The state of retail

The love of the bargain is what drives them… Click for CNBC’s coverage

It’s a common fallacy to think of a time before a change in status quo as somehow being magically problem-free. A Panglossian world where all was well and nothing needed to change, and wasn’t it a shame that it had to. Similarly, we cannot blithely consign the retail industry of the past to some glorious era when everything was perfect; far from it. The industry has been under continual evolution, with no absence of controversy on the way. It was therefore a timely reminder, as well as being a fascinating article in its own right, when the New York Times provided readers recently with a potted history and a gaze into the future of Manhattan department store stalwart, Barneys. Not only is their past one in which the original proprietor sought to undercut his own suit suppliers, creating a bootlegging economy by literally ripping out their labels and replacing them with his own, but it was also one where department stores served a very different purpose to what they do today. They had less direct competition, not least unforeseen competition in the form of shops without a physical presence. Moreover, today they are run in an extremely different way, with an arguably much healthier emphasis on revenue (though some might say this comes at the expense of a feeling of luxury, in a lobby now brimming with handbags and little breathing room). The problems and opportunities for Barneys could serve as an analogy for the industry of which it is a part.

Despite brief reprieves such as Black Friday (click on headline image for CNBC’s coverage), as well as the expected post-Christmas shopping frenzy, can one of the main problems affecting retail at the moment simply be that it is undergoing an industry-wide bout of creative destruction? Zeitgeist has written about the nature of creative destruction before, and whether or not that is to blame for retail’s woes, the sector is certainly in the doldrums. In the UK, retailers are expecting a “challenging” year ahead. Recent research from Deloitte shows 194 retailers fell into administration in 2012, compared with 183 in 2011 and 165 in 2010. So, unlike the general economy, which broadly can be said to be enjoying a sclerotic recovery of sorts, the state of retail is one of continuing decline. How did this happen, and what steps can be taken to address this?

Zeitgeist would argue that bricks and mortar stores are suffering in essence due to a greater amount of competition. By which, we do not just mean more retailers, on different platforms. Whether it be from other activities (e.g. gaming, whether MMOs like World of Warcraft or simpler social gaming like Angry Birds), or other avenues of shopping (i.e. e-commerce, which Morgan Stanley recently predicted would be a $1 trillion dollar market by 2016), there is less time to shop and more ways to do it. The idea of going to shop in a mall now – once a staple of American past-time – is a much rarer thing today. It would be naive to ignore global pressures from other suppliers and brands around the world as putting a competitive strain on domestic retailers too. Critically, and mostly due to social media, there are now so many more ways and places to reach a consumer that it is difficult for the actual sell to reach the consumer’s ears. This is in part because companies have had to extend their brand activity to such peripheries that the lifestyle angle (e.g. Nike Plus) supercedes the call-to-action, i.e. the ‘BUY ME’. The above video from McKinsey nicely illustrates all the ways that CMOs have to think about winning consumers over, which now extend far beyond the store.

If we look at the in-store experience for a moment without considering externalities, there is certainly opportunity that exists for the innovative retailer. Near the end of last year, the Financial Times published a very interesting case study on polo supplier La Martina. The company’s origins are in making quality polo equipment, from mallets to helmets and everything in between, for professional players. As they expanded – a couple of years ago becoming the principle sponsor of that melange of chic and chav, the Cartier tournament at Guards Polo Club – there came a point where the company had to decide whether it was going to be a mass-fashion brand, or remain something more select and exclusive. As the article in the FT quite rightly points out, “Moving further towards the fashion mainstream risked diluting the brand and exposing it to volatile consumer tastes.” The decision was made to seek what was known as ‘quality volume’. The company has ensured the number of distributors remains low. Zeitgeist would venture to say this doesn’t stop the clothing design itself straying from its somewhat more refined roots, with large logos and status-seeking colours and insignia. Financially though, sales are “growing more than 20% a year in Europe and Latin America”, which is perhaps what counts most currently.

Louis Vuitton’s ‘L’ecriture est un voyage‘ is a good example of experimental thinking and missed opportunities

In the higher world of luxury retail, Louis Vuitton is often at the forefront (not least because of its sustained and engaging digital work). While we’re focusing purely on retail environments though, it was interesting to note that the company recently set up shop (literally) on the left bank of Paris; a pop-up literary salon, to be precise. Such strokes of inspiration and innovation are not uncommon at Vuitton. They help show the brand in a new light, and, crucially, help leverage its provenance and differentiate it from its competition. Sadly, when Zeitgeist went to visit, there was a distinct feeling of disappointment that much more could have been done with the space, which, while nicely curated (see above), did little to sell the brand, particularly as literally nothing was for sale. The stand-out piece, an illustrated edition of Kerouac’s On the Road, by Ed Ruscha, Zeitgeist had seen around two years ago when it was on show at the Gagosian in London. Not every new idea works, but it is important that Louis Vuitton is always there at the forefront, trying and mostly succeeding.

