On Advertising & Getting What You Pay For

Blitz Magazine, November 2002

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This issue is the 5-year anniversary issue of this magazine; here’s hoping that readers may look forward to more Blitz pages. Osama’s attacks and corporate corruption didn’t just rock the stock market—they knocked the wind out of magazine ad sales. You have, no doubt, noticed that every magazine you pick up is a lot thinner than in previous years. As for me, if all the people who gush about how much they love Blitz don’t start supporting it, I’m going to pitch my publisher’s hat into the Pacific.

The experts keep telling us that the Canadian economy is the envy of the G7, that we’re perfectly stable and thriving and bla bla. ‘Problem is, Canadian businesses don’t appear to believe that. The response of many has been to cut advertising budgets.

This is most unfortunate, because it is an inviolate rule of business that the uncertain, or down, times is when advertising is crucial. You can advertise when you have gobs of cash coming in—but you must advertise when it seems like you can’t afford to. Otherwise, you’ll sink.

Some recent examples: In an effort to maintain earnings, Bristol-Myers cut advertising by 14%; three of its five top-selling drugs are now losing their monopolies. Buy.com thought that cutting ad spending would save the company; sales immediately dropped by $20 million. Samsung decided to eliminate “unnecessary” costs. A spokesperson said: “The company is seeking ways to reduce travel, traffic, advertising and miscellaneous expenses.” To this, Sergio Zyman responds: “If you’re the kind of company that puts advertising in the same sentence as ‘miscellaneous expenses’, you deserve what you get.”

Zyman is the former chief marketing officer at Coca-Cola and the author of the newly-released The End of Advertising As We Know It. His point is that, in an effort to capture the attention of information-overloaded consumers, ad agencies have had to find increasingly inventive ways to reach audiences. Which is fine, except that the focus on brand awareness has shifted. Now, everybody seems to want to use every technical tool available—just because it’s there, to create hip portfolio pieces and win awards. When the focus should be on sales results, i.e. the actual goal. Zyman cites K-Mart as a perfect example: huge awareness, but it’s in bankruptcy. Remember the Taco Bell Chihauhua commercials? The ads won awards, the client’s sales tanked.

Over the last five years, I’ve had hundreds of calls from ad agencies and pr firms. The conversations rarely vary:

Caller: “We’ve done a terrific campaign for ABC Widgets and we think it would make a great article.”

Me:      “Well, the campaign isn’t newsworthy. The results are newsworthy.”

Caller: “Huh?”

Me:      “Once the campaign is well under way, or complete, the increase in sales figures would make it a story.”

Caller: “I don’t understand….”

Me:      “Your agency, and ABC Widgets, will track the campaign’s results, right?”

Caller:  “Uh…”

Me:      “So, in four months, or whenever, you should be able to tell me that, as a result of this campaign, the client’s sales went from ‘here’ to ‘here’. That they increased by ‘this much’. Then the campaign could be a cover story.”

Caller:  “But it’s a great campaign. Why isn’t that worth writing about?”

Me:      “Because it’s not a great campaign if you can’t show increased sales.”

Caller:  “Oh. OK. As soon as we have those results, I’ll call you back.”

No one has ever called back. And as it’s not likely that they passed on the chance for a cover story, I have to assume that I didn’t hear from them again because their campaigns didn’t generate results. They may have won awards, and the teen-agers producing them thought they were really cool and were able to persuade the client of same, but the work didn’t work.

It should be obvious to everyone that if anything a business does doesn’t contribute in some way to increased profits, it shouldn’t be done. To that end, marketing directors have to say to ad agencies: “This is the plan, this is what it has to achieve, I’m going to pay for your ideas on how to best achieve this. Once I, and the rest of my staff, agree that your ideas are likely to increase sales, I’m going to pay you to provide the required services.”

