Do countries need a brand identity?

Australia is apparently rethinking its advertising approach to tourism. Some countries were upset by the current advertisements which ask: “Where the bloody hell are you?”.

Personally I liked the line. It has the brash good humoured charm we expect from our friends down under. Anecdotal evidence suggests that most British people also found this appeal credible and persuasive. However this acceptance was not matched in Japan who now send fewer tourists to Australia.

It proves that culture and customs are still different across the world,
even in today’s global village.

Perhaps the British attitude is informed by our shared history and
their ready willingness to fight by our side in two bloody world wars.
They sacrificed a lot of young men to help protect their cousins half the earth away.

Now the Australian authorities are to develop an all encompassing
brand identity which will hopefully reflect all the positive elements
that make the country what it is.

A country’s image is affected by its geography, geology, history, people, politics, economy and its position in the world. Branding a country is therefore a complex task, since we are talking not just about tourism, but also exports, off shore banking, foreign and domestic policy, inward bound investments, culture and
heritage.

The danger is projecting an identity that conflicts with current
perception. Psychologists call this ‘cognitive dissonance’.

Countries that need a new and credible image, need to adapt rapidly and there is usually not the will or resources to do it.

Consider three countries as examples.

Sri Lanka is an ancient land, culturally interesting with a strong rooting in Buddhism. It offers great value for tourists, wide sandy beaches, wild elephants, but once again in turmoil because of the actions of the Tamil tigers.

China is a huge country, accounting for a quarter of the world’s population. Many peasants are poor, though there is a burgeoning urban middle class. It is home to one of the great civilisations but currently ruled by a repressive totalitarian regime with a bad human rights record at home and in Tibet which they occupy illegally. They are the hosts for this years Olympics and have just suffered a calamitous earth quake.

Indonesia has the worlds greatest concentration of Muslims and a source of militant Islamism. Bali, is one of their beautiful islands, inhabited by gentle Buddhists and favoured by Australian tourists. It was targeted twice by terrorists.

Perhaps all most countries need is correct positioning for each of their many target sectors.

New Zealand provides incentives for film makers. Much was achieved by the shooting of the ‘Lord of the Rings’ trilogy, which was watched by millions all over the world.

The ad concept of ‘Pure’ is simply true and stronger for the lack of hyperbole.

Egypt cleverly positioned their Red Sea resorts by describing the strip as the Red Sea Riviera. This succeeded in shifting the perception of the place from the Middle east and all that implies to Europe, safe and sophisticated.

Branding a country with a universal message may be very difficult.

Repositioning a country differently for its different targets may be all that’s needed.

Tourism - a bumpy ride ahead?

The tourism industry is set for a turbulent time.

Oil has just reached a record high of $120 per barrel. Ethanol production, touted as the green alternative has now attracted criticism as the cause of lower food production and subsequent higher prices. Butanol, Richard Branson’s alternative fuel aircraft may be a passing phenomenon.

More serious is the growing consciousness that human activity is the cause of global warming, serious storms and human tragedies. Flying is believed to be the worst offending act. Since giving up holidays completely is not an option, ways of salving our green conscience will be sought. One way is taking at least one holiday each year in the UK. Kelkoo, a price comparison site reports a 39% increase in the number of people searching for UK holidays.

For overseas destinations however, a demonstration of the measures being taken to combat global warming is required. Tropical countries should be getting more of their energy needs from the Sun with solar panels and photo voltaic cells. Another renewable source is hydro-power. ICELANDAIR trumpets their green credentials in their advertising: “Discover the source of green energy”, is the headline with an image of waterfalls.

Another measure is offering greener vehicles, particularly for tourists. Hertz has a green collection of cars that meet the EU’s 2008 voluntary target of 140g/km C02 Output. Avis offers natural gas cars in Germany and Hybrids in Portugal. The real breakthrough may be in Electric cars. Carlos Ghosn, the Chief Executive of Nissan has embarked on an ambitious plan to dominate this sector by the year 2012. He is confident that improved batteries and the problem of speedier re-charging will be solved soon. The country that adopts this technology will reduce smogs caused by traffic jams and generally improve the quality of the air.

