More Proof That Super Bowl Ads Are Worthless

I just got a nifty email today - a ranking of the top 5 Super Bowl advertisers (in terms of spend) over the last 20 years.

Here's the tally:

1. Anheuser Busch - $250.8M
2. Pepsico - $190.0M
3. GM - $65.7M
4. Time Warner - $63.4
5. Walt Disney - $43.5M

So with all that great Super Bowl advertising, surely these companies are dominating their respective industries and rolling in the profits, right?

Well, you know what's coming.

Let's start at the top with Busch (A-B for short). I found a 2005 report from the Beverage Marketing Corporation with less than encouraging news for A-B. For example:

"A-B’s output surpassed the 100 million-barrel mark in 2002 and continued to grow. However, its 0.4% growth in 2004 was slower than the overall market."

"Slight to nonexistent growth rates and declining per capita consumption have characterized the U.S. beer industry lately. More often than not during the last decade, when beer volume growth has occurred, it has usually been at less than 1.0% annually; 2004 marked the fifth year in a row of such tepid growth."

"In 1996, per capita beer consumption stood at 22.0 gallons. By 2004, it was 21.6. Average intake slipped by one gallon since 1991 and by two gallons since 1981."

The report goes on to note that the only share of the beer market that has consistently grown in the 21st century has been the import market. Why would that be, I wonder? Maybe because imports taste better?

The bottom line, is this: all that money A-B has been plugging into the Super Bowl ad has resulted in a loss of market share in a shrinking industry.

Pepsico, the number two advertiser hasn't fared much better. For whatever reason, it's difficult to find publicly available data on market share for soft drinks. Nonetheless, I did find this snippet from 2003: "In fact, [Coca Cola] increased its market share of the $63 billion U.S. soft-drinks market by 0.6 percent to 44.3 percent in 2002. Pepsico, the No. 2 company, saw its market share dip by 0.2 percent to 31.4 percent."

Why did Coke increase market share? Well, it can't be the advertising, since Pepsi outspent them on the mother of all advertising opportunities. Instead, the article notes: "Industry analysts credit Vanilla Coke, launched last year, as a huge success for Coke similar to Pepsi's breakthrough in 2001 with Mountain Dew Code Red, a cherry-flavored variation of the drink."

Do you see a theme here? It's not the advertising, but rather the product that matters. Consumers, clearly, are smart enough to decide for themselves whether they like something or not.

How about GM - what have they gotten for the $65.7M they've handed over to happy network executives? Again, let's review the numbers. In an article aptly titled "U.S. Carmakers Bleeding Market Share":

"GM, the world's largest automaker, sold 4.66 million cars in the United States in 2004, for a 27.6 percent market share. That number is expected to fall sharply this year to 4.4 million and only 26 percent of the market."

"Ford and GM have seen an erosion of their domestic market share in recent years as foreign companies, particularly Japanese manufacturers, have enjoyed increasing popularity with American car buyers."

And just in case you were wondering: "Ford and GM have failed to put out passenger cars that appeal to American consumers."

Hmm, so I guess big ad campaigns don't work so well if the actual product isn't interesting to customers. Maybe some of that $65M should go to, oh I don't know, product development!

Well, I think I've drilled the point home by now. I apologize for the extra dose of sarcasm, I have a bit of cold at the moment and it is making me particularly ornery.

Maybe a Pepsi will make me feel better. Michael Jackson and Britney Spears can't be wrong, can they?

India versus Singapore - What an Airport Says About a Country

India's got problems. Specifically when it comes to organization, process, and execution. Singapore, by contrast, is a well-oiled machine. The contrast between these two countries is at it's clearest on a flight between the two.

Now before I get too many of my Indian brethren angry at me, let me caveat this post by saying this: there is no question that India has many, many brilliant, hard-working, innovative, interesting people. To wit, the folks I met at Mercantila-Bangalore often embodied these very qualities!

What I'm talking about here is India as an entire country - the government, the infrastructure; how life works on a day-to-day basis.

So now on to my airport story.

Last Friday I left our Bangalore office for the airport. While waiting outside in the cab, I noticed a massive fire on the sidewalk in front of the office. Upon further inquiry, I learned that this was actually an intentionally-set garbage-fire. Apparently instead of hiring garbage pick-up, some businesses just hire poor women to sweep up garbage and then light it on fire. Shockingly, Bangalore has quite a smog problem.