Marketing directors and company owners should not say: “This is the company whose products represent my life’s work. These are the products whose sales support the jobs of dozens of employees. I’m putting all of our prospects in your hands. I hope you can pull it off.”

payfor1At the same time, a marketing director or company president who expects a certain result, and who’s confident that what his agency recommends will work to increase sales, but who then balks at the cost of the work, is doomed. Ditto with company owners who think that flash-in-the-pan campaigns will produce results. This is especially true with print campaigns, where advertisers often cancel a campaign if one or two insertions didn’t generate immediate results. You want results, you have to commit for the long haul. You want more revenue, you have to open your wallet. You get what you pay for.

I thought everyone knew this. Zyman says that that is most definitely not the case. And that it’s time for everyone to think again. Because, he says, advertising is a science. And those who fail to master that science, and properly practice it, are going to go out of business—along with their clients.

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Not Worried, Being Happy: Happy Planet Foods Makes a Splash in the Beverage Business

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“Wouldn’t it be nice if we could produce and sell the world’s best juice while promoting sustainable farming and environmental responsibility?”

“Actually, we can.”

This, one imagines, is the conversation that took place in 1994, between Randal Ius and Gregor Robertson. The two shared a deep concern for the environment, a passion for food and a knack for sales. And Robertson owned an organic farm. Happy Planet Foods was born; Ius and Robertson started selling carrot juice.

‘Sounds a little out there, but first-year sales hit $400,000. Today, Happy Planet is the fastest-growing company in BC, with 50% annual growth and 1999 sales of $3.5 million. It produces 18 beverages, introduces new flavours each year and is known as the innovator in the super-premium juice and smoothie category. Its products are sold at 550 locations, including Starbucks, Safeway and Save-On Foods, plus just about any store serving the ‘alternative’ market in Vancouver, Victoria, Whistler, Calgary, Edmonton, Toronto, Seattle and San Francisco.

The organic food movement has grown steadily since the ‘60s, fueled by an ever-increasing horror of chemicals and a more health-conscious society. It used to be, though, that organic foods weren’t very appealing. And they commanded no respect. Happy Planet (HP) has changed that, at least in the beverage category.

Most of HP’s products fall under the category of New Age beverages knows as ‘functionals’ or ‘nutraceuticals’, a segment which is growing faster than any food category in North America, and which accounted for $350 million in sales in the US last year.

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Functionals have something useful and/or beneficial added to them—minerals, vitamins, herbs etc. Happy Planet has five such beverages: Extreme Green (passion fruit, green micro-nutrients), Abundant C (strawberry, guava, Vitamin C), Spirulina Soul Food (pineapple, coconut, spirulina), Thinkgo (raspberry, mango, ginkgo biloba) and Dot.calm (papaya, pear, St. John’s Wort).

It then has ‘Organics’, which are beverages certified to contain at least 95% organic ingredients, and which may or may not be functionals. In Happy Planet’s case, they are. There is Green One (mango, plum, green micro-nutrients), Essential Echinacea (guava, strawberry, Echinacea), Power Plant (banana, strawberry, soy protein). These are just general descriptions—if you look at the full ingredient list of Radical Response, it says Apple, Plum, Apricot, Guava, Banana, Grape Seed, BetaCarotine, Citrus Bioflavinoids, Milk Thistle, Chlorophyll, Zinc, Manganese and Selenium.

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Then there are the ‘Naturals’, which are strictly thirst-quenchers and include Lost Lagoon Mango, Sunset Beach Strawberry, Righteous Raspberry, Lemon Made and O Cranada. These are the lowest-priced Happy Planet products; organics are the highest-priced.

“Naturals are the entry-level products,” explains George Noroian, HP’s President & CEO. “But people want organic and they’re prepared to pay for it. And there has been an explosion of interest in functional beverages, so our more expensive products are our biggest sellers. People don’t mind paying more if they’re getting more. Not only do we have functional ingredients but, unlike SoBe or V-8, which have 10% juice and 90% water, we offer the actual fruit—we don’t add any water. Each 16 oz. bottle contains five whole fruits, so one bottle meets Health Canada’s recommended daily intake of fruit and vegetables. Our beverages are heartier and healthier than anything else available.”