So what ways are there that retailers should be innovating, perhaps beyond the store? One of the more infuriating things Zeitgeist hears constructed as a polemic is that of retail versus the smartphone. This is a very literal allusion, which NBC news were guilty of toward the end of last year. “Retail execs say they’re winning the battle versus smartphones”, the headline blared. What a more nuanced analysis of the situation would realise is that it is less a case of one versus the other, than one helping the other. The store and the phone are both trying to achieve the same things, namely, help the consumer and drive revenue for the company. Any retail strategy should avoid at all costs seeing these two as warring platforms, if only because it is mobile inevitably that will win. With much more sound thinking, eConsultancy recently published an article on the merits of providing in-store WiFi. At first this seems a risky proposition, especially if we are to follow NBC’s knee-jerk way of thinking, i.e. that mobile poses a distinct threat to a retailer’s revenue. The act of browsing in-store, then purchasing a product on a phone is known as showrooming, and, no doubt aided by the catchy name, its supposed threat has quickly made many a store manager nervous. However, as the eConsultancy article readily concedes, this trend is unavoidable, and it can either be ignored or embraced. Deloitte estimated in November that smartphones and tablets will yield almost $1bn in M-commerce revenues over the Christmas period in the UK, and influence in-store sales with a considerably larger value. That same month in the US, Bain & Co. estimated that “digital will influence more than 50% of all holiday retail sales, or about $400 billion”. Those retailers who are going to succeed are the ones who will embrace mobile, digital and their opportunities. eConsultancy offer,

“For example, they could prompt customers to visit web pages with reviews of the products they are considering in store. This could be a powerful driver of sales… WiFi in store also provides a way to capture customer details and target them with offers. In fact, many customers would be willing to receive some offers in return for the convenience of accessing a decent wi-fi network. Tesco recently introduced this in its larger stores… 74% of respondents would be happy for a retailer to send a text or email with promotions while they’re using in-store WiFi.”

These kind of features all speak more broadly to improving and simplifying the in-store experience. They also illustrate a trend in the blending between the virtual and physical retail spaces. Major retailers, not just in luxury, are leading the way in this. Walmart hopes to generate $9bn in digital sales by the end of its next fiscal year. CEO Mike Duke told Fast Company, “The way our customers shop in an increasingly interconnected world is changing”. This interconnectedness is not new, but it is accelerating, and the mainstream arrival of 4G will only help spur it on further. The company is soon to launch a food subscription service, pairing registrants with gourmet, organic, ethnic foods, spear-headed by @WalmartLabs, which is also launching a Facebook gifting service. At the same time, it must be said the company is hedging its bets, continuing with the questionable strategy of building more ‘Supercenters’, the first of which, at the time a revolutionary concept, they opened in 1988.

One interesting development has been the arrival of stores previously restricted to being online into the high street, something which Zeitgeist noted last year. This trend has continued, with eBay recently opening a pop-up store in London’s Covent Garden. These examples are little more than gimmicks though, serving only to remind consumers of the brands’ online presence. Amazon are considering a much bolder move, that of creating permanent physical retail locations, if, as CEO Jeff Bezos says, they can come up with a “truly differentiated idea”. That idea and plan would be anathema to those at Walmart, Target et al., who see Amazon as enough of a competitor as it is, especially with their recent purchase of diapers.com and zappos.com. It serves to illustrate why Walmart’s digital strategies are being taken so seriously internally and invested in so heavily. Amazon though has its own reasons for concern. Earlier in the article we referenced the influence of global pressures on retailers. Amazon is by no means immune to this. Chinese online retailer Tmall will overtake Amazon in sales to become the world’s largest internet retailer by 2016, when Tmall’s sales are projected to hit $100 billion that year, compared to $94 billion for Amazon. The linked article illustrates a divide in the purpose of retail platforms. While Amazon is easy-to-use, engaging and aesthetically pleasing, a Chinese alternative like Taobao is much more bare-bones. As the person interviewed for the article says, “It’s more about pricing – it’s much cheaper. It’s not about how great the experience is. Amazon has a much better experience I guess – but the prices are better on Taobao.”

So how can we make for a more flexible shopping experience? One which perhaps recognises the need in some users to be demanding a sumptuous retail experience, and in others the need for a quick, frugal bargain? Some permutations are beginning to be analysed, and offered. Some of these permutations are being met with caution by media and shoppers. This month, the Wall Street Journal reported that retailer Staples has developed a complex pricing strategy online. Specifically, the WSJ found, it raises prices more than 86% of the time when it finds the online shopper has a physical Staples store nearby. Similar such permutations in other areas are now eminently possible, thanks in no small part to the rise of so-called Big Data. Though the Staples price fluctuations were treated with controversy at the WSJ, they do point to a more realistic supply-and-demand infrastructure, which could really fall under the umbrella of consumer ‘fairness’, that mythical goal for which retailers strive. Furthemore, being able to access CRM data and attune communications programmes to people in specific geographical areas might enable better and more efficient targeting. Digital also allows for a far more immersive experience on the consumer side. ASOS illustrate this particularly well with their click-to-buy videos.