When we got near the airport, we realized that the traffic was in such utter chaos that it would actually be impossible to be dropped off at the arrival area. We're talking wall-to-wall rickshaws facing every different direction, combined with throngs of people, wild dogs, and a few trucks thrown in for good measure. So we jumped out of the cab and walked through the traffic to the entrance.

At the entrance, there were approximately 150 people outside the door. Blocking the door was a lone policeman. Every few minutes, he would arbitrarily let people into the airport. No one seemed to know why this was the case, nor did anyone seem to care. As we were on a schedule, we pushed our way through the crowd and managed to be let into the building. No doubt it helped that we were Westerners, otherwise I might still be outside in the crowd waiting.

The lines at the Singapore Airlines check-in area were, of course, huge, despite the fact that it looked like there were at least 25 people working behind the counter. After about a 30 minute wait, I finally made it to the front. Since I was flying stand-by, I was told to "wait five minutes" while someone in the back office determined my status.

Five minutes later, I checked with the counter and I was told to come back in ten more minutes. Ten minutes later (now 10:10PM with a departure time of 11:10PM) I was told to come back at 10:30. When I explained that it would be difficult to make it through both immigration and security in 40 minutes, I got a nod and an "OK, sure." The 25 people behind the counter appeared to be chatting amongst themselves.

So at 10:20 I had finally had enough. I marched up to the counter and planted myself in front of the counter employee. After a couple of minutes trying to ignore me, he finally relented and went back to talk to the back office (to do this, he needed to step onto a moving baggage conveyor belt, then jump down to get to the office). After a few more minutes, I was given a boarding pass.

Upon reaching immigration, however, we learned that we could not proceed further unless all our bags had name-tags on them (they have to stamp the name-tags. Of course, they didn't have any at customs . . .). We went downstairs to get name-tags. So now it is 10:35PM - 35 minutes to take off. The security line was of course about 100 people deep with little organization (imagine a snaking line but without any ropes to define the snake).

By 10:50 we had moved about 1/2 through the line and were getting a little antsy about getting on our flight. Amazingly, the guy who had been handling the check-in for Singapore Airlines was now suddenly in charge of the security line. Perhaps recognizing that my prediction that we would miss the plan was indeed coming true, he grabbed us and rushed us to the front of the line.

By 11PM we made it through security, and then through the 'bag name-tag' check. After that there was yet another security counter (not sure what this one was about) but as our plane was about to take off, the security folks allowed us to skip this last bit of security and actually catch our plane.

By contrast, when I arrived in Singapore, the process was a wee bit easier to say the least. Instead of gigantic lines, I simply grabbed a number from a machine and waited to be called. While waiting, I enjoyed a fresh-squeezed grapefruit juice and a free foot massage (by a machine). Had I wanted to, I could have also taken advantage of free Internet, free Xbox video games, a free movie theater, free roof-top pool, an orchid garden, and plenty of duty-free shopping.

When it was finally my turn to talk to someone in customer service, I was told that they would page me when they knew of my status. For the record, there were only three people working the customer service line. Sure enough, 45 minutes later I was paged and got a seat on the plane. The woman at the customer service even recognized me before I approached her.

So, let's review. Bangalore with its flaming piles of trash, closed airport entrance, long lines, unhelpful gate agents, random security name-tag rules, and 25 people sitting around chatting . . . versus Singapore with free foot massages, orderly lines, and just three customer service agents who managed to efficiently serve everyone they encountered.

Bangalore, where only by pushiness and sheer will was I able to make my plane . . . versus Singapore where I waited patiently, fully confident that if I had a right to make the plane, it would happen.

India, with 1.1 billion people and GDP of $720B ($654 GDP per capita) . . . versus Singapore, with 4.5 million people and GDP of $110B ($224,000 GDP per capita).

For the record, I recognize that there are aspects of Singapore that I could easily criticize - the Draconian government, the blind obedience of its citizens' to order at all costs, etc. Is the trade-off between less freedom and more order worth it? Do the means justify the ends?

At the end of the day, it isn't for me to decide. It's really up to the people of India and Singapore to determine what's right for them.

