31 October 2010

The Quagmire of Low Price

A tech giant has just made a huge U-turn.

About a week ago, Dell announced plans to spend hundreds of millions of dollars on a new global advertising campaign.  What makes this new push radical -- for Dell -- is its stated intention to move away from price-focused, transactional advertising to a strategy that is more focused on the brand.

I wonder if it's too late.

Dell became the #1 PC company in the world on the back of its 'direct' model: a revolutionary, 'just-in-time' manufacturing process that dramatically lowered inventory costs, cut out the middle man, and served up huge profits in an industry infamous for its razor-thin margins. The pace of obsolescence in the PC industry is unforgiving -- so inventory management is critical. While other players typically struggled with weeks of supply (WoS), Dell counted its inventory in terms of hours. (At its brutal best, it even boasted 'negative' inventory -- it collected your money before it started to configure your purchase; and stretched out rebate payments.) For the longest time, no one could touch its supply chain efficiency.

Then the competition wised up. HP and other contenders got their act together and reduced their WoS -- but they also offered consumers the choice of buying from the retail channel, the sensory experience of physically interacting with the product (and bonding with the brand) before buying it.

Dell's competitive advantage was no longer so.  The only other residual impression it had registered, was low price.

Source: www.tonystone.com
But price is not a strategy.  It is the quicksand of a brand -- drop your price, and you will almost never be able to claw your way back to a firmer footing.  It is indefensible (sooner or later, someone is going to drop prices lower than you can afford to), and the only connotation that keeps it company is the wrong one -- poor quality.

Dell has finally wised up, too.  But it has a mountain to climb.

Paul-Henri Ferrand, its Chief Marketing Officer, has acknowledged that they "need to invigorate the brand".  It's about time.  But when he says that "there's a real space for us to become the most-loved PC company in the industry", my skeptic antenna starts twitching.

The campaign theme says, "You can tell it's a Dell."  With due respect to its creators, I believe it's the worst possible thing Dell can tell.  If all you've got is a much-eroded competitive advantage, and the double-whammy impression of low price / poor quality, don't wave a red flag in front of a bull. Remember the concept of 'credibility snap'. You need to work your butt off to prove you're a different company, then let your audience ascribe to you that compliment. In other words, don't say it. Just earn it.

I hope Mr Ferrand has deep pockets.  He's going to need them.

05 October 2010

Audi: Giving Virtual Advertising A Whole New Spin

Source: www.fastcompany.com
Talk about seismic shift.

This past weekend, car-maker Audi raised the game to a whole new level, with a trail-blazing article in Fast Company which touts their latest planned campaign.

"Planned" is the operative word -- because the campaign hasn't really run just yet.  But -- in a move resonant with today's bare-all social media generation -- Audi has apparently allowed its agency, a creative shop called the Access Agency, to publicly share the creative rationale behind this admittedly compelling concept: “It is a display of four life-size Audi cars, suspended inside the silver rings of a massive Audi symbol attached to an iconic bridge structure or in front of landmark spaces — the Sydney Harbour Bridge, Brooklyn Bridge, Tower Bridge, the Golden Gate Bridge. The rings rotate around, light up at night, and move up and down the bridge. Against the backdrop of spectacular urban architecture, the Audi installation reflects Audi’s continuous challenging of the status quo, its capacity to innovate, and its ability to avoid the bland and the ordinary.”

The agency goes on to say that real brand value will delivered by the process of getting the iconoclastic idea built: the “manufacturing and transportation of the gigantic rings, the installation of the rings, the hoisting of the vehicles, the first test of the lights, the rehearsals of the launch.”

Source: www.fastcompany.com
Is the idea compelling?  Pitted against much of the dreck that's out there, I'd definitely say, Yes!  But is it 100% original?  I know, from a previous life spent in Canada, that the Engineering students of the University of British Columbia (UBC) had an annual tradition of hijacking a lecturer's car and installing/suspending said vehicle in all manner of incredible positions (including one memorable year in the early 1990s when I lived there, when they suspended a tutor's car from the Lion's Gate Bridge -- all in the name of demonstrating engineering prowess). Adidas' "Vertical Football" human billboard and Esprit's vertical catwalk show down the exterior wall of an Esprit building are two other well-known examples of the human installation idea and its product installation cousin.

But here's where I think the real genius of this Audi campaign lies: (Did you pick up on it?) Here is an advertising campaign that hasn't yet run, but which has garnered the kind of publicity one should only hope to achieve if a campaign was actually out there.  No actual executions in sight -- yet a few well-timed 'leaks', the offer of an 'exclusive', a well-written rationale, and voila!  Thanks to the wonders of PhotoShop, a launch campaign is yours without having to actually produce an ad. Gives virtual advertising a whole new spin, don't you think?

Source: www.fastcompany.com

Source: www.fastcompany.com
 Access Agency seems to be milking this approach for all it's worth.  Its big idea for the Nike swoosh apparently hasn't seen the light of day -- yet it might as well have done, considering the buzz it's generated and downloads it has inspired.  They've latched on to the insight that people pass on and share stuff they think will awe or entertain their friends -- casting themselves as purveyors of cool in the process.  It's easy to see how this can make sense for a shrewd client and sharp agency -- you get a lot of bang for little buck.

If this trend catches on, I daresay ad agencies will rediscover the lost art of writing a creative rationale.  And as for media agencies?  Be afraid.  Be very afraid.