As the Boston Consulting Group point out in a recent report, with the understated title ‘Digital’s Disruption of Consumer Goods and Retail’,  “the first few waves of the digital revolution have upended the retail industry. The coming changes promise even more turmoil”. This turmoil also presents problems and opportunities for the marketing of retail services, which must be subject to just as much change. If we look at the print industry,  also comparatively shaken by digital disruption, it is interesting to note the way in which the very nature of it has had to change, as well as the way its benefits are communicated. It is essential that retailers not see the havoc being waged on their businesses as an opportunity to ‘stick to what they do best’ and bury their head in the sand. This is the time for them to drive innovation, yes at the risk of an unambitious quarterly statement, and embrace digital and specifically M-commerce. What makes this easy for those companies that have so far resisted the call is that there is ample evidence of retailers big and small, value-oriented to luxury-minded, who have already embraced these new ideas and platforms. Their successes and failures serve as great templates for future executions. And who knows, the state of retail might not be such a bad one to live in after all. Until the next revolution…

Olympic Winners and Losers – Empty Seats and Byzantine Ticketing

What a fantastic ad from Channel 4 advertising their showcasing of the Paralympic Games, beginning soon. Meanwhile, what of the Olympics? Though there have been tales of Tube and travel chaos, Zeitgeist has not personally experienced problems with public transport, either for commuting or for travelling to the Games themselves. And while our mayor may have been left dangling like a pinata the other day, he certainly seems not to have left London in the lurch in its preparedness for the Games.

LOCOG, however, have had to face two severe lines of questioning since the Games opened last Friday. The first, which became immediately apparent to anyone watching the first few days of events, was that thousands of seats were unoccupied, including for events LOCOG had deemed sold out. The fault, it seemed, lay mainly with the Olympic Family, who weren’t turning up to events. Seb Coe tried to shrug off the incident, saying it was normal for the few first events of an Olympic Games. It must be particularly galling for him though after the same thing happened in the 2008 Games in Beijing and he pledged to avoid such an occurrence in London. It is unfortunate then for all concerned then that, despite releasing more tickets, the problem is still not resolved as of today.

Moreover, this brings us to the second big problem. The selling of tickets. The whole balloting system originally set up was pretty arcane and inefficient to begin with. But now with tickets being released on a rolling basis throughout the day, the chaos is all the more apparent. Yesterday, eConsultancy published an excellent article with a blow-by-blow account of just why “the Olympic ticketing website is so bad”. Worst, for Zeitgeist, was firstly not having a mobile version / mobile-optimised site. Secondly it was not having anything informing users of when certain tickets became available. Thankfully, as in any well-functioning democratic society, where there is a market failure, substitute products or competitors will come in to correct the situation. Such was the case at the weekend, when the completely unofficial @2012TicketAlert account was launched on Twitter, which used automated tweets to alert followers when any Olympic tickets became available. It was a fantastic idea, and seemed much in keeping with the ‘hack’ trend we see nowadays, when companies like Microsoft and Transport for London open up their APIs for users to develop their own programs. Such examples clearly had not occurred to LOCOG though, and earlier this evening, after amassing over 8,000 followers, LOCOG denied the @2012TicketAlert account further access. As the administrator of the account, Adam, wrote,

“[I]t seems someone at LOCOG has taken exception to our idea (or the publicity it is getting) and instead of reaching out to us or addressing the lack of a notification system, they have simply blocked our access to their server. This means we are unable to check or post any new ticket alerts… we would point out that the alert was not against the Terms of Use of the http://www.london2012.com website, nor have these terms been updated to make it so.”

It seems a poor PR move on LOCOG’s part, and more importantly a poor operational move because it makes it that much harder again to check for newly available tickets. Taking into account the immense budget that must have been allocated to the ticketing website, the result is severely lacking, and many thousands of people have been put off the Olympic experience because of it. Ticketmaster, which has branding on the website, has also come under fire. These acts, as we predicted in an earlier article, may well be the undoing of those involved, for, once lost, a good reputation is hard to recover.

Game Change – How TV stole Film’s Spotlight

In a belated – and very un-zeitgeisty – move, Zeitgeist only got around to seeing HBO’s Game Change this past weekend. The film, which first aired in the US in March, is based on the book by Mark Halperin and John Heilemann. While the film has attracted its fair share of controversy, it has been deemed “very accurate” by those on the campaign trail at the time. Zeitgeist thoroughly enjoyed it; HBO had done it again.

HBO have had a remarkable run of success, producing some of the most daring, innovative and enjoyable TV shows of the past 20 years, from Curb Your Enthusiasm and Dexter to Sex and the City, The Sopranos and Boardwalk Empire. HBO has created a brand halo effect for television, a medium once dismissed by serious actors and directors whose natural home was in movies. Now those professionals, such as Dustin Hoffman, flock to television. Speaking recently with the FT, he commented,

‘The big studios were making films that are only being done outside the studio system today. It used to be you would never do TV.’ That stigma has gone, he says; these days the only creative risks being taken are in low-budget independent films and on well-financed pay TV networks… ‘HBO leave you alone and there’s no censorship. You do the work you want to do.’

The real game change then is in the drift in creativity from the big screen to the small. The world of film is increasingly deemed to be suffering, bombarded as we have been for several years now with iteration after iteration of superhero from DC and Marvel. To rub salt into the wound, The Avengers yesterday passed the $1bn box office threshold after just 19 days, joining Avatar in its speed at reaching said gross. Last month’s Vanity Fair editorial elaborated on the malaise that is slowly descending on film. Graydon Carter notes,

Television offers a range and scope, and a degree of creativity and daring, that the bottom-line, global-audience-obsessed, brand-driven movie industry just can’t compete with… the superiority of television goes beyond drama. Comedy on TV is undergoing a renaissance, far outpacing the bromances that the film business falls back on so much.

