agents are more responsive that competitive agents, but the execution is so hokey that the point is likely lost on most people. State Farm’s ad agency was surely shooting for “great,” but what they hit was “grating.”

In short, State Farm doesn’t seem to have been able to create a very compelling story to tell its target audience.   And if you don’t have a good story to tell, any investment you make in advertising is likely to be an extremely risky one.  You’d think an insurance company would know that.

Ping Quietly Scores an Ace

January 29th, 2011

It’s always impressive when a company performs a sincere act of generosity, particularly when they don’t call attention to it.  And it’s better yet when, despite the lack of self-promotion, consumers somehow find out about the generous deed.

I recently received an email about a wonderful program in which Ping provides a full set of golf clubs to military veterans who participate in the Wounded Warrior Project.  As this article explains, Ping modifies their clubs so they can be used by these heroes regardless of whatever appendages they might be missing.

Now emails like the one I received are making their way to golfers everywhere, making them aware of Ping’s admirable actions and suggesting that it might be nice to reward Ping by making them the brand of choice when it’s time to buy a new driver or set of irons.

My only hesitation in giving Ping high marks for a powerful public relations coup is that it suggests this was a conscious–and exceptionally clever–attempt to build their brand equity rather than a sincere and selfless effort to thank these veterans who have given so much for their country.

Ultimately, I decided that whether Ping is being exceedingly clever or exceedingly generous, they are more than deserving of a rave review.

Target.com Customer Service Way Off the Mark

January 9th, 2011

Over the years I’ve generally been a big fan of Target, particularly the ambience of its stores and its product selection.  However, I just had the type of disappointing experience with Target.com that makes me wonder if things are starting to unravel as this well-respected retailer.

Our son, who recently moved to China, gave my wife a Target.com e-gift card for Christmas.  Redeeming it this afternoon, however, proved to be a major ordeal. First, when when I tried to enter the payment information, I got a message saying that e-gift cards can’t be used on target.com–even though the email announcing the gift made it clear that e-gift cards can only be used on target.com.  After wasting several minutes of my life trying to figure out what was going on, I stumbled upon some fine print informing me that the problem was that we were doing the transaction as a “guest”, and that e-gift cards can only be used if the recipient has a Target.com account.

So is this a ploy by Target to force people to create online accounts?  Or, worse yet, is it a ploy to frustrate gift recipients and induce them to help Target’s bottom line by simply giving up on redeeming their e-gift cards? I don’t know the answer, but I know it’s not good for Target to have its policies create such questions in the minds of its customers.

Anyway, I then created an online account, but the site wouldn’t accept the password I created–and didn’t tell me what, if anything, I was doing wrong.  So I had to call their toll-free number, where a very nice–but very hard-to-understand–telephone rep was finally able to set up a password for me that worked.  (What had I done wrong in trying to create the password on my own?  Nothing, according to the rep.)

Home free?  Not quite.  When I placed the order, the cost of the least expensive shipping option was $17–or 4 times what Borders.com had charged me an hour earlier for a heavier and larger shipment.

So now I’m left wondering if Target has suddenly become greedy, incompetent, unethical, or some combination thereof. I know they and the financial analysts following them have been disappointed in their recent revenue trends, but whether this is resulting in pressures to cut corners on customer service in order to boost the bottom line is impossible to me for say.

What I can say is that, in my mind,  the service I received today has served to replace Target’s red bullseye with a red flag.

Is Groupon Overrated?

January 2nd, 2011


I realize that Groupon is officially the fastest-growing company of all time, that its members  (of which I am one) are raving fans, that its founders are scarily bright and innovative people, that Google reportedly recently offered to buy the company for $6 billion, and that Groupon’s owners felt that price was well below what the company is worth.  I also realize that I will probably look like a fool for saying the following:

I don’t think Groupon’s success is sustainable.

There–I said it.  And I might well be the only person on the planet to have said it.  But, in the event that you haven’t dismissed me as a small-thinking, shortsighted Luddite and surfed to a more coherent blog, here’s my reasoning:  I just don’t think that Groupon’s business model makes financial sense for enough of the businesses that use their services.

Most of these businesses offer savings of approximately 50% to Groupon members; whatever price the member pays, Groupon and the business split the proceeds 50/50.  Thus, if the product or service normally sells for $20, the member pays only $10 and Groupon and the business each take home $5.  In other words, the business’s take is one-quarter of what it normally makes.  If their gross margin is 50% (meaning that the cost of the product or service is $10), they’ve lost $5 on each and every sale.

The theory, of course, is that the business will gain so much exposure to new customers from the Groupon promotion that they’ll generate enough incremental profit in the long term to more than cover their promotional losses.  But is that theory valid?  If you try a new product or service, how likely are you to buy it again at double the price you just paid for it? I’d say the odds are pretty low, unless the product or service is dramatically superior to other options.  And let’s face it; most industries are populated by “me-too” competitors that rely more on low pricing than superior performance to induce customers to choose them over all other options.  As soon as a lower-priced alternative comes along, their fickle customer becomes a former customer.

Thus, other than for a truly one-of-a-kind product or service that will knock the socks off the people who try it, it’s hard for me to imagine that a Groupon promotion will lead to enough future sales at full price to offset the losses generated by all the sales done at the bargain-basement Groupon price.  If I’m right, the value of Groupon is a fraction of what virtually everyone else seems to think.

Of course, given that Groupon’s business model was surely vetted by the folks at Google–not to mention Groupon’s founders, investors and managers–it’s very possible that I’m missing something.  If anyone knows what that is, I’d love to hear from you.

Until then, consider me the original Groupon un-groupie.