Last post of the year

I've been taking it easy for the past couple weeks. I'll get busy soon.

In the meantime -- best wishes for the coming year.

DemandTec acquires TradePoint

DemandTec has announced the acquisition of TradePoint Solutions.

TradePoint offered an "online deal management software linking manufacturers, sales agencies and retailers", which will now be jointly marketed with DemandTec's retailer and manufacturer systems. According to the press release:

The combined solution from DemandTec, including the DemandTec TradePoint and DemandTec Promotion modules, is the industry’s first to combine consumer demand management and forecasting, promotion planning and optimization, and online collaborative deal management, all delivered via a software-as-a-service platform for both retailers and manufacturers.

Benefits to manufacturers and sales agencies include improvements in trade spend effectiveness and efficiency, improved demand planning, better forecast accuracy, efficient and accurate deal negotiation, streamlined deduction clearing and improved audit compliance.

Benefits to retailers include consistent deal management and billing across all vendors and brokers, integrated and controlled planning with vendors, improved promotion and category performance, better forecast accuracy and in-store service levels during promotions and improved audit compliance.

Round one to Nintendo

It looks like Nintendo's Wii is leading in the early returns in the big battle of game system intros. November sales figures show:

• 476,000 - Nintendo Wii
• 195,000 - Sony PlayStation 3

While that news is encouraging to the folks at Nintendo, it should be noted that Microsoft's Xbox sold 511,000 units in November, and appears on track for 4 million for the year.

Pass the popcorn, and let's settle in to watch the battle.

Brand extensions -- the best and worst

Brandweek put together a rating of brand extensions. Some of them are great ideas, like the American Red Cross emergency radio (featuring a hand crank, a cell phone charger and a siren). As a panelist said, it links a solid brand name with an appropriate product. "It seems logical and magical," he said. "Unlike bad extensions, it's just one that sounds like 'Why didn't they do that sooner?'"

But the real fun is with some of the really bad ideas. What were these people thinking?:

• Cheetos-flavored lip balm
• Salvadore Dali deodorant
• Diesel Jeans wine
• Chicken Soup for the Soul pet food
• Lamborghini notebook computer

Those were the top (or bottom) five bad ideas, but some of the others really deserve mention:

• Willie Nelson Biodiesel Fuel
• Lance Armstrong's LiveStrong mutual funds

And I don't see why my favorite didn't win a prize: Play-Doh perfume.

How often do you shop the inserts?

According to a recent study by the Newspaper Advertising Association, the frequency with which people shop in newspaper inserts varies considerably by the type of retailer.

Of those respondents to the survey who said they look at inserts (not all adults, therefore), the following are the percentages who looked at specific types on a regular basis:

• 79% Grocery stores
• 72% Dept stores
• 66% Discount stores
• 57% Home Building Centers
  
• 54% Home Electronics stores
  
• 52% Drug stores
  
• 48% Home Furnishing stores
  
• 44% Appliance stores
  
• 43% Sporting Goods stores
  
• 40% Computer stores
  
• 39% Office Supply stores
  
• 19% Cell Phone stores

How many cell phone stores run inserts? I don't recall seeing them.

In any case, the value of insert advertising to a supplier should, based on these results, vary considerably by channel of distribution.

Circulation drops, ad rates rise

If that headline seems to make no sense, that means that you're not a newspaper publisher.

Despite tanking circulation numbers, newspapers across the country plan to raise advertising rates anywhere between 3 and 6 percent in early 2007.

Publishers want to maintain those 20% profit margins, and with circulation income down, they plan to make it from advertisers (and from the suppliers who fund the retail advertisers). They may find that advertisers feel differently, however.

"We don't want to pay more for less. We're certainly going to try negotiating rates. We take a lot of factors into the rates we are willing to pay," [a Macy's spokesperson] says.

A big factor will be the many media choices now available. When I started in this business in the 70s, I worked for a department store where we spent about 90% of our budget on newspaper advertising. That has changed, and the change will accelerate if publishers continue to diminish their ad value.

An increasing factor, one serving buyers, says Monroe, is the increasing options now available to advertisers that did not exist 20 years ago.

That makes it easier for advertisers to resist increases, and it also makes it easier to look elsewhere for the same or better results.

"Media is not newspaper-centric any longer," he says. "If newspapers begin to charge rates that don't yield the results the advertiser is looking for, they will move to a medium that does."