What Happy Planet adds to its juice is closely regulated by the Canadian Food Inspection Agency and Health Canada, which set guidelines for what additives are allowable, and at what levels. (Americans are more lax—Odwalla adds far more vitamin C to its products than Health Canada would allow.) As we now know, too much of a good thing can be dangerous, so Happy Planet has to constantly consult with Health Canada, as well as herbalists and naturopaths, and it has a microbiologist on staff. For in-depth information, consumers can find product literature wherever HP juices are sold, and 10,000 people consult HP’s cheerfully uncomplicated web site (www.happyplanet.com) each month.

Happy Planet uses no concentrates, preservatives, additives or genetically-modified organisms. Two-thirds of ingredients come from Canadian farms and all ingredients come from sources known to use fair trade practices. The company claims to not use any paper from old-growth forests and says it gives 10% of its net profits to environmental and humanitarian causes.

But staying with the organic thing proved to be harder than at first thought. “All-organic is not possible due to availability and price,” says  Noroian. “Organic farming is much more expensive. Pesticides cost far less than natural controls and, where in conventional farming you pick a field twice, in organic you have to pick it four or five times. That means more labour and a substantial price differential—organic bananas cost twice as much as conventionally-grown bananas. If all of our products were 100% organic, they’d be out of the acceptable price range.

“So we take a pragmatic approach. As much as possible, we deal directly with farmers to guarantee quality at the most reasonable price. And as our purchasing power and the demand for organic ingredients increases, we transition ingredients to organic—now, all of our plums and mangoes are organic, as are most of our oranges. Between 40% and 60% of our ingredients are organically grown and as the economics work more in our favour, we’re able to make an even better product at an acceptable price.”

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Happy Planet’s production takes place in 13,000 square feet of space on Vancouver’s east side. Bottles are of high-density polyethylene (which is more environmentally-responsible than glass). All apples are BC-grown and processed in Vancouver; other fruits arrive in the form of purees from trusted sources in places like Fiji, Ecuador and Hawaii. As Noroian explains, the logistics can be nightmarish.

“When you’re dealing with organic fruit, the quality changes from year to year. So there’s a much bigger effort involved in sourcing ingredients, and we have to do a lot of taste-testing and keep buffer stocks on hand. We try to maintain consistency, but sometimes we have to change recipes to accommodate changes in ingredients. Consumers notice if there’s a change in quality. They want their juice a certain way and demand consistency. Our on-going challenge is to keep our ingredients within an acceptable specification, to minimize variation in the final product, and to reflect the reality of variability of organic ingredients.”

Distribution is also a challenge. Because these juices have to be kept cold.

“Our products are fast-pasteurized. The process kills the worst bacteria but it doesn’t totally degrade the enzymes and the goodness in the fruit,” says Noroian. “So the juice is still a live product. If it’s allowed to warm up it will begin to ferment after one day.”

The HP juice has a shelf life of 21 days, and much effort goes into making sure it’s kept cold. There are refrigerated Happy Trucks and, if need be, HP will provide retailers with refrigerators. Noroian says it’s worth the cost. “We sell a unique product and no one benefits if it’s not kept cold. Besides, the fridges, because of their size, get prominent store placement. They’re great billboards.”

The Starbucks approach to selling Happy Planet is even better—Starbucks keeps the bottles in ice-filled baskets beside the cash register. On the other hand, the freshness aspect has backfired. Some grocery stores stock it, not with beverages—where people looking for something to drink will gobut in the produce department, alongside the bags of salad.

Noroian notes that the freshness aspect has also retarded expansion somewhat.

“Our current focus is to expand our geographic reach, to where we’re well-established in the 15 main Canadian markets, and more established in California. But because our products have to be kept at a certain temperature and have to be rotated, we have to take a more hands-on approach to distribution. We have people in New York who want to carry our juice, but we aren’t there yet.