Planting more trees is another ideal. A Swedish tour operator has bought land in Malta and plants one tree for every tourist he flies in. Governments should not rely on such generosity. Sugar cane fields should be bordered by long lasting trees like jacaranda, and Le flamboyant for beauty and Tamarind, Neem and Jamboul for usefulness. Such a strip would have the added advantage of being a fire break. Off shore and uninhabited islands could be made green havens to encourage endangered bird species and wherever possible new mangrove plantations could be created to make habitats for fish nurseries.

Governments could also provide incentives for hoteliers who provide green eco-friendly resorts. According to the Sunday Times Travel magazine, The Jet wing hotel in Sri Lanka recycles its waste and pays local farmers to produce organic produce.

The idea of getting local people to benefit is a good thing. The Feynan Eco lodge in Jordan is run on solar power and is run by Bedouin in collaboration with Jordan’s Royal society for the conservation of nature. The ll Ngwesi is an eight room thatched lodge in Kenya’s uplands that also runs on solar power. The Masai who help manage it get 40% of the profits.

The time has passed when tourist boards had only to organise themselves for growth. Growing tourist numbers or even maintaining your share will depend on how efficiently you anticipate social and political trends and prepare for them.

Are we talking ourselves into a recession or are we already in one?

Recessions are usually characterised by a decline in economic activity over three quarters.

This is typically accompanied by falls in consumer confidence and spending, caused by price inflation, rising unemployment and a bear stock market.

The stock market has more red ink than black and share prices in sectors such as banking, property and retail have taken a particular pounding. Financial companies, particularly those involved in the USA’s sub prime shambles have suffered badly.

Some might say that their plight has more to do with greed, fraud and incompetence than general economic woes.

And a correction in house prices has been anticipated for at least two years when the ratios between wages, rents and house prices began their journey into economic craziness. The Economist in 2005 said that prices would fall by 20%, proving again that it is possible to forecast events or timing, but rarely both correctly.

Problems in the high street are being presented as another indicator of the recession and though Marks and Spencer has had a decline of 2.5 % in their Christmas sales, John Lewis at one end and Primark at the other have done well. Online sales are on the up.

So what is really happening?

Unemployment is falling. Oil prices as defined by Brent Crude are 10% down on the $100 dollars a barrel threshold. Inflation is still a risk which is why interest rates remain on hold. If consumers rein in their spending it will be no bad thing and if savings ratios start rising again, that’s all to the good.

In the advertising industry, a slump in ad spend is indicated by the IPA’s Bellwether report. Advertising activity is a function of corporate liquidity and consumer spending.

Previous recessions point out the dangers inherent in reducing communication investment in times of economic slowdowns. It will be even more damaging now that we have more knowledgeable and empowered consumers.

But advertising weight alone is not enough, nor clever creative advertisements.

Emulate Steve Jobs whose Apple showroom in Regents Street is one example of how to do it correctly. Give people what they want and they will besiege your store.

Supping with the devil

The big multiple supermarket chains are a powerful bunch. In many areas of food and drink retailing they control three quarters of all items sold. Their success is based on the solid marketing principle of supplying products that their customers want, at prices they can afford.

This good value pricing policy is possible partly to the economies of scale created by buying in bulk. The competitive nature of retailing means that most of these savings are passed onto the consumer. However since the retailers have so much power they can exert a great deal of excessive pressure on the smaller suppliers.

Now the Competition Commission is demanding access to hundreds of e-mails sent by Tesco and Asda, purportedly demanding further retrospective discounts to fuel a price war between these two groups over the summer.

Why should such practices cause such surprise?

Supermarkets have been doing this for years. Suppliers have been asked to contribute to deals such as “Buy one, get one free”, and provide specially deep price cuts from time to time. Some supermarket groups insist that their own procurement experts advise suppliers how to remain solvent whilst discounting to a greater extent.

