Vol 2 Issue 14

News: New Fax Rules on Hold
Marketers breathed a sigh of relief recently when the Federal Communications Commission decided to delay implementation... 

News: Beware the Number 22
Apparently clothing retailer Abercrombie & Fitch owns the number 22. 

Feature: Back-to-School Retail Looking Up
After a couple of years in the wilderness, marketers are finally starting to see some hopeful signs from consumers.  

Column: Network Before You Need It
By Greg Welch 

Q&A:
Brian J. McHale, President of Empower MediaMarketing 

Q&A:
Don Albert, Director of Strategic Partnerships at eBay 

News

New Fax Rules on Hold

Marketers breathed a sigh of relief recently when the Federal Communications Commission decided to delay implementation of a new faxing rule that was part of the recently passed national Do-Not-Call rules. 

Those rules were actually a little known part of the law until their implementation deadline approached. At that point, marketers and businesses began to realize that the new rules would make fax machines very difficult to use as a business tool. A flood of complaints to the FCC prompted the agency to delay implementation until the rules could be clarified, but it still plans to enforce the rules eventually. 

"This is just the extension of the date so people can comply with the new rules," FCC spokesman Dan Rumelt. 

The new implementation date for the fax rules will be January 1, 2005. 

The new rules would have required written permission before a business could send out faxes that could be considered advertising or promotional in nature. A form of the rule did exist before, but there were exceptions in place for when customers requested information or when there was a pre-existing business relationship. 

The rule was intended to curb the activities of companies that blast out advertising faxes - thereby wasting paper and other resources on the receiving fax machine. 

However, many businesses that use fax machines as a quick communications tool would have run into trouble trying to gather signatures from existing customers and prospects. 

For example, if a company were hosting a conference, it would need to obtain written permission before being able to fax a registration form to someone - even if the customer requested a registration form be faxed. 

The new rules update faxing guidelines set in the Telephone Consumer Protection Act of 1991.

Each violation of the new fax rule could cost up to $11,000 per fax. 

If nothing else positive comes of it, the new fax rules provide a useful object lesson in why industry self-policing is preferable to the loving hand of government.

News:
Beware the Number 22

Apparently clothing retailer Abercrombie & Fitch owns the number 22. Please note for future reference. 

Abercrombie recently filed a lawsuit against American Eagle Outfitters over that company's use of the number 22 on a new line of clothing. Abercrombie claims that its Hollister chain of stores owns the number 22 because it has featured that number on various lines for the past three years. 

Neither Hollister nor Abercrombie registered a trademark on the number, but Abercrombie claimed a common-law right to the number because of its prominent use on Hollister merchandise, packaging and Web site. 

The lawsuit, filed in U.S. District Court in Columbus, Ohio, asked for a judge to order American Eagle to stop using the number 22 on clothing and advertising campaigns. In addition, the lawsuit asks that American Eagle be forced to destroy any current inventory using the number and pay Hollister any profits from those items already sold. 

In a cryptic statement, Abercrombie spokesman Tom Lennox said, "The suit speaks for itself." 

This, of course, begs the question of why the lawsuit needed a spokesman. 

Court is familiar ground for Abercrombie & Fitch and American Eagle. In the past four years, three courts have ruled that Abercrombie can't prevent its rival from selling clothes that look similar to Abercrombie lines. 

For its part, American Eagle representatives have called the lawsuit frivolous, and sent a letter to that effect to Hollister. 

It is possible for a company to trademark a number if people have begun to associate the number with a particular product, but it remains to be seen if Abercrombie or Hollister have reached that level. 

No word yet from Big Bird or other representatives of the children's show Sesame Street, which was recently brought to you by the letter "Q", and the number "22".

Feature
Back-to-School Retail Looking Up

After a couple of years in the wilderness, marketers are finally starting to see some hopeful signs from consumers. 

If things keep up, this may be a merry Christmas after all. 

Back-to-school is often considered the second most important indicator of retail health - behind the traditional Thanksgiving to Christmas holiday shopping season. Last year, the back-to-school period was unusually weak, and was followed by the smallest level of year-over-year sales growth recorded in the past 30 years. 

This year, economists are hopeful that the recent Bush tax breaks, stock market growth and continued strong mortgage refinancing and housing market sales will produce a strong second half to the year. 