“Our growth it also closely tied to demographics. These juices are expensive to make, expensive to buy and are not considered staples. They appeal to a specific type of consumer. So we look carefully at the demographic and psychographic profiles of every location we’re in. It would be problematic to engage a chain like 7-11 when our product is only suitable for certain of its locations. Our experience with Safeway has been very positive because Safeway knows its customers, understands our product and knows where it will and will not sell.”

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Noroian says that HP’s placement in Starbucks two years ago was an important turning point.

“Starbucks is a credible company and its seal of approval gave us credibility. It was excellent from the marketing perspective as well—people saw us in Safeway, then in Starbucks. We already had the neo-hippy, alternative affiliation; Starbucks gave us the mainstream cross-over. Now, our customer base is broader—it’s people with more disposable income, people who are physically-active and health-conscious, families, and everyone who insists on exceptional quality.”

Unfortunately, squeezing out a marketing budget has always been a problem for Happy Planet. “Our products are expensive to make and deliver,” explains Noroian. “There’s not a lot of money left for traditional marketing. So there’s always been an emphasis on the guerrilla element, just to get the juice in people’s faces. We build awareness and maintain our retailer relationships by doing a lot of store sampling, couponing and specials. We run print ads in holistic lifestyle magazines like Shared Vision and trade magazines such as Grocer Today. Will we ever buy billboards? That would be a stretch. For us, the most potent way to market is to spread the word and get other people to spread the word.”

Happy Planet spends about $40,000 a year on advertising. But, believe it or not, the company has eliminated its marketing director position. Instead, it has taken the PR route.

“Our PR firm helps with strategizing and program implementation, developing stories about the company when we do product launches and reaching people who may want to do articles on the juice or health food industry,” explains Noroian. “PR is a relatively inexpensive way of getting exposure. There’s no guarantee that you’re going to get ink, and you have no control over it, but we think you still get more bang for your buck.”

When he joined the company two years ago, HP’s former marketing director, Steve Everitt, found that his first order of business was to revamp the company’s visuals. 

“We had our juices sitting at the Starbucks tills,” he recalls. “If you asked 100 people if they’d seen the juice, they’d say yes. If you asked them what the name of the juice was, few would be able to tell you. The globe logo wasn’t working. So we brought the name off the logo and created a new wordmark. And we simplified the image by choosing popular colour schemes and a clean font as our headline. Also, previously, the materials carried images of all kinds of fruit, and leaves. We changed that to feature individual pieces of fruit. And we saw a great increase in name recognition. The wordmark is much more powerful because of its simplicity, cleanliness and legibility.”

Everitt joined Happy Planet just as Starbucks started carrying the HP line. This began a year of significant growth, when HP juices increasingly turned up in locations more concerned with branding and style. There was no direct competition; sales were increasing weekly. Then, in 1999, SoBe and Snapple’s ‘natural’ brand extensions appeared.

“All of a sudden, we had direct competitors,” says Everitt. “None of them were 100% juice with herbal ingredients—they were vaguely similar, but thinner and cheaper. SoBe, for example, has herbal ingredients but only 10% pure juice. It won on price—it was SoBe’s 20 oz bottle for $2.19 vs. our 12-oz bottle at $2.99. Our sales went up, our retailer numbers rose, but our growth leveled out. Without lots of cash, it’s hard to combat that competition. We had to just stay the course.”

Where Odwalla would spend between 4%-7% on marketing, Happy Planet allocates 1.8%-2.2% of gross revenue. Everitt stretched this budget by gang-printing vast quantities of p.o.p. materials (posters, brochures, shelf talkers, stickers). Product launches were creative and inexpensive—when O Cranada was launched, 150 media members received buckets filled with ice, cranberries, juice and the relevant literature. Dot.calm was launched with images on CD-Rom, literature printed to fit the CD case and juice packed in ice-filled Tupperware containers. The kits looked expensive, but cost only $5 each.