I can say this though: from a purely business perspective, I am certain that the heavy-handedness of the Singaporean government provides more opportunities than the apparently laissez-faire approach of Indian leaders. Singapore is a country built for business. India is a country with tremendous business opportunities, most of which will remain untapped as long as the government is unable to create order from the chaos.

That makes travel frustrating for me. More importantly, for all of the smart people I met during my time in Bangalore, disorder restricts their ability to fully participate in - and benefit from - the global economy. That's a shame for them, and for us as well.

The Westward March of Global Power - is India Next?

My incredible high school history teach - Tas Anthony of Iowa City, Iowa - presented a theory to the class once; he argued that power has historically moved from East to West.

For example, you had the Egyptian Pharaohs (1500BC?), followed by the Greeks (500BC), then the Romans (200AD), the Spanish Armada (1500), Rule Britannia (1700), the American Century (1960), the growth of Japan in the late 20th century (1980), and now the emergence of China as a major world player. (Note: all dates approximate and in the case of the older dates, very approximate).

So as I sit here on the eleventh floor of a high-rise apartment building in Bangalore, India, I wonder whether India is next on the list.

India, after all is the second biggest country in the world, with 1.1 billion people to China's 1.3 billion. For the record, the United States is now the third largest country, but with only 300 million people! (Thanks to Shyam and Nisho for pointing this out to me).

India also has an incredible system of higher education, with the crown jewel - The Indian Institute of Technology or IIT - producing scores of top computer scientists and engineers who have achieved legendary status the world over.

And India is the undisputed leader when it comes to technology outsourcing. Sure, China and Russia have some decent tech folks, but the world looks to India - and particularly Bangalore - when IT outsourcing is the issue at hand. Oh, and India is to the west of China.

Combine a huge population, scores of highly educated workers, and a thriving technology industry and it would seem that India is indeed well-positioned to take a major role in the world's economy over the next few decades, right?

Well maybe not. India lacks one thing that China, Japan, and every major empire has had - infrastructure and order. The Romans build amazing roads and aqueducts. The Spanish had a disciplined fleet. The British modernized industry as we know it. China is not afraid to destroy entire towns to create hydroelectric power.

In India, things just sort of seem to happen without much planning or reason. You drive down the street and there are no lanes, no stoplights, and no rules. Power in our apartment turns off intermittently. The government is notoriously corrupt, ranking 89th out of 160 countries in a recent study of worldwide corruption. Heck, there are 23 official languages in India so even conversing can be a challenge.

Of course, these are all things you could say about China too. The difference, I think is that China has been actively working to change these problems for many years now, hence the building of giant dams, improved infrastructure, and even trying to eliminate its own corruption issues. Oh and it also helps that China is a totalitarian regime that can make sweeping modernization improvements with little concern for the opinions of impacted constituents.

In the end, however, I do think India will get there. But to emerge as a world leader, India will likely have to follow in the footsteps of China; not by being communist, but rather by making a commitment to infrastructure, process, and order.

It's clear that India has the people, they have the brains, and they have the industry. But when you have to take your life into your own hands to drive across town to get some Tandoori, that's a sign that the country is not quite ready for prime time just yet. That's OK, though. After all, to paraphrase a famous quote, "Bangalore wasn't built in a day."

Editor's Note: thanks to the Mercantila-Bangalore Advertising Team for some of the cool facts and figures above!

Google Sneezes, Part #2

The front page of the San Francisco Chronicle business section, as well as several prominent search blogs, has this breaking news: Google to Launch Data Center in North Carolina. I don't recall ever seeing this much publicity around, say, United Airlines opening a maintenance center, or even Yahoo opening a regional office. But because Google launched the data center, it makes the news.

I think the best job in the world has to be working for Google PR. In fact, if Google wants to save some money, I have a novel idea: fire the PR team and create a simple "Mad Libs" program that spews out new press releases every day. Here's an example of how it would work. Let's say Google launches an application, like Google Calendar. The system uses a template to create a press release in seconds:

"Google today announced an (positive adjective) initiative to provide new (any technology related phrase) to the people of (geographic region). The free service - launched in beta - will be available via invitation only by (three months from today).

The service will revolutionize (aging service industry). To support this effort, Google plans to hire (number) new employees in (impoverished geographic location with good tax breaks and no concept of stock options).