Nielsen to measure in-store

VNU has created a new division, Nielsen In-Store. "which will measure consumer exposure to in-store marketing vehicles, including television and radio, shelf talkers, digital signage and other point-of-purchase displays."

The new effort follows up research conducted earlier this year with the In-store Marketing Institute in an effort to develop metrics.

Research was conducted on the metric in 2006 by a consortium of advertisers including 3M, Coca-Cola, Kellogg’s, Miller Brewing, Procter & Gamble, and The Walt Disney Company, in cooperation with retailers including Albertsons, Kroger, Walgreens and Wal-Mart.

The service will be tested in early 2007 and rolled out nationwide later in the year, with global expansion to follow.

Montgomery Ward is back (kinda)

I've always been fascinated by the efforts of companies to buy up and resurrect dead brands. Quite often it seems to work, and a Chicago company that specializes in the field has brought back one of retailing's most famous names, Montgomery Wards.

Wards is back only as a cataloguer and Internet site, however -- there are no stores and apparently no plans to build any.

Milgrom has built a $160 million-a-year company through a strategy of acquiring older, established domain and catalog names. A former lighting products supplier to Sears, Roebuck and Co.'s home furnishings catalog, he licensed the right to use Sears' name on catalogs after founding the firm in 1993 and now mails several Sears specialty titles, gifts book Charles Keath, its core HomeVisions catalog and Wards.

I was impressed with the way they have captured Wards' look and feel on the website, which looks just like an old Wards circular. Apparently, it's working.

Is Adidas hurting Reebok?

One of the dangers of mergers is that often the smaller partner is slowly killed off by the bigger one -- not intentionaly, but simply because logic dictates that most of the attention, most of the resources, and most of the opportunities are reserved for the division that generates most of the revenues.

That may be happening in the case of Adidas and Reebok, if this article from the Portland Oregonian is a guide.

[In April] took over a licensed merchandise deal with the NBA from Reebok, acquired in January. Last week it started selling new fashion sneakers designed for each of the 30 NBA teams and has poured more money than ever into basketball marketing.

But perhaps Adidas' own Reebok, and not Nike, will be the biggest loser. Reebok, whose overall business is lagging in sales and order backlogs, has rapidly ceded market share in basketball.

Adidas' market share in basketball shoes has climbed, but so has Nike's. It's Reebok who has dropped.

"It's difficult enough to compete against everyone else, let alone having to compete against your brother," said Matt Powell, contributing editor for Sports Executive Weekly, an industry publication.

International quick notes

Unilever is planning expansion and growth in India and other developing markets: "The Asia and Africa market saw a 5% volume growth for Unilever in the third quarter, compared to 3.1% in Europe and 2.7% in North America."

Also in India, following up on this post from a couple weeks ago, the Wal-Mart/Bharti venture is being looked at by the Prime Minister's office. Thus far, the departments responsible have cleared the proposal, but the government is expecting push-back from opposition parties and from retailers.

Opening the Sarbox

The Securities & Exchange Commission is expected to announce a plan this week (BusinessWeek says it will be Wednesday) to revamp Sarbanes-Oxley, and the PCAOB, which enforces the rules, is also expected to announce a rewrite of its accounting standards.

It's an exercise designed to address businesses' core concern: Compliance simply costs too much. But when the dust settles and final rules are adopted early in 2007, any changes are likely to have a modest impact on Corporate America's bottom line. Their real value, rather, might be peace of mind.

Costs are apparently already decreasing as companies get a firmer grasp on how to do things. The estimate now is that compliance costs are about 0.25% of revenues, with best-of-breed companies at 0.14%.

The big change, rather than cost reductions, may be legal shields:

Without specific direction from regulators, companies fret that anything intimating even the slightest hint of a shortcut could leave them vulnerable to expensive shareholder litigation. It's that fear, probably as much or more than actual compliance costs, that's driving the call for change.

The recent elections, putting in power a Democratic congress, mean that any changes will come from the SEC and PCAOB, not congress, "because lobbyists fear that reopening the law, especially in the new, Democrat-controlled Congress, risks making it worse."

That means the much-discussed changes to exempt smaller businesses from some provisions of the Act are less likely to happen.

Hasty departures

Some top marketing people have gotten the axe recently.