Within this shift in TV’s prominence, a microcosm of change is also taking place. Ten or fifteen years ago, all the best US programming was being produced by the major networks – NBC, CBS, Fox, ABC – and garnering many a golden statuette at award ceremonies, with cable left to function as auxillary provider of repeats of said programming. This situation has now changed, as cable networks like HBO, FX, Showtime and AMC debut their own quality shows. The New York Times reported on this ‘cable envy’, and how the majors are trying to fight back. It seems a seachange has occurred as the glut of ‘reality’ shows has made way for higher quality programming.

Of course, the other massive shift occurring in the TV landscape at the moment is the way in which we consume television. This has to influence both the quantity and type of media that we consume. Social TV and the ‘second screen’ trend are making the TV-watching experience even more engaging. VentureBeat feature a great infographic of how said landscape has changed.

American Airlines – Putting you first, in First?

This lovely TV spot for travelling First Class on American Airlines, the latest incarnation of a campaign featuring Kevin Spacey, emphasises individuality above all else. Great iAds have been appearing for this recently in iPad apps for The Economist and The Financial Times. It’s disappointing then, upon arriving at the AA site, to be greeted with a data-heavy template that seems like it’s stuck in 2003, and the only mention of the campaign – ‘The Individual’, takes you to an unsatisfying pop-up microsite. This microsite URL is ‘The Individual Flyer’. Why not call the whole campaign that, as typing in ‘The Individual’ reveals no immediate organic or paid results for AA. What is worse, when you Google ‘The Individual Flyer’, the first hit on Google is for the mobile site. Similar in its failure to equate luxury with excellence in all fields is the newly launched – and undeniably beautiful – Four Seasons website, which, at a gigantic cost of $18m, attracted a withering review from eConsultancy.

“I want [a product] that treats me like me, whoever I happen to be”, Spacey intones. It’s no recent phenomenon that brands are trying to tailor their offering to every consumers’ whim, but what this ad hints at is that economies of scale just won’t work for luxury products and experiences. Unfortunately the digital agency who worked on the AA site have economised, and the site itself, much like Zeitgeist on a long-haul flight, is in need of an upgrade.

The Technology Paradox in Retail

In December, shopping transactions saw a 187% increase, year-on-year. This sounds like good news for the economy, and surely the high street. Unfortunately, this increase was purely for mobile shopping, as reported by IBM. Brand Republic, which picked up the story, noted “mobile traffic on retailers’ websites rocketed by 169%, meaning 15% of all traffic came from mobile devices during December”. The principal attractions of mobile commerce are easy to identify: it allows you to purchase items from anywhere with a phone signal rather than travelling into a store. It also allows the customer to shop around far more easily than would be possible on a high street for the best deal.

The drift toward mobile commerce, however beneficial and efficient for the customer, is part of myriad factors that are having a pejorative effect on the high street. Another, recently noted in a fantastic editorial in The Financial Times, detailed the onus shoppers must face up to, as a nation obsessed with the material quest for the very best deal possible. “We are all going to hell in a shopping basket”, read the headline.

“Through the internet we can now get relevant information instantaneously, compare deals and move our money at the speed of electronic impulses. Consumers and investors have never been so empowered. Yet these great deals come at the expense of our jobs and wages, and widening inequality.”

183 retailers fell into administration last year. The internet must shoulder a large part of the blame for this, as customers shift to the relaxation of shopping at home. Experian Hitwise reported that Boxing Day 2011 was the biggest ever day for online retail in the UK, an incredible stat (one of many covered by eConsultancy), especially while circumstances for bricks-and-mortar stores seem so dire.

However, while digital technology is keeping people from shopping on the high street, it is also helping it evolve. Recently, CNBC reported from New York on the National Retail Federation’s annual convention. Technology companies like Intel and IBM were front and centre, and willing to engage ever more deeply with brands. 73% of consumers were willing to share their demographic information with retailers in order to improve targeted communications. In the store itself, Macy’s has unveiled Beauty Spot, a digital mirror that lets you try on what you want, what is suggested to you by the mirror, and share your looks with your friends, according to TIME magazine. Also at the conference, Kraft featured a vending machine that featured face-recognition technology, registering your ethnographic details and dispensing samples based on that data.

The possibilities for clothing are significant, too. At the recent Consumer Electronics Show, Microsoft unveiled a prototype digital mirror for retailers. PSFK noted it “relies on the Kinect gaming system and basically allows people to try on clothes before taking their final selection to the dressing room”. Moreover, last month, the e-tailer Gilt Groupe teamed up with GQ magazine to create a men’s high-fashion retail experience in the so-fashionable-it’ll-soon-be-uncool Meatpacking District of New York. The FT has more.