Supermarkets also demand contributions to their own marketing campaigns and many smaller companies forego their own branding needs in order to pay these levies.

This is always a mistake.

Do not let supermarkets do your marketing for you. All they are interested in is increased store traffic. They will use your money to increase footfalls but don’t care if customers buy your product as long as they buy something.

In the travel industry, tour operators acted just like supermarkets till the internet weakened the packaged holiday sector. Like supermarkets they offer customers a range of options and don’t really care if the customers choose your country or another, provided it’s bought from them. It still occurs today when overseas operators with strong airline links can offer the Tourist Boards of smaller countries the prospect of increased tourists.

But be warned, once you agree to this demand, you will have to offer all tour operators and airlines similar levels of support.

And when you stop, many will fold their tents and steal away.

Can we stop the fat lady singing?

We have stopped laughing at the Germans. They used to be the fattest people in Europe. Now we are.

23% of women and 22% of men in Britain are now defined as clinically obese, according to the European Union’s statistical office. Obesity is defined by a formula called the Body Mass Index (BMI) composed of two simple factors - height and weight.

The formula is:

Ideal weight in kilograms divided by height in metres squared = 20% to 25%.

You are regarded as overweight if the BMI score is in excess of 25% and obese if it exceeds 30%.

Very fit weight lifters will fail this test, so perhaps a simpler measure would be waist size and its relation with the chest measurement for men and hips for women. The waist should be at least 8 inches less than their chest for men and for women about 8 inches less than their hips.

The British Government’s figures suggest that two out of three men are overweight and the figure for women is only slightly less.

This is a very worrying situation, since it means a greater incidence of heart disease, diabetes, high blood pressure, raised cholesterol levels and cancers of the prostate and womb.

One of the actions taken by the government body OFCOM is to ban the advertising of processed foods that are high in fat, sugar and salt in TV programmes where the majority of the audience is 14 years or younger. The reaction of the advertising industry has been less than considered. After all, we invented, or at least promoted, tasty products that were loaded with the most dangerous elements such as transfats, simple sugars and excessive salts.

And now it seems that some advertisers are trying to compensate from the absence from TV by using the internet to sell their unhealthy foods to children.

Skittles, the sweet brand has apparently spent more than £100,000 to set up a profile on the social networking site “Bebo” seeking young ambassadors for their brand. Other advertisers on the internet are McDonalds, Starburst and Haribo. They do this partly because the internet is outside OFCOM’s remit.

Obesity is linked with poverty and poor education. We cannot compel people to eat sensibly or exercise regularly, but neither should we give carte blanche to parts of the food industry who are concerned with the hitherto easy profits in unhealthy products.

The property factor and the effects on tourism

Financial analysts are worried about the property sector and how a collapse here could trigger a mudslide affecting the economies of many European countries.

Take Ireland for instance which showed the greatest increase in house prices in the E.U. since 1995. Domestic property prices fell in April, the first decrease in five years.

In France, housing starts have declined for the first time in six years and in Spain where unfettered development over the years is being challenged by a crash in the value of shares in developers and builders.

The European Central bank, preoccupied with Germany’s depressed economy reduced interest rates overall to 2%, far too low for the bubbling economies of France and Ireland. As a result, their property prices soared. Bank interest has since risen in seven rapid steps to 3.75% and expected to reach 4.25% soon. This has meant a doubling of mortgage payments with its inevitable consequences.

In Britain, the Chancellor has been more aware of the impact of low interest rates on inflation, and here a wholesale crash is unlikely. A number of factors will affect house prices in the next twelve months. One is the dampening effect of stamp duty. According to the Centre of Economic and Business Research, stamp duty will generate £7 billion for the Exchequer in this fiscal year. This has affected sales and currently only 7% of the housing stock is in transaction compared to 9% in the 1980s. Demand is been generated also by overseas buyers from Russia and India who see London as a particularly desirable place to live. In other areas it’s the “buy to let” market sector that has restricted house availability.

