The marketing of consumer debt

I'm old enough to remember that in my youth, the preeminent bank card was called MasterCharge. Every time you used it, it reminded you what you were doing. Charging. Going into debt.

At some point it was changed to MasterCard, evoking Indomitable Power over the darkness of want. Then along came Delta, which became Visa, a travel pass to your heart's desire, and then Sears launched Discover, perhaps a new way to find the fabled city of El Dorado.

I am reminded of a statement by GSD&M's Roy Spence, who once advocated a Secretary of Marketing to replace all other presidential cabinet posts. In this case, that idea could be easily tested: instead of the new rules and regulations that are about to be put into place by regulators regarding fees and interest on credit cards, perhaps we instead could let the free market establish those rules, with the regulators requiring only that the cards brand themselves as Slave2Debt (MasterCard), Passport To Bankruptcy (Visa), or Devoured (Discover). Then let's see how often they're used over cash when consumers pull that message out of their wallets with every purchase.

I'm kidding of course. But only because government regulators wouldn't know good creative when they see it.

Lookin' for latte in all the wrong places

When I was last in Zurich, in 2006 (negotiating a settlement regarding trademark infringement by Swisscom - shame I don't ski) I took a few hours to explore the city on foot. After I had passed the fourth Starbucks, it struck me that I had likely traveled 16 to 20 city blocks, so made my way back to the hotel. I had counted my distance in Starbucks, not blocks. The same could have been done in every American city and virtually any other city in Europe. And then.

Three years later, Starbucks has shuttered hundreds of locations worldwide and what was once an iconic brand and a unique experience now looks to McDonalds Value Meals for salvation. The thinking must be that they are looking for ways to ingrain Starbucks into our routines the way McDonalds has done. Yet in addition to the grab and go $5 latte market, Starbucks was always a destination for the self-employed, the freelancer, the coffee networking types to meet and discuss business. With this in mind, just how much business do Starbucks executives think is conducted at McDonalds?

In the interest of fairness and full disclosure, I am not privy to extensive research regarding Starbucks customer base. Anecdotally, however, these types of meetings, good for about $10-15 a table and high table turn, are a critical market - and in my neighborhood, Starbucks are losing these common meet-ups to Paneras Bread. Paneras welcomes this type of guest with large tables and free wifi, which activates with a polite reminder regarding etiquette in the use of the facilities. (Starbucks is still trying to wring revenue from agreements with AT&T and T-Mobile.)

There are other local restaurants, regional and national chains that serve a similar market, but few are as effective as Panera at creating an environment as specifically well-suited to the needs of the increasing legions of the 1099 workforce.

Last year the 1.3 billion (revenue) Paneras stock soared from $32 a share in January to about $50 a share at the end of the year with a debt-free balance sheet. McDonalds, meanwhile, struggles with systemwide sales off by 4.6% in February. McDonalds might be aspiration for Starbucks in size and brand ubiquity, but Paneras reflects the needs of its customers.

In latte as in life, it is important not only to understand your competition, but to be certain that you've properly identified who they are.

The Internet, in dog years

This is not your teenager's Internet.

The latest news from the Pew Internet and American Life Project will not surprise a colleague who has a 90+ year old father who regularly "Tweets" his family.

Older Americans are going online more than ever before.

According to the study, in the past three years the 'hockey stick' in Internet adoption has been in the 70+ demographic. 70+, folks. God love 'em, these are the same folks that still re-use aluminum foil. Growth in Internet use among people ages 70 to 74 increased by 19% and for those above 75 (b.1924!) growth clocked in at 10%.

Other studies concur that older demographic groups spend more time online than their younger counterparts and while many go online to get health information and visit government Websites, the growth actually stems from use of the Internet for activities such as games, watch movies, use social networking sites or read blogs.

The assumptions and biases that the Internet, social networking and digital media are all tools to reach younger demographics needs to be readdressed by marketers as in this economy particularly, no opportunity to reach out to prospective customers should go unexplored.

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• Old Fogies Taking Over Social Networks? (socialmediatoday.com)

How much is a friend worth?

A month or more ago when Burger King was running its Facebook promotion that encouraged users to delete 10 friends to receive a free Whopper, a friend of mine posted on his status that he "is not going to give up a friendship for a Whopper." Well, that’s a kinda low threshold for my value as his friend, though to be certain, I'm glad I qualified.

So what is a friend worth? Poets and songwriters might couch it in elegant prose and a clever turn of phrase, but a new study by University of Chicago Economics professor Gabriella Conti affirms that being popular – particularly in high school – is quantitatively valuable later in life. In the study, Conti and colleagues measure the association between popularity in high school and later wages.

From admittedly dated data (the raw data was gathered in 1975 from 4000 men who graduated in 1957) The subjects were asked to name up to three of their closest friends and used the number of times ta person was mentioned as a measure of that person’s popularity, and then compared that to a person’s earnings.

The takeaway?

They found that, after controlling for variables, each extra close friend in high school is associated with an increase in earnings of 2%. The study concludes that either social skills carry forward to the working world or simply, friends tend to help friends.

Given the subjects and the data are dated, it begs the question as to whether the data carries forward to friends through Social Media net out as an increase, and if friends that are exclusively 'virtual' friends have the same impact.

Either way, its bad news for social misfits who take solace in the idea that one day they'll be lord and master over their current adolescent tormentors. The data doesn't seem to support the fact that the computer club president will one day be in a position to hire and fire the varsity quarterback. On the upside, years later he might still be able to hack that football hero's fat bank account.

Silly Skittles, this trick is for kids

Okay, so by now, everyone knows that Skittles jumped head first into Social Media yesterday, and by today (24 hours later) has recognized what many of the rest of us already had known: its a shallow pool. Or a pool of shallow people. Either way, a bit of a mess. Like I wrote THREE years ago folks, just because its the new thing, doesn't mean its right for your message, or at least the way you might initially think about going about it.

A brief history of Skittles Marketing, ca. March 2 - March 3, 2009: "Edgy" ad campaign moves to Social Media by using the Skittles brand feed on Twitter as the home page, accepting all posts and all posts using the word "Skittles". (User name, "Skittles", incidentally, not secured. A lonely woman with a cat and an abandoned Twitter account, #skittles, presumably gets a lot of misdirected traffic.) After discovering a preponderance of negative and/or objectionable posts coming through on the Twitter feed, decide on Tuesday to instead use their brand's Facebook presence as their new website. Rude comments continue on both sites.

So, Skittles discovered that the prime users of Social Media and their demographic overlap. What they hadn't learned was that Social Media isn't about them, its about the community. By hijacking a third party site like Twitter and claiming it as your own, you are undermining the validity of that community.

Hint: Marketing is a lot more than simply mixing in equal parts audience reach, clever messaging, and good product. It takes a bit of thought, consideration, and strategy. Those leading the social media revolution are brilliant, truly, but just a little green. Hey kids, marketing fundamentals are still relevant.

Still, I wouldn't be too concerned. Former Coca-cola CMO Sergio Zyman built a career talking about the New Coke debacle. I assume this will have a silver lining as well.