Such movements are part of a burgeoning trend toward blurring the boundaries between digital and bricks-and-mortar retail. But for the latter way of shopping, the problems are immediate. An article in this week’s The Economist referenced a report commissioned by the government in December that claimed “one in three of the nation’s high streets is failing“. Places like Argos, Mothercare and Thorntons plan to close up to one third of their shops. Conversely, the magazine references a survey conducted by Saatchi & Saatchi which detailed 16-29 year olds’ feelings on retail. Apart from enjoying a good shop, “42% said that, if they were to start a small business, it would be on the high street”. This puts a desire to see an epicentre of retail / beating heart of a town against an indolence born of the luxury of being able to shop while in the bathroom. To combat this dilemma of desires, Anne Robinson-lookalike Mary Portas has made several suggestions as shopping czar to the government, including requirements for a “quota of affordable shops”. This idea is pure lunacy. State intervention in market commerce is not a road we want to go down.

While the article offers some hope, detailing the importance of improvements to infrastructure, and making space above retailers into shops again rather than flats, the major threat is from online retailers. Last week, the Financial Times reported solemnly,

“Tesco [will] call a halt on new hypermarkets, believing the internet offers the most profitable future for non-food sales. Retail analysts believe Tesco’s admission marks a watershed moment for high street retail chains. Many have already seen their business models trampled over by the big supermarkets, but now they must follow the leader’s structural shift towards online sales, or face extinction.”

These are dire times for retailers, but things will not improve until they fully embrace the inevitable march of technology, both in their stores, and in people’s homes. With another recession looming, now is not the time to bury one’s head in the sand and hope for the best.

Marketing Movies

At the height of summer, Hollywood can always be counted on to release its annual glut of rambunctious, noisy films for the gluttonous, rambunctious, noisy masses (read teenagers). Zeitgeist commented previously on the exceptional marketing efforts gone to by Disney and Pixar for “Toy Story 3″. The film was finally released the other week in the UK, having been pushed back to make way for the onslaught of the World Cup. This article will be focussing on four very different films and the differing marketing efforts employed in them; “Eclipse”, “Inception”, “Knight and Day” and “Tron: Legacy”.

The third film in the Twilight saga, “Eclipse”, has recently exploded into cinemas, making $280m in it’s first week at the global box office. In the film, Robert Pattinson’s ‘Edward’ drives around in a pining manner in a Volvo XC60 SUV. The car, owned by China’s Geely created their “most expensive campaign to date to promote its tie-in”, according to Variety. In the series’ sophomore outing Volvo had played on its product placement almost entirely online with their “Come and See What Drives Edward” campaign. In the new film there is another website, “Lost in Forks”, which is being more heavily promoted on TV in a cheesy, Americanised way (this is the ad Zeitgeist saw the other night). The site asks the user to play a game in order to be in with a chance of winning the XC60. The game, however, is interminably boring for all but the most dedicated of Twilight fans (who fortunately for Volvo number in the tens of millions); Zeitgeist lost all interest in entering the competition and having their information captured for Volvo to use in the future. Variety points out “the SUV is also being given away by Burger King as part of the chain’s own ‘Twilight’ tie-in and gives the vehicle a shout-out in its ads.” Even for the first film in the series, in which the Volvo C30 appeared but the brand had “no advertising budget”, the car “received millions of impressions [and] increased consumer traffic through [US] and international dealerships”. It helps that the author of the novels, Stephanie Meyer, had, bizarrely, sprinkled her books with mentions of Volvo.

Volvo took a back seat to Mercedes for product placement in Christopher Nolan’s “Inception”, the only product placement example in the film, writes BrandChannel. However, the film’s marketing has far more impressive accolades, namely its integration with Facebook. Although every brand and its uncle sees Facebook advertising as a sine qua non nowadays, the team at Warner Bros. created an imaginative and engaging campaign that helped raise awareness and excitement for a movie shrouded in secrecy. On the UK Facebook fan page for the film, competitions were announced that took place in Brighton, London and other locations. A man, suited and wearing sunglasses, and carrying the silver briefcase showcased in the film, appeared at various locations along with a vague clue or riddle as to where he was. The first person to solve the riddle and find the man was given tickets to the UK premiere. It’s an idea sui generis, and it evidently paid off. Apart from the film opening at No.1 and beating out “Toy Story 3″ in its second week to retain its top spot, sometimes almost a hundred people would comment per competition when all was said and done. The great engagement continued in more simple ways when the film opened, with reviews posted from various publications, and asking fans whether they would be seeing the film again…

eConsultancy praised the efforts, saying they produced “a marketer’s dream campaign” (no pun intended I’m sure). The article details how Warner Bros. “went to great pains over its blog outreach campaign, utilising major and minor movie fan sites to help spread titbits of pre-release information.” They conclude with the pithy insight, “It’s worth contrasting this against that similar old media behemoth, the music industry, who have consistently struggled to find a new marketing model that competes with free sharing and piracy.”

All seemed not quite as rosy initially for the Tom Cruise / Cameron Diaz starrer “Knight and Day”, with the New York Times predicting before its release that it would fall short of expectations. The two stars, however, have gamely been showing their faces around the world, and not only at premieres, in this case touring Brazil before spending hours with fans in London. They also showed up at the Tour de France, watching from the side of the road before helping the eventual winner lift the trophy. Very soon the film will have it’s ‘People’s Premiere’ at London’s Somerset House, giving the film the added publicity of having two premieres. Finally, last week the duo showed up on the BBC’s “Top Gear”, driving the show’s ‘reasonably priced car’. The show is still available on iPlayer, and in Zeitgeist’s opinion well worth the watch. This kind of globe-trotting coverage is perfect fodder for the target audience, the kind who like big explosions, fast cars, and lean storylines.