That spells good news for marketers preparing for the upcoming holiday shopping season. 

The rising economic figures were reflected in early returns on the back-to-school shopping season. 

This year, Wal-Mart Stores Inc. said that the sales growth recorded so far in August shows that the shopping period was much stronger than expected. The Bentonville, Ark.-based discount retailer said it expects same-store U.S. sales to increase from four percent to six percent in August. Earlier forecasts called for a three percent to five percent increase in year-over-year sales. 

Last year, Wal-Mart saw a 3.8 percent growth in sales for August. 

If the six percent figure for August holds up, it will mark the largest same-store sales increase at the company since a 7.9 percent jump in June last year. 

Same-store sales, or sales at stores open at least a year, are considered a key indicator of a retailer's health.

Many economic experts keep a close eye on sales activity at Wal-Mart. The company is the world's largest retailer, and currently accounts for about six cents of every retail dollar spent in the U.S. Consumer spending accounts for about two-thirds of economic activity. 

"Discretionary spending is looking pretty good, but it's going to take about two more months of same-store sales data to find out if July was unusually strong or part of a trend," said Richard Hastings, chief economist and retail analyst with Bernard Sands, a retailing consulting firm. "My guess is that discretionary spending is starting to have a comeback."

For its part, Target Stores reported a similarly rosy August forecast of same-store sales growth of between four percent and five percent. Target spokesman attributed the gains to strong sales of toys, pharmacy items and electronics. 

Consumer confidence figures took a similar bounce up in August. Those figures have been slowly climbing since a dip in March and April during the war in Iraq from a low of 61.4 in March to August's 81.3 score. 

Consumer confidence in July scored a 77.0. Analysts had predicted a score of about 79.6 for August. 

The Consumer confidence index is an ongoing survey of consumer attitudes about the health of the economy and job market. The index is pegged on consumer attitudes in 1984. Any score below 100 indicates that consumer confidence is below that recorded in 1984. The opposite is true for scores above 100 points. 

The index data is from a survey of 5,000 households on a consumer research panel. Some of the other interesting bits of data from the study showed that more consumers are planning to purchase major appliances in the next six months, and many are planning vacations in the near future. 

Both are hopeful signs of increased willingness on the part of consumers to spend money. 

At the same time, the Commerce Department reported that demand for durable goods continues to rise. Durable goods are more expensive items expected to last more than three years such as cars and washing machines. The growth of 1 percent was consistent with analyst expectations. 

What that means for marketers is that consumers are growing more comfortable with spending money - a good sign as Christmas nears. 

"People aren't feeling really good about the economy but that doesn't stop them from taking advantage of bargains when they're offered and spending the money they have," said Gary Thayer, chief economist at A.G. Edwards & Sons Inc. in St. Louis.

Home sales have continued strong growth as well - a fact often attributed to record low interest rates. The National Association of Retailers reported that sales of previously owned homes grew to 6.12 million units in July. That marks the best month on record for home sales.

As the holiday shopping season approaches, marketers will need to be careful to tap into the newly optimistic mood of consumers to translate those sentiments into sales and revenue. 

While challenging, it's certainly a better challenge than the one from the past two years, which was just trying to stay above water for one more year.

Column Network Before You Need It By Greg Welch

Your career is going great. You enjoy what you do and they company for which you work. So, why bother networking?  

The answer is easy. In today's rapidly changing economy, anything can happen. No job or industry is 100-percent secure, even if you think otherwise. During such turbulent times, the value of a professional network can be one of your best assets.  

Today's marketing professionals must be conscious in their efforts to regularly build a network - whether for career stability or new opportunities.  

I often speak with marketing job seekers who assume they can immediately pick up the phone and connect with someone who can aid them in their job search. Unfortunately, I witness first-hand the problems faced by these talented executives.  

Unless you have invested time into that relationship, it is unlikely that a stranger will take the time to help you. To network is to engage in informal communication with others for mutual assistance or support. As such, it is a two-way relationship.  

Contacting virtual strangers and asking them for assistance does not constitute networking. This is why your professional network does not (nor cannot) develop overnight. It takes time. And if you don't consistently nurture those relationships, you may not have a viable network when you need one.  

Blame human nature, but when the job is going well, people have a tendency to ignore their network. This often is caused by a lack of time or motivation. Why make the effort to network if you don't need to?  