Google CEO Eric Schmidt remarked, "We are proud to be (positive verb) people find information easily and efficiently with the launch of (product name)."

Does Bid Management Technology Matter?

To paraphrase a phone call I had today with a senior member of a search company: "bid management technology doesn't work. A keyword optimized by hand will always outperform bid management tools or companies, no matter how advanced they claim to be."

Instinctively, I felt compelled to strongly disagree and declare him a member of the flat-earth society. After all, how can a human possibly manage thousands of keywords on multiple search engines (and 24/7 no less). But I thought about it some more, and at the very least I have to admit that there are some strong arguments to be made in favor of manual optimization.

Here's my list of pros and cons of bid management technology. For the purposes of this posting, assume that I am referring to third-party technology, like Efficient Frontier, Atlas, or KeywordMax.

Pros:

1. Scale: No question, if you have hundreds of thousands of keywords, you can't manage these by hand. But the true measurement is not the total number of keywords you have in your account, but the number of active keywords. In other words, if you have one million keywords, but you only actually get clicks on 20 of these every week, scale is an irrelevant factor. Anything over 1000 active keywords on at least three search engines can probably benefit from the scale of automated technology.

2. 24/7: In theory, a computer never sleeps and can be updating bids around the clock (many bid management technology companies like to boast about how they can make bid adjustments up to 48 times a day). In practice, there aren't too many keywords that really require 48 bids a day. And lots of bid management companies end up only making bid adjustments once or twice a day for their clients, mainly because they only get a daily data feed of revenue/profit so anything more frequent than that is overkill anyway. Still, simply having an automated system to at least make one bid a day on your top keywords - especially when you are away from your computer on the weekend - has some value for sure.

3. Advanced algorithms: Every bid management tool/company worth its salt will talk to you about the thousands of programming hours that went into their ultra-secret bid management algorithm. Few if any account reps could possibly explain this algorithm to you, and those that could probably can't because their company doesn't want them to give away the crown jewels. My sense is that most of the big bid management companies actually do have algorithms that are reasonably effective, but you really need to push hard on the account reps and the engineers to figure out whether a particular algorithm will truly benefit your business.

4. Singular focus: Why do people get their oil changed at Jiffy Lube? Well, Jiffy Lube is good and efficient at it, and frankly, most people have better things to do with their time. The same is true for bid management. Spend your time doing something else and let a tool to do the heavy lifting for you instead.

5. The IBM factor: There's an adage in the business world that goes "no one ever got fired for choosing IBM." Similarly, if you have a big keyword campaign you need to manage, and you need to choose between an established 3rd party tool/service provider (Efficient Frontier, Doubleclick, Did-It, for example) or managing your keywords by hand, choosing one of the experts to (literally) do your bidding gives you an extra layer of job security.

6. Pareto Management: Even if you want to reserve a few top keywords for manual management, by giving the long tail of keywords to a bid management company or tool, you are essentially freeing up your time so that you can really dig deep on your top words.

Cons:

1. Only you know your business: Even if you have the most dedicated account rep in the world, no one outside your company will ever truly understand your business. So if it's raining outside and that means it's time to advertise timeshares in Arizona, you can pretty much assume that any 3rd party service provider or tool will be totally oblivious to this fact. Third party technology is only as smart as the rules you give it, and its pretty hard to give a computer program enough rules to truly understand your business.

2. Only you care about your business: Only the sellers of blue widgets stay up all night dreaming of new ways to optimize blue widget keyword campaigns. When the whistle blows at 5PM, don't expect your account manager to stick around after hours brainstorming the next big thing to put your business over the top.

3. All things to all people: 3rd party bid management technology is always designed for the middle of the road. Expect little if any customization for your business (and expect to pay for whatever customization you request).

4. You're already behind the ROI 8-ball: Depending on the bid management technology you use, you can expect to pay between 2% and 10% on top of your monthly spend. In other words, let's say you spend $10000 and you make $1000 in profit without bid management technology. Now, with bid management (assuming a 5% percentage of spend fee), $500 of your $1000 is going to an outside vendor. So if that vendor doesn't make you an additional $501, the technology is only costing you money.

5. Black box mystery: As noted above, every bid management technology company claims to have amazing technology. It's really hard to know whether you are actually paying for cutting edge algorithms or a cutting edge PowerPoint.