The new Prime Minister, Mr Gordon Brown, recognises the shortage in supply and promises to build 200,000 new “affordable” homes each year, but some of the land available is flood plains and the hazards they pose have been evident in recent days.

Britain will therefore avert an all out property crash but by 2008, prices will stagnate. The British and more seriously affected citizens of Ireland, France, Spain and Poland will feel less rich and that should affect their spending on other things such as retail goods and possibly travel. Home improvement may do well, because house owners who postpone a move to more expensive properties may choose to invest in their current homes with conservatories and the like.

However for countries that depend on tourism one way of boosting visitors is to make it easier for them to buy a home in your country. They will then visit more often, stay longer, spend more and encourage friends and relations to come too. Some enterprising owners will let their property to other people from their own country. All this will raise tourist numbers.

Since 1998, British visitors to Portugal have risen by 48%. Spain has enjoyed the same level of success, whilst trips to Italy have grown by 66%.

Much of this happened because of more cheaper flights by bargain airlines, an older and affluent UK population and a feeling of greater wealth caused by rapidly rising UK property prices. Your house is worth more, so you feel wealthier, save less and even borrow against your growing house assets.

Apparently more than 300,000 properties abroad are owned by the British. Political stability, warm climate, lots of inexpensive flights to convenient airports and affordable property have made Southern Europe so popular.

Judging by the advertisements on television and in the press, countries like Bulgaria, Egypt’s Red Sea Riviera and Dubai are also seeking the British house buyer.

However property abroad will have to grow in value and generate income from lets to offset initial purchase prices. With so many countries jumping the bandwagon there is an oversupply of such homes.

Selling houses to foreigners may help boost tourist numbers, but the basic laws of economics still apply.

Demand must match supply or there will be tears at suppertime.

Advertising on the Internet - a threat to conventional advertising agencies?

The Internet as an advertising medium has been an amazing success. Last year it took over two billion pounds in advertising revenue in the UK and accounted for 10.6 % of all advertising spends.

Even more impressive was its relative speed of growth. In 2001 Internet ad spend was £166 million accounting for just 1 % of the total. Between 2005 and 2006 alone, Internet advertising grew by 48%.

This has panicked traditional service providers into jumping on the bandwagon without much understanding of how and where future returns on this new and large investment was to come from.

Consider where the Internet gets its advertising revenue.

77% of total revenue is classified advertising. Two-thirds of this is for search, an electronic and creatively more exciting version of the old directory advertising. Google dominates the search industry in the UK and elsewhere. None of its rivals have been anywhere near as successful.

Much of search advertising reaches people researchers describe as “engaged”. The distinction is between people who need to be “interrupted” from their usual preoccupations as when, seeing an advertisement for a chocolate bar, you stop at the local newsagent and buy the brand on impulse.

Engaged people are seeking, actively or casually, information about a specific category, product or service.

Advertising is not the only way to reach these people. Brands can raise their internet profile by clever web site design using more relevant copy, careful repetition and providing more information so that Googles web crawlers find it and push it higher up the rankings.

Advertisers can then also use search optimisation by buying specific keywords in an auction bid system. Actual keyword choices become important. Some advertisers use their competitors’ brand names to redirect their traffic. Knowing what price to bid is also very important.

Other than search, of the rest of classified internet advertising, £202 million is accounted for by the online recruitment sector. That slice of the cake is dominated by online specialist operators who account for two-thirds of this spend. Newspapers are making a strong bid to retain their minority share.

Which brings us to the area of traditional “interruptive “and brand advertising. In the internet online display field, banners, buttons, skyscrapers and interstitials rule.

Few advertising agencies regard this as mainstream.
After all it is difficult to be creative in such a limited format. Yet many advertisers think that all advertising on the internet is waste free. I wonder if John Wanamaker who first said: "I know that half my advertising is wasteful, I just don’t know which half " would agree with this view of the internet