• Two top Wal-Mart execs, Julie Roehm (SVP-Marketing Communications) and Sean Womack (VP, Communications Architecture) are gone. Here's an Adweek article on it, and here's a piece from Media Post that offers some speculation on why Roehm is gone.
• Also, at Chrysler, Joe Eberhardt (EVP, Global Sales, Marketing and Service) is out. According to Media Post, it's in part because he "was at the heart of a dealer insurrection."

Update: Looks like I missed the good stuff by being too early. Now The New York Times is reporting that Wal-Mart is also firing their new agency, Draft FCB. Gotta be tough to win and then lose a $580 million account.

The Times says that Roehm and Womack were fired for having "a personal relationship that violated the company’s strict ethics policy", accepting gratuities, such as meals, forbidden by the company, and showing favoritism toward some vendors.

Apparently Draft FCB must have been one of the favored vendors, since Wal-Mart is putting the account up for review again and not permitting the incumbent to compete.

Roehm and Womack deny an inappropriate relationship and the other allegations, and Roehm says culture was more the problem:

Ms. Roehm acknowledged that her style and ideas did raise eyebrows at Wal-Mart. “I think part of my persona is that I am an envelope pusher,” she said last night. “The idea of change in general can be uncomfortable for many people, and my persona as an agent of change can prompt that feeling.”

In one of her first assignments at the retailer, Ms. Roehm transformed Wal-Mart’s traditionally stodgy shareholder meeting into a three-hour Broadway extravaganza, hiring a troupe of New York actors who sang songs like “The Day That I Met Sam,” the company’s revered founder.

The show elicited groans from longtime company executives.

Several weeks ago, Ms. Roehm courted controversy again when she oversaw production of a holiday TV ad, known inside the company as “Sexy,” that portrayed a husband and wife discussing racy lingerie in front of their extended family. The ad drew customer complaints and was immediately taken off the air, a person involved in the matter said.

Nothing like a good scandal -- especially when it involves both sex and money.

Gap fashions are a flop

Nasty headline, huh? But it's not mine, it was on this Bloomberg article that ran in several papers.

Gap has apparently tried to copy H&M and Target, by getting some big fashion names to design for them. Unfortunately, nothing much happened.

Cynthia Sanner got to Gap Inc.'s New York store on Fifth Avenue two hours before it opened Friday to make certain she would get one of French designer Roland Mouret's dresses made exclusively for the clothing chain.

She needn't have bothered. She stood alone for an hour and 20 minutes before being joined in line by two other shoppers. "I was shocked," said the 35-year-old personal assistant from New York. "I thought it was going to be a mob scene."

Of course, that may be because Gap forgot to promote:

Unlike Stockholm-based H&M's treatment of its designs, Gap didn't display Mouret's name in stores or windows or even on the clothing. "It's missed execution," said Mark Montagna, a New York-based CL King & Associates analyst who rates Gap "underperform."

Oops.

Ahold fallout continues -- now it's Deloitte's turn

It's been several years now, but the fallout from Ahold's US Foodservice scandal (overstating promotional allowances by over a billion dollars) hasn't stopped spreading.

Just this past week, prosecutors in the Netherlands filed charges against Deloitte, Ahold's auditors at the time.

"The disciplinary complaint is lodged for acting as the accountant for the annual accounts of Ahold NV in the period from 1997 to 2002," the prosecutor's office said in a statement.

An Ahold spokesman declined to comment on the complaint, and officials from Deloitte could not immediately be reached for comment.

Survey says newspapers #1 shopping medium

Of course it does ... the survey was sponsored by the Newspaper Association of America.

Okay -- that's a bit too cynical. Actually, I think it's probably true, regardless of who the sponsor is. And there are some really interesting nuggets (I got these from a write-up by the Center for Media Research -- I haven't had a chance yet to digest the full 41-page report), for example:

53 percent of adults used newspapers to make a shopping or purchase decision in the previous 30 days, while 27 percent used the Internet, which now is the second-leading source.

However, there's also this: "A plurality among those age 18-24 consider the Internet to be their primary advertising source ..."

Another interesting point:

Sunday is by far the most likely day for about one half of shoppers to consult advertising, while Saturday is a distant second, noted by one-fifth of consumers. The only other days in double figures are Wednesday and Friday, at 13 percent each.

Since weekday rates are typically 75% or so of Sunday rates, it would seem weekday advertisers are overpaying by outrageous margins. If I were a media buyer, I'd show this report (which is from the NAA, remember) and say, "If your Wednesday edition gets one-fourth the shoppers of Sunday, then I'm only going to pay one-fourth as much."