6. Reaction time: Most bid management companies adjust your bids once or twice a day. If you have offline revenue (i.e., if the bid management company can't get your revenue through a pixel), you'll probably end up sending a daily feed of your revenue to the company. That works OK, until something catastrophic happens in the middle of the day, and the bid management company doesn't find out about it until it receives your revenue file at 1am the next morning.

Summary

My contrarian friend who eschews bid management technology (and companies) does have some valid points. For a small to meduim set of keywords, I do think it is difficult for an outside technology provider to compete with a focused, passionate human manager.

That being said, there's a reason WalMart dominates Mom and Pop drugstores. When you get to a certain scale of keywords, and you begin to realize that there aren't enough hours in the day to bid manage, create keywords, test ad copy, and fill out performance reviews, it may well be time to think about outsourcing your bid management to someone else.

Why Super Bowl Advertisers Are Super Dumb

I'll be the first to admit that I really don't understand brand advertising. I know that on some level, it works. I do find myself squeezing the Charmin at the Supermarket.

But I also know that billions of advertising dollars are wasted every year on ridiculous branding expeditions. The Ad Agency-Corporate Marketing Industrial Complex is a self-congratulatory machine that somehow convinces companies to shell out big dough for minimal results, and even less quantification.

The pinnacle of this blind buying bonanza is the Super Bowl Ad. This year's ads cost $2.4 million for a 30 second spot. Wow, that's bigger than 99% of all online marketing budgets, me thinks.

So what do you get for that $2.4 million? Well, let's take Ford Motor Company as an example. They have purchased two 60 second spots during the pre-game show, as well as two "5 second sponsorship billboards", according to their proud press release. So, if my math is correct, Ford is spending around $9.6 million on their Super Bowl advertising campaign.

And here's the concept behind the Ford ads (again, from the press release): "Nothing gets between a Mustang Convertible owner and the open road. Nothing's tougher than an F-Series, except possibly an F-Series owner. Ford will demonstrate these undeniable truths on Sunday for millions of viewers tuning in to catch Super Bowl XXXIX and its eagerly anticipated commercials."

The branding message is that the Mustang is really fun to drive, and Ford F-Series drivers are studs. As Marty Collins, general marketing manager at Ford, says of the F-Series ad: "Only F-Series could do an ad like this. No one besides America's undisputed truck leader could credibly send the same kind of message on toughness."

In other words, Ford is spending $4.8 million to tell Americans what they already know about the F-Series - after all, "only Ford could do this ad," and Ford is already the "undisputed truck leader". It's kind of like McDonalds running an ad that tells people they sell French fries, or Coke letting the world know that they are the #1 soft drink. Again, I never claimed to understand branding.

But beyond my confusion over how this $10 million campaign is going to make Ford tons of money, I also discovered another interesting phenomenon. Go to Google and type in the search query "buy a car". Heck, type in "buy an american car" or even "buy a mustang" or "buy an f-series." Unbelievably, Ford is nowhere to be found. In fact, the only query I could find Ford advertising on was "buy a Ford", and they were actually in third position, behind a California Ford dealer and a car lead generation company.

To put it bluntly, Ford is shelling out eight figures to run Super Bowl ads but virtually nothing to advertise online to people who are explicitly looking to buy their vehicles. Maybe, I thought, Ford doesn't want to advertise online for fear of alienating it's local dealers? No, as noted, they actually do have an online campaign (albeit incredibly small). What's worse, their local dealers also don't seem too interested in this crazy Internet advertising thing (there were a few local advertisers, but they were generally in lower positions).

Instead, Google's AdWords positions are filled by the lead generators, who attract buyers solely on price. The URLs have names like WhyPaySticker.com, CarsBelowInvoice.com and PriceQuotes.com. Thus, those consumers who do end up researching Ford cars online end up expecting to get multiple quotes from several dealers. Translation: much lower margins for Ford.

What's even crazier is that Ford could no doubt dominate these keywords, and for a fraction of the cost that these lead generators are paying. When you consider the impact that Google Quality Score and Clickthrough Rate have on position on Google, you would assume that virtually any ad text Ford chose to run on a keyword like 'Buy a Mustang' would instantly rocket to first position at a very affordable cost.