Unfortunately, this is a short-sighted view. Professional networking is a long-term investment that needs to be incorporated into your business routine. While it shouldn't be approached as a full-time job, it does require thought and effort to maintain the network. And it's not always about what you'll gain, but what you can give.  

To begin with, contact a professional organization (like the AMA) or a local not-for-profit board of directors. Get involved in your community. You also can register your background, experiences and interests on an executive search firm's Web site or through your university's alumni relationships group. 

However, networking doesn't have to be a formal affair. It can occur at anytime with anyone. You can strike up a conversation with the executive sitting next to you on the plane, with a guest at your neighbor's dinner party or with the couple beside you at the theater (quietly please). Unless you start meeting new people and asking questions, you'll never know how your experiences and interests might click with someone new.

While there are obvious reason for developing an external network - future career opportunities, creative ideas, sound professional advice - there are as many reasons to build a rapport with your current colleagues.

In today's large corporate environments, it is not uncommon for executives to be unfamiliar with executives in other business units. I often encourage people to reach out to other executives in their organization; find out what they do and what interests them. This connection will help you build a future network while assisting you in your current day-to-day responsibilities.

You can establish this rapport by asking colleagues for a lunch date or their opinion on a business matter. You also can send them an article of personal and/or professional interest or help them solve a business problem.

Don't delay. For those who have yet to establish a strong network, do it now. For those who need to improve and expand their networks, do it now. Whether you feel vulnerable in your current position or if you are looking toward the future, today's savvy marketing professionals should understand the value of a network.  

Every day you focus on selling your organization - now you must focus on selling yourself. In a rapidly changing business world, reach out your hand and introduce yourself. You might be surprised by the opportunity that answers.

Greg Welch is a member of Spencer Stuart's Chicago office. Greg specializes in marketing and recently has placed top marketing professionals at KFC, Hallmark, Jim Beam and Eastman Kodak.

Q&A with Brian J. McHale President Empower MediaMarketing

Brian McHale is the president of Empower MediaMarketing, a Cincinnati, OH-based media planning and buying company. Empower MediaMarketing is an independently owned company that works with nearly all types marketing media. 

McHale previously served as senior vice president/partner, overseeing Empower's national and local media operations for a wide range of clients. In that role he was responsible for developing effective, marketing programs using various forms of media. 

In addition to leading the national and local media operations, McHale managed client service, media planning and media execution for numerous Empower accounts. As part of his duties, McHale was involved in several national brand introductions and targeted market promotions.

Prior to joining Empower in 1989, McHale worked for the Dayton, Ohio NBC affiliate as well NBC in Los Angeles. He graduated magna cum laude from Miami University in Oxford, Ohio, with a bachelor's degree in mass communications. 

How had the media planning/buying business changed in the past 15 years? 

The biggest change has been the focus of why clients come to a media company in the first place. When we first started most clients wanted to buy as much media as they could, for as cheap as they could as quickly as they could. It was very much a tonnage strategy. 

What has evolved in the past 17 years is we are very much talking about strategy. Who do they want to talk to? How do you reach that audience? They still try to get the low rates and be cost efficient, obviously, but it's much more about streamlined campaigns. Advertisers want target ability and accountability. In the earlier days the focus was to be on the air. Now they want to know exactly what they got out of each buy. 

I think that's been mostly driven by the fragmentation of media. We wrote a piece here a few years ago called "Fragmentation is our Friend." Many advertisers were worried about the number of choices they had when it came to a media buy. We see it from another angle. Media fragmentation means richer targeting and you zero your dollars where you want, when you want. 


How are your clients now approaching the idea of online marketing? 

It is absolutely still a viable media today. Originally, the way people approached the Internet was that it was a cool thing to do. You almost had to be there or you were out of it. There was a lot of talk about measurability - some of which was true - but the hype was certainly bigger than what was actually delivered. 

That hasn't stopped advertisers today who want to target a niche market. There is more money today being spent on the Internet area, but it has shifted away from banner ads to look at better optimization of various sites. 


What about e-mail marketing? 

We do nothing that is not opt-in today. Spam is out of control. Often it does an advertiser more harm than good to be part of an e-mail program that is not opt-in. If the target audience member is not willing to say they're interested in receiving the offer, we won't do it. We don't want our clients to be accused of Spam. 