The last film Zeitgeist will be discussing is the release this winter – December 17th in the US – of the second Tron film, “Tron: Legacy”, which, by the time it opens, Disney will have committed “three and a half years priming the audience” for, according to the New York Times. The team at Disney has – much like “Inception” did in a much shorter timeframe – been feeding rabid fans tidbits piece by piece, with the release of a new trailer (see below) at Comic-Con recently, where one arrived at the screening via a themed entryway, a great piece of experiential.

“Marketing campaigns for what the industry calls ‘tent-pole’ movies… have traditionally started about a year before their release in theaters [sic]. Increasingly, there is scarcely enough time… The goal is to make movies feel like must-attend events”.

Multi-channel integration, be it on Facebook as with “Inception” (and as with Disney’s newly purchased Playdom for $760m), through supporting Disney channels as with “Tron: Legacy”, or through mobile games that extend the movie’s universe, will help bolster revenues. However, as digital video recorders like Sky+ in the UK and TiVo in the US continue to erode film’s main piece of publicity – the trailer – and as DVD sales continue to plummet, without much offset from Blu-ray or online avenues, the film industry is increasingly less wary about taking risks when it comes to how films are promoted. One thing is for sure though, sometimes you just can’t beat a great trailer…

Visiting Google HQ

On Monday morning, fully half the Zeitgeist team awoke from its slumber, left its abode and walked the 15-minute walk to Mecca. While not a dedicated fanboy, the integral part this company has played in the evolution of the Internet over the past decade, (Zeitgeist first remembers using their search engine in 1999), is undeniable. The morning would be spent in the hallowed halls of Google HQ. Mobile advertising for the Android platform would be the focus.

After munching on a croissant, downing an Earl Grey and meandering past the ice cream delivery bicycle, Zeitgeist was talked at by Ian Carrington, Amanda Rosenberg, Reto Meier, Scott Seaborn from that indefatigable ad agency Ogilvy and from IconMobile; Steve Griffiths.

Given the high volume of iPhones-to-people ratio in the room, it was not best to start off the morning with a non-so-subtle jibe at the aforementioned device. However this was indeed how the morning started; these jibes became the sine qua non of the whole event. Given the current regulatory scrutiny Google’s search empire faces regarding Net Neutrality, any hubris around ‘open source’ might have also have been best kept checked, yet there it was. Those who persevered in their listening heard that 2010 was indeed the year of the mobile. For some it may have seemed like they had been stuck in an echo chamber; every year since at least 2005 has been deemed ‘the year of the mobile’, occasionally with the suffix “but this time it really is!”. Zeitgeist would not care to argue with the statement though, as finally consumer desire and the corporate technology to suit that desire seem to be approaching an optimum. Last Christmas, there was a sale on eBay through a mobile device every two seconds. We were told that “Everything Google do, we have a mobile version of”. Despite this poor syntax, this was an impressive statement; something simple and logical, but surely something that only a very small number of companies could lay claim to.

Google’s director of mobile advertising said that the company’s mantra when developing new products was now “mobile first”, again, an impressive affirmation when you really think about it. Currently there are fifty times as many searches performed on smartphones vs merely WAP-enabled handsets. So the iPhone, Android platform and its myrmidons are clearly providing a better user experience for consumers, that they in turn are utilising – though it will be interesting to see whether the soon-to-be-introduced data tariffs will have any impact on this. This may not be the year of the mobile, but it certainly is the year when futureproofing becomes a sound investment: In 2013, smartphone sales are predicted to overtake PC sales, which will coincide with mobile internet use overtaking desktop computer use. It’s quite plausible by then that such distinctions between types of computers will be even fuzzier than now, (iPhone, iPad, netbook, laptop, desktop) if not moot.

Google is currently in the throes of redesigning its Android application store, currently with 60,000 apps and growing (compared to Apple’s 250,000+). Apps are an interesting phenomenon. With Apple’s initial inception, they are now quite the hot item, the thing your client’s clamour after without knowing exactly why. Yet what service do they provide? According to the meeting yesterday, 95% of Apple’s apps are not used after twenty days. For Windows’ part, half of the ‘Marketplace for Mobile’ apps are made by Microsoft, suggesting they have some way to go before accruing a wide, collaborative audience. The utility of an app, it was suggested to the audience yesterday, could be one of two things; engagement or purchase. Your app is there to either enhance the brand (like Chanel or Dior) or to encourage purchase (Argos). Time, lack thereof and frequency are also a large contributing factor to an app’s use. Simply put, it would not be worth someone’s while to download the Expedia app to their phone in order to book a single flight. It would, however, be of use to a regular traveller.

The audience was later shown a graph showing mobile and desktop search queries throughout an average day, with troughs and peaks mirrored between the two systems. Google stated they were not sure whether mobile search had a cannabilisation effect on desktop search, and that they “don’t care”.

