IMKTG REPORT December 03 2002

al berrios IMKTG REPORT 12.03.02: Accountability, Wireless; more…

THIS WEEK'S CONTENTS ARE:
[1] JUST SAY IT: our updates, Honest Wall Street?
[2] BRANDSTRATEGY: Accountability Destroyed the Economy
[3] CONSUMERFOCUS: Understanding Premium Cable Viewers
[4] MEDIA: al berrios & co. Executive Media Marketing Panel
[5] MANAGEMENT: Consumer Challenges in Wireless

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[1] JUST SAY IT: our updates, Honest Wall Street?
>> "It seems to me universally obvious that this current model will crumble," says FCC Chairman Michael Powell [on the state of government regulation of airwave spectrum.]

Good morning execs,

Lots of great things going on here at al berrios & co. Last week, we completed a study on premium cable viewers (details below), hosted an exclusive, educational panel on media marketing, relaunched our newsletter archive as a proprietary knowledge bank where you can hopefully continue to expand your insight and understanding into why consumers do the things they do: http://www.alberrios.com/clientaccess.html, (other than installing a search function, which we're addressing, any other suggestions?), and celebrated a really good holiday with family (yup, I actually have a life.)

So let me get this straight: if you're too buddy-buddy, you get sued. If you're actually objective, you get sued. Analysts are not generally known for being objective (which is important to gain access to the right execs for company insight), but bias made regular investors whine and demand reform. But in the midst of reform, LVMH, the French luxury products retailer, is suing Morgan Stanley, claiming that a negative (yet apparently objective) recommendation was bad enough to lower its stock price, doing them damage. What is an investor (who was obviously never told about risk in the market) to do? Um, how about, stop investing until you understand what you're doing. What is a company (that can't seem to get a break any which way) to do? How about fix industry-wide compensation structures top-down, lower fees to investors, and even more revolutionary, try being honest.

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[2] BRANDSTRATEGY: Accountability Destroyed the Economy

With increased scrutiny in the CEO suite, CEOs have become more risk averse. Consequently, they push down accountability to the rest of their company. This accountability decreases innovation, since tried-and-true is valued more. A lack of innovation decreases consumers' perception of value, consequently making them want to spend less on your brand. And if they're spending less on your brands, your profits dwindle. No money coming in, jobs have to be cut. As jobs get cut, confidence in the economy also decreases. To prepare for decreased spending by consumers, budgets get cut so companies can save. And hence, as budgets are cut, accountability gets drilled down even more into the mindset of the company. Repeat this indefinitely, throughout all industries, and presto, economy destroyed.

BOTTOM LINE: Last week I commented on OOH media survival despite a lack of being able to measure its effects. I also mentioned how a media executive understood that it's not always about measurement and accountability. After a more thorough assessment of the role accountability plays in the economy and in the executive suite, it's a safe bet that placing too much of it on your company and its vendors makes it very difficult for your company to achieve success. Wanting to know your return on investment isn't bad, as long as you plan and allocate your resources to the quality of your brands.

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[3] CONSUMERFOCUS: Understanding Premium Cable Viewers

Our study breaks down viewers by subscribers to a premium cable channel AND whether or not they are aware of premium cable programming. The most significant finding was that viewers that were not subscribed nor aware of programming can still be persuaded to switch to another premium cable brand. As most of you may have already guessed, premium cable viewers mostly recall programming over content, however, they recognized one brand over another as the source of the program they prefer, whether influenced by ads or friends.

BOTTOM LINE: Males appear to be the most reached by communications efforts, with females either not being successfully reached or not being successfully persuaded to switch. In all viewer segments, viewers felt that more insight into a storyline makes a communications campaign more effective in getting them to tune in to a specific show. Although cost wasn't immediately identified as a deterrent (since premium cable subscribers are already known to have above average household income), most premium cable viewers have little to no understanding or perception of value of paying for premium cable. al berrios & co. strongly advises experimenting with alternative pay packages and communication creative to clarify program storylines.

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[4] MEDIA: al berrios & co. Executive Media Marketing Panel

Last week, we hosted an intimate, exclusive panel for media planners/buyers featuring two experienced media executives, Bruce Rogers (VP of Marketing for Forbes.com) and Richard Loomis (VP of Marketing for Comedy Central). The topics covered were how media reaches audiences in this environment, changing consumer media habits, content strategy, and advertiser value.

BOTTOM LINE: Always remember the consumer comes first, so if you're faced with less resources, don't cut corners on quality. All the marketing in the world won't help your brand or your content if your content is crap. There's too much competition out there for you to think you can fool consumers; We all know consumers are spending more time with the internet, however, research also shows that they watch TV, listen to radio, etc simultaneously. The challenge now is to gauge consumer involvement with your content while they're involved with another media; Many media companies are still having difficulty balancing their core subscription-based content with what is mainly perceived as a peripheral, free online version. How do you avoid cannibalism? How do you avoid devaluing your core product? How do you keep your audience coming back for more? Our panelists were confident that offering unique content or services inherent to the web on your online platform would not cannibalize your core product. In fact, the users of your core product and users of your online version have different habits and expect different things from all your channels, (i.e. you may not read Ayn Rand online, but some of your users will.) But the key take away was quality. What distinguishes a diamond from a cubic zirconia in the eyes of advertisers and audiences alike is the caliber of your content. The higher the caliber, the greater your success.

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[5] MANAGEMENT: Consumer Challenges in Wireless

1) An (easily fixed, bureaucrat-controlled) artificial scarcity in airwaves has saddled wireless providers with too-huge debt from purchasing licenses just to operate; 2) wireless handset internet access is quickly becoming obsolete to laptops, pdas, and pc tablets with wireless network access; 3) alternative revenue strategies, such as advertising, movie watching, alternative payment, texting, and websurfing, not to mention playing MP3s, radio, taking pics, and playing games, haven't taken off to help reduce the enormous cost of building and managing a service network. How could telecom right itself?

BOTTOM LINE: There are obvious financial re-structuring solutions present all over. However, let's explore solutions from the consumers' point of view. a) Target new audiences by different metrics. Start with asking yourselves what consumers want from wireless service brands: a) clear, consistent service b) lower rates c) service anywhere they go. Then ask yourselves why they want these things: to communicate. Watching movies, surfing the web, and paying bills are rarely at the top of consumer needs list when purchasing wireless service. b) Identify the brand promise your service wants to make and stand by it. al berrios & co. has identified the major reason most A21-27 yr olds don't change their service plan is because they don't want to change their numbers as opposed to any loyalty felt for the brand. Wireless companies clearly haven't spent on developing brand loyalty, as most wireless services are perceived as a commodity going for the lowest price. c) Stop competing with theatres, arcades, and credit cards and tone down all the extra things consumers can do with their phones. Why are you trying to reinvent the wheel, folks? Do you realize you're trying to change the way consumers behave with wireless services the wrong way? (This also begs the question: do users have a clear understanding of their service vs. their service's technology, or in other words, do they want to pay for the phone or the service? Are wireless companies spending money marketing to make consumers loyal to Motorala or themselves?)

Disclaimer: The recommendations, commentary and opinions published herein are based on public information sometimes referenced via hyperlinks. Any similarities or likeness to any ideas or commentary from any other sources not referenced is purely coincidental. al berrios & co. cannot control any results occurring from advice obtained from this publication nor any opinion(s) conveyed by any reader of this publication.

(c) 2001-2005. All Rights Reserved. al berrios & company, inc. Published by al berrios & co. This Report may not be reproduced or redistributed in any form without written permission from al berrios & co., subject to penalty.

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