Marketers are typically already there, however. The marketing directors are already there because they receive tons of Spam too. They know the response rates are very low and they figure if they're going to spend a dollar on marketing, why not put it somewhere effective? 


Marketing textbooks teach aggressive marketing during a down economy - what have you seen is the actual practice? 

Well, obviously it's easy - and self serving - for someone in my position at a media buying company to tell marketers to go out and spend. However, there have been plenty of studies that show that advertisers can go out during a down economic period and increase their market share relatively cheaply. Those that don't typically will have to spend more later to catch up. 

As for our experience, during 2001 the majority of our advertisers did not dial down their spending much. We were fortunate to be working with advertisers that still saw the value. Some did put campaigns on hold or slow spending, but by the second half of 2002 we saw most of those on-hold projects come back. Our advertisers have really been going full-bore for the past 12 months.

Q&A Don Albert Director of Strategic Partnerships eBay

Don Albert is Sr. Director of Strategic Partnerships at eBay, heading a team that works with brand marketers to meet their objectives by tapping into eBay's marketplace and 69 million member community. 

Albert has held senior management roles at several leading Internet and media companies, including wireless technology pioneer fusionOne, where he was Sr. VP Marketing and Sales. Prior to fusionOne, he was Senior Vice President of Advertising Sales and E-Commerce at PointCast. 

Albert's online experience dates back to 1989, when he was an e-commerce manager and the national ad sales manager at Prodigy. He was a charter member of the Internet Advertising Bureau, and is a founder and former Vice Chairman of the Mobile Marketing Association. In addition to his Internet experience, Albert has held senior marketing roles at several leading media companies. He has served as Director of Marketing and Sales Development for both Sports Illustrated and Newsweek magazines, and held various sales and marketing management positions at the New York Times. Albert holds a BA in Politics from Princeton University and an MBA from NYU's Stern School of Business.

Albert recently talked with Marketing Matters about a new rewards program called eBay Anything Points program where users can trade loyalty points from certain companies into points they can use to shop on eBay. 



How do you present the benefits to marketers when you're pitching the eBay Anything Points idea? 

The program affords marketers a compelling way to reach out to the eBay community. It lets them tap into the largest rewards catalog in existence - eBay has 79 million items available at any one time. Marketers can then offer that entire catalog to their consumers. 

The way it works is we have two classes of partners: exchange and earn. 

Companies like Hilton are tapping into the program and offering their current Hilton Honors members the ability to transfer their program currency into eBay currency. We also have three airlines in the program where users can trade frequent flyer miles for eBay anything points. The way the economics words, when an eBay point is exchanged, the partner pays us a penny for that point. 

Earn partners use eBay's currency as a customer acquisition or loyalty program currency. Any time our partner gives a consumer an eBay point, they pay eBay a penny. When consumer uses those points, eBay backs up that currency with cash and pays the seller. 

There will be cases where our partners are paying with cash or marketing commitments in addition to the pennies.


Who do you consider the customer in the program: partners, point users, merchants selling on eBay? 

All of the above, actually. The program evolved out of discussions with the eBay community and brand marketers who are anxious to figure out how to tap into the marketplace. The program was a way for brand marketers to become part of the e-bay community. It brings a value to the marketers, eBay and our buying and selling users. 


What are the strategic goals you are hoping to accomplish with the Anything Points program? 

The primary goal that drove us is we are always looking for new ways to bring value and excitement to eBay community. We want to give users more of a reason to come to our site. This program certainly does that by bringing new currency to the site with new users and a higher velocity of transactions. 

A key aspect is we have been in discussions with a wide range of marketers and worked with them to develop programs to leverage what is unique and powerful about eBay to give them access to these 69 million consumers [who shop on eBay].


When designing a loyalty program such as this, what are some of the steps you went through in evaluating whether the program would help you achieve those goals? 

I think that this program in particular appeals to marketers looking to acquire new customers and are used to using promotional incentives to do so. The program offers a powerful way to acquire customers from eBay's consumer base. The partners have an opportunity of endearing themselves to the eBay community with a relevant offer. 

We have an interest from marketers for a powerful new currency model such as this pooled points program. It can support both short-term promotions and ongoing loyalty programs.