Everitt also maximized exposure by managing an exhaustive contra program. “You always have to make more juice than you could sell; every week, I would end up with anywhere from 500 to 2,000 bottles of juice to work with. So I would give juice to Greenpeace, the David Suzuki Foundation, the Evergreen Foundation. They’d serve the juice at their events and meetings; we’d get space in their publications. In two years, I negotiated 400 contra arrangements with 200,000 bottles of juice given out in exchange for ad and advertorial space. Vancouver’s a prime market for this type of approach. And when you don’t have lots of cash, it’s a great way to get the product into people’s hands.”

While Happy Planet gives generously to food banks, Everitt also worked, or was involved in, 75 events a year—the Children’s Festival, the Folk Festival, the Carnival of Souls etc. “We used any relevant occasion to reach consumers. We’d see a slight increase in sales following these events but the impact of events is hard to measure. People would see us everywhere but whether or not that translated into increased sales is unknown.”

Everitt was able to conduct some focus groups. “The focus groups were very useful—and produced surprising results. It reinforced what we knew; that our primary market was the health-conscious female age 25-39. What was surprising was that we thought our secondary audience was the age group of 40-55. In fact, our second strongest following is males 17-25.”

That became particularly apparent when Happy Planet was confronted by a large adversary in the form of Coca Cola. For obvious reasons, Whistler is one of HP’s biggest markets. Every store carries it and HP sponsors many sporting events there. But last winter, Coca Cola had Happy Planet bounced off the mountain.

“Coca Cola takes a very wide view when considering its competition,” says Everitt. “Some of its executives were up from Atlanta during the snowboard championships, they’d put a lot of money into Intrawest, they saw our fridges on the hill—next day, we were gone. Then they tried to have us removed from the University of British Columbia campus. The students found out, put pressure on the administration and we prevailed.

“That’s one occasion where the philosophy of the company came into play. For the most part, people don’t care about a company. They care about the product. The only time the philosophy comes into play is when consumers are faced with competing products. If the taste and price are equal, they’ll look down the line for reasons to choose and they’ll choose the company that’s committed to positive things. Happy Planet has that in spades. It will hopefully be a long time before the corporate philosophy has to win out again. In the meantime, Happy Planet has to focus on the fact that it’s not selling a company or an idea, it’s selling juice.

“We’d run into trouble trying to sell the fact that HP juice is the best in Canada and part of a healthy lifestyle—while also telling people about the company message of sustainability and commitment to the earth. That company message clouds the marketing message—the consumer wants to know that the product tastes good and is good and is worth the price. We had three or four totally unique types of users. Some were attracted by the health aspect, some by the organic aspect, some by the meal replacement aspect, some by the corporate ethic. It was always difficult to hammer home all the real benefits to everyone.

“I felt that we had the largest growth potential in the mainstream grocery business, considering that the natural food business is 10% of the market in Canada. And if you want to go mainstream, you have to do consumer advertising. And Happy Planet is still a small company with a small marketing budget and distribution covering a large geographic area.”

For his part, Noroian is undaunted. “So far, we’ve been experimenting and developing the brand. Now we’ll focus on more robust growth, availability and new markets. In the more distant future, we’ll expand into products like baby food, nutritional bars, soup. For now, we’re committed to being the best at what we’re doing.”

 

Gun Violence, Music & Advertising: Enough is Enough

Blitz Magazine, January 2006

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I, like all Canadians, am proud of how we’ve been able continue our various cultural traditions, grow our own superb artists and successful industries, and maintain a distinct Canadian identity (no one can quite describe it, but it’s there). We’ve done this in spite of our proximity to the United States, whose culture has permeated that of every nation on the planet.

I, like all Canadians, am also proud of how we’ve been able to keep out the worst of the US—especially the war mongering and the obsession with guns. The proliferation of handguns, long the scourge of that nation, has been kept at bay. Rather, had been kept at bay.

Since last January, Canadian cities have been seen a shocking increase in gun-related violence. Edmonton has just clocked its 37th murder, while Toronto experienced a veritable bloodbath, losing 50 of its citizens to bullets. A couple of weeks ago, a promising young artist was shot dead on a Vancouver street by a complete stranger with no apparent motive.