We were then treated to a presentation by Amanda who delved into the world of Android-capable handsets. This included voice search – asking the phone directly “What are the best restaurants for breakfast near Union Square in San Francisco?” led to a satisfying list of responses – and voice text; unfortunately punctuation is something that remains almost impossible to do by voice, currently. There was also an example of Google Goggles, which, as well as being able to identify a building from a picture taken by a user, can also scan hard copy text, translate it and then pronounce it for you. All of which, except for the semantics of context, was most impressive.

Scott Seaborn then stepped up to the plate, going through some interesting case studies of mobile advertising. Two in particular caught Zeitgeist’s eye. The first was the Seer app that IBM updated for this year’s Championships at Wimbledon. This interesting video from the somnambulistic “Click” show on the BBC details the amazing thing that OgilvyOne’s app can achieve. Also quite fun was the new Coke Zero iPhone app called The Cleaner, soon to be released.

Steve from WPP’s Iconmobile brought up some similarly interesting case studies. The first of which was for T-Mobile as it attempted to encourage paperless billing with a great mobile initiative that involved “green” perks. The other highlight was that of a North Face campaign in China, which won a Silver Lion at Cannes. An interesting co-incidence of brand and region, as most Chinese people are currently gravitating to an urban life, and do not traditionally treat hiking or mountain-climbing as a past-time.

We then heard more about the Android platform. 160k devices that support Android are activated daily now. One of the nicer features that Zeitgeist saw was the enablement of cross-app usage. A user could be browsing through nearby restaurants on one app. Upon finding the one they want and clicking on a button in the app to book a table, the user would then be taken straight to the OpenTable app, which would immediately display the available times and tables for the restaurant you were just looking at on a separate application. While convenient and a nice move, this does present a potential hindrance for advertisers if users begin to navigate through the web merely by going from proprietary app to app rather than using a browser where they would be exposed to more advertising.

Conversely, the expandable ads that will begin to appear on Android platforms while surfing looked great, especially for things like films (the example we saw was for Adam Sandler’s Funny People). Lastly, we saw the new ‘Navigation’ app, which is currently only available in the US. Its map system allowed for alerts to the user for nearby amenities on their chosen route, e.g. cinemas, restaurants, etc. Interestingly, it also allowed for sponsored layers, meaning advertisers could put specific flags down on the map for particular promotions, to encourage people to take advantage of en route to their final destination.

As for Google’s final destination? Well, we’ll save that for a future article.

Selling ‘Toy Story 3′

Orson Welles once said “If you want a happy ending, that depends, of course, on where you stop your story”. Many pundits thought that a third iteration of the popular ‘Toy Story’ franchise would be a step too far; could a film released eleven years after its predecessor still pull in the crowds? Any such questions were swiftly forgotten about when the film grossed a record-breaking $110+m in its opening weekend in the US, and held it’s number one spot this weekend just passed as well.

Apart from the enduring popularity of the series, as well as studio Pixar’s seemingly unending run of stellar films, the film (which has yet to be released in the UK to avoid clashing with the World Cup) surely owes some of its success to an excellent marketing campaign. As well as simple things like the teaser trailer, which handily features the ‘Toy Story 3′ logo in the middle of the clip (the image YouTube then uses as a thumbnail), and releasing apps for the iPhone et al., there are three examples in particular that Zeitgeist will be focussing on in this article.

The first example was intended to build some viral buzz around the film by releasing various videos on YouTube. These videos were commercials that featured old toys from the ’80s that appear in ‘Toy Story 3′, such as the Lots-o’-Huggin’ bear. The catch is that these commercials are fake, because the product itself exists purely in the film. The video however is so realistic, from the VHS-like video quality to the ’80s music, voiceover and clothing, it blurs the boundaries between fiction and reality, and takes you into the ‘Toy Story’ universe. As Mashable writes, “Thus far, Disney and Pixar have heavily marketed the film across different demographics, but there has a been a strong viral push to grab the attention of people in their mid-to-late twenties. For that reason, creating an ’80s-esque toy commercial makes a lot of sense, because we’re a generation that is obsessed with recollecting our past and relishing what once was.”

SEO has been under the microscope as well, to great effect thanks to Google and Twitter. eConsultancy ran an article on the film’s promoted Twitter presence, saying “the placement is great branding for the Toy Story franchise”. It’s presence was on the Promoted Trends slot, which brands have to “win” to be lucky enough to feature on. The article continues, “media mentions of its Twitter purchase are also working out to its benefit.” For Google’s part, the film jumped on the Search Stories bandwagon, creating a fun video of what results the user (in this case characters from the ‘Toy Story’ films) get when they type in certain words on the search engine.

Lastly and most impressively (because it is such a simple thought), there was the fantastic idea of allowing people to buy tickets to the film through Facebook. This is a first, and a great step. For too long, generic thinking has operated along the lines of “We’ll put together a site, make some great content, make it really engaging, and people will come to visit the site.” This example represents a shift to thinking more along the lines of “Let’s bring this content and functionality to where they already are.” It’s just a simple and superb idea, no doubt the first in a long line of such promotions from all the studios. One marketing head from a rival studio told Zeitgeist they were “all over Facebook now”.

Overall, great thinking and great execution have led to several promotions that not only make the consumer feel closer to the brand, but also, as with the latter example, help lead to direct monetisation.