Dare I say that Ford could even use this Google shelf-space as a branding opportunity. Why not create some ads that say: "Ford Mustang. Experience the Open Road. Get Official Info!" You could even send searchers to a cool multimedia site (to keep the ad agency and corporate marketers happy). Mr. Collins (the Ford marketing manager mentioned above) could release a very hip press release that describe Ford's "cutting edge Internet advertising campaign, fusing the direct marketing of paid search with an incredible rich media experience."

And let's not forget, Ford is spending $10 mil on the Super Bowl. Assuming that the average auto keyword costs $1 on a search engine, Ford could be generating 10 million self-selecting car shoppers every year, simply by scraping the Super Bowl ad and throwing that money at Google and Yahoo.

Let's recap then. Ford is spending $10 million to reinforce their existing brands to consumers who are probably not looking for a car, instead of spending any money marketing to consumers who are actually in the market for a car. Oh, and they're also spending money writing press releases, which will never be read by anyone, other than a few snarky bloggers.

But, hey, what do I know. I don't understand branding (and Brutus is an honorable man).

2007 Internet Marketing Predictions

Cleaning out my closet this weekend, I noticed a dust-covered orb in a dark corner, covered by some well-worn Google t-shirts. Upon further examination, I realized it was my trusty crystal ball! Moments after I picked it up, visions of the future of Internet marketing starting flying at me faster than a Viacom exec submitting his resume to Monster. Allow me to share a few with you now . . .

1. Panama Helps Yahoo . . . A Little: Yahoo's new search platform makes it much easier for advertisers to actually, well, advertise, with Yahoo. And by copying the Google 'yield management' model, revenue per click also increases for Yahoo. The bad news, however, is that Yahoo is unable to fully confront its click fraud problem, which leads many advertisers to be cautious with their Yahoo investment.

2. Mobile Marketing Get Lots of Funding and Press, But Not So Much Revenue: The Apple iPhone launch creates a Sand Hill Road frenzy, with VCs push each other out of the way to invest in ad platforms that will take advantage of mobile phone usage. Big media sources like the Wall Street Journal devote front page coverage to the "mobile commerce" revolution. But after many months of hype, few companies are actually making much money with cellphones.

3. Yahoo and eBay Merge: Yahoo recognizes it can't stop Google search, and eBay gets sick of fighting Google Checkout and Google Base, so the two giants take comfort in each other's arms. Meg Whitman becomes CEO while Terry Semel gracefully exits and buys several islands in the Caribbean with his severance package.

4. Two or More Senior Google Execs Leave Google: Jonathan Rosenberg (SVP of Product) and Omid Kordestani (SVP of Sales and Biz Dev) separately decide that they are ready for new challenges. Rosenberg becomes CEO of a big competitor, while Kordestani starts a non-profit.

5. Google Gets Sued Over Quality Score: Several advertisers who watch their online marketing campaigns disappear overnight join together in a multibillion dollar class action against Google's mysterious Quality Score. Google outwardly claims no wrong-doing but internally works on changes to Quality Score to satisfy the plaintiffs.

6. Mercantila.com Goes Public, Earns $225 Billion Valuation: My new company, Mercantila.com, becomes the toast of the town and quickly rivals Google as the sweetheart of online marketing.

7. Technorati is Acquired by Yahoo: Yahoo continues to love Web 2.0 and gobbles up Technorati for $350 million in stock.

8. Google Offers Free Broadband At Home: Google becomes an ad-supported ISP. Americans love the deal, but must wait six months after the announcement as Google does not hire enough resources to fulfill the service initially.

9. Online Lead Generation Consolidates: Quinstreet and Nextag merge, Oversee.net swallows up a major competitor, and AdChemy.com takes another round of funding, using the money to acquire some small SEO shops.

10. RFID Behavioral Marketing Begins: Companies offer colleges students thousands of dollars a year to have an RFID chip implanted in the skull. The businesses then use GPS to track the student's every move, eventually developing an amazing accurate behavioral profile. Internet advertisers willing shell-out 200 to 300% more per impression to get in front of these targeted customers.

And with that, the crystal ball became cloudy again. For a brief moment, I thought I saw fellow blogger Jay Weintraub scaling Mt. Everest, but I really can't be too sure. I guess we'll have to wait until 2008 to find out.

Happy New Year!