You want creepy? Visit http://www.nra.org. As I look at it, it’s headlines are: ‘NRA to File Lawsuit Challenging San Francisco Gun Ban’, ‘Historic Victory for NRA as President Bush Signs Protection of Lawful Commerce In Arms Act’, and ‘American Rifleman Wins Folio: Gold Ozzie Design Award’. Yee haw.

The NRA exists for no other reason than to ‘protect the right of Americans to own guns’. (In fact, the US Constitution does not specifically grant that right.) Given that the only purpose of guns is to take life, you have to shake your head at the mentality of people who fight tooth and nail to own lethal weapons and endanger the lives of their fellow citizens. In Florida, Jeb Bush—who is obviously as dim and malleable as his brother—has enacted a law that justifies homicide if the killer (read: shooter) feels threatened by the, uh, dead person.

What has this to do with media communications?

Last week, I get home from a party. I flick on the TV, to CNN. But I’ve pressed the wrong buttons and I get MuchMusic.

It’s 3:00 a.m. and I’m watching a ‘music’ video (there’s no actual music in evidence). In it, a scantily-clad young woman is ordered onto all fours, then a man puts his foot on her back and pushes her to the ground. She gracefully submits. I stand there and watch a couple of these videos, one by a band named ‘Pitbull’, sandwiched between ads by Coca Cola, Cadbury and Maybelline. All of the videos feature thug wannabes yacking about who-knows-what and surrounded by half-naked, writhing women and I’m thinking: “Please tell me that these losers aren’t the role models of Canadian teen-agers!”

The ‘musicians’ in all of these bands are black. And they’re twisting themselves into knots trying to show their ‘Street Cred’ and their ‘Hood Gangsta membership, making themselves look very foolish in the process. It’s not only boring, it’s sad. This is not what people should be led to believe of black culture. Black culture is not about crime and rape and abuse and drugs and guns. Millions of people are working to get away from this garbage, and it helps no one to see it glorified and to have these stupid and shameful stereotypes perpetuated.

In the US, the latest media darling is rapper 50 Cent (aka Curtis Jackson). He recently made a movie: Get Rich or Die Trying, and has had great success with songs like How to Rob, Ready to Die and No Mercy, No Fear. His parents (murdered long ago) were well-known drug dealers, he has a very long rap sheet and has survived being shot nine times. “Well, good for him,” everyone says. “He got out of the ‘hood and has become a success.” (The media rarely mentions black teachers and doctors who rose from the ‘hood—too boring. It’s violence that sells.)

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Jackson has already faced censorship in Canada—a planned concert was barred from taking place. But I’m loathe to encourage censorship. It can’t be the role of government to control what people read, see and hear. Parents have to do it. And many of them are doing a lousy job, thinking it’s better if their teen-agers play blood-soaked video games and watch the aforementioned crap at home, rather than hanging out at malls.

Advertisers also have to take some responsibility. Marketers have to look at what their ads are supporting—it’s their money and their choice. Does Maybelline, for example, want its customers to think that it’s OK for women to submit to abusive acts by men? No? Then it has to be careful about what it’s advertising around.

Paul Martin was slammed (by the Conservatives) for promising a handgun ban at the launch of his election campaign. People called it “opportunistic”. Deputy Prime Minister Anne McLellan had to do some fast talking in her home province, telling an Edmonton reporter: “The handgun ban doesn’t apply in Alberta. It’s a provincial opt-in.” Her Tory riding opponent, Laurie Hawn, took the tried-and-true NRA route, calling it an “excuse to target law-abiding citizens.” Well, law-abiding citizens don’t own handguns. Handguns are not an effective means of protection: they’re used for crime and, when kept in the home, are often used by children—to shoot other children (anyone remember Columbine?).

As far as I’m concerned, if Martin enacts a handgun ownership ban and makes possession a heavily-punished crime, he’s a hero. The bloodshed and violence and fear associated with handguns is one part of American culture that we do not want, and the Canadian media and advertising industries should not be encouraging it by seeking to profit from it.