Nintendo’s Nemesis & Evolution

“All is unceasing and rigorous competition in nature”, said the Marquis de Sade. Rivalries come and go, it is the victor who must with each success continue to innovate and ultimately change, enduring the onslaught of new competitors. Yahoo vs Google, Microsoft vs Google, WPP vs Google and more recently Apple vs Google and Apple vs Amazon vs Google; in similar circumstances, we have gone from Sega vs Nintendo, to Sony vs Nintendo, to Apple vs Nintendo.

Apple themselves have pushed beyond their preliminary battle with Microsoft to a place where they now court multiple rivals in all the different markets that they affect with products like iTunes, the App Store and Apple TV. Steve Jobs, in September last year, said that the iPod touch was being released with gamers in mind after having had much feedback from the public as to what they used the device for. This was part of the reason why the iPod touch was cameraless, unlike its smaller, cheaper cousin. Nintendo must have known it was only a matter of time until their paths would cross…

Zeitgeist has very fond memories of inadvertently reshaping the bones in his thumbs while playing the Mario Brothers trilogy for hours and hours back in the day. The Nintendo Entertainment System, their first console, was fantastically successful. Somewhere along the way, however, the company got a bit lost. The turnabout it managed thanks to the Wii (and to a lesser extent the DS) is extraordinary; Sony and Microsoft saw share of their respective PlayStation and X-box platforms gradually erode to give Nintendo a position of dominance, becoming the market leader less than a year after its launch; PSFK named it one of their top ten brands of 2010. In the last week though, Nintendo have reported an earnings drop – its first in four years – hurt by slow sales of the Wii and possibly effected by piracy as well, according to Le Monde. Just as Apple are encroaching on Nintendo’s sovereign territory, the reverse is also true, as Nintendo have been offering Netflix movie rentals for a while now. Will the DS soon be facing off against the iPhone, iPod and iPad? According to Le Monde, in 2008 Apple’s iPhone represented 5% of the gaming market, Nintendo 75%. Today the iPhone’s share is 19%, Nintendo’s 70%. It is the casual nature of its games that made the DS and Wii appeal to a market that other consoles never even considered. Now though, those casual gamers are equally at home playing on an app on their iPhone, as well as on Farmville on Facebook. Variety says, (emphasis added),

“More than 32 million people tend their virtual crops each day, and the game has a total user base of 80 million. That’s roughly seven times the number of people who play the online smash ‘World of Warcraft’.”

Of course, rivalries like this will become increasingly common in this sector, as technology platforms – what the great Lawrence Lessig calls “layers” – continue to converge, allowing for excellent, mutiple functionality on one product (look at the iPad as an example). Somewhat counterintuitively, customers may not readily embrace this convergence, as behavioural economics tells us that people put more trust in a product that performs one dedicated task well; they assume anything else will be somehow diluted. Neither Nintendo or Apple should fret, exciting times are ahead. There is speculation in the Le Monde article, among others, that Nintendo should take the fight to Apple by releasing its own phone. Zeitgeist would find that a real treat. Almost much as much of a treat as the original Japanese advert for Super Mario Bros. 3. Enjoy.

Location, location, location

Foursquare is to the zeitgeist what Chatroulette was all those days ago. Location-based targeting has been gathering steam for some time, and the potential blossomed with the release of the iPhone 3GS last year. For the user, it allows them to ‘check in’ to a certain place, alerting those who follow them. If said user checks in to a certain place often enough, they become ‘mayor’ of that location. Moreover, with time a map builds up showing definitively where the user tends to go. It is this last point that is of particular interest to advertisers, who are always desperate for more facts and figures to make it appear that the industry they work in is one of cold, hard, calculable facts, with no irrational outliers in order to better know the consumer they are targeting.

An exhibition detailing the evolution of maps is currently on show at London’s British Library; today we seem to rely on maps ever more as they become – with GPS functionality – an important feature on most mobile devices. It was reported earlier today that the Foursquare service has now exceeded forty million check-ins. Not one to miss out on anything that involves the decay of personal privacy, Facebook shortly intends to release its own version where users can check-in through their site, with McDonald’s already on board.

eConsultancy has a list of ten select marketing examples using geo-location, however Zeitgeist are going to focus on two specifically. The first is that of the Financial Times and its walled garden. Borrowing a page from other brands of getting a user while they’re young, the FT may soon begin providing free access to those who check-in in certain areas. Those areas being “select coffee shops located by major financial centers and near business schools including Columbia, Harvard, the London School of Economics, London Business School and London’s Cass Business School”, in other words, superior centres of academia, that Zeitgeist may or may not call an alma mater. According to FT.com, “Only the ‘mayors’ will be granted a free pass, and only for a limited time”. It’s a nice incentive and it will be interesting to see how competitive the race for free content becomes among ostensibly cash-strapped students.

The other example Zeitgeist likes is that of the luxury shoemaker Jimmy Choo, who have decided to organise a shoe hunt. As one blog describes it, “The idea is pretty simple, a pair of Jimmy Choo’s new trainers will check into some of the most exclusive and fashionable places in London, if you can track them down and catch them while still checked in at a venue, then they are yours.” Sounds like a very fun idea and a fantastic excuse to run around town going to lots of great places. Let the games begin.