Omid and the Meercat

Motor insurance premiums have apparently risen by 18%.

Is this a fact or merely the industry's wishful thinking?

It's easy to see why they need a rise in premiums. Although this is a massive business worth £13 billion, it remains only marginally profitable. Claims, some fraudulent have increased and there are now a large number of uninsured drivers. However intense competition, particularly in the shape of advertising, £109 million's worth last year, has surely put a dampener on price rises.

Price comparison sites are now the new breed of broker and they spend a lot of money on the box. Some of them produce memorable advertising too. Can you forget the Russian meercat Alexandr and his catchphrase "Simples"?

All this activity suggests that there is very little loyalty in the market. According to an IPSOS/MORI study, three quarters of policy holders shop around when it is renewal time. And they get three quotes before committing. In this scenario, a renewal notice, from the insurer which has not been prior checked on a price comparison site is inviting defection.

Clearly price and price increases are key influencing factors. Past experience is also important. Disgruntled motorists complain about difficulties in sorting out claims. This is important because one in six policies are claimed against.

Like other business sectors, establishing trust is vital and especially so in the finance industry. Trust helps keep customers. And it is more expensive to acquire new ones.

Finally, do you know who writes the most motor policies?

It's the Royal Bank of Scotland. They own Churchill and a few others. And we own the RBS.

Creative Magic.

I heard from an old friend last week.
We had lost touch many years ago and he found me through Google.
Chris Sharpe is a talented creative man who played the piano beautifully. He had been the creative director at Masius, then the second largest advertising firm in London.
BacoFoil was one of the many grocery brands we handled. Advertising appeared on television in November and December, because most of the year’s sales occurred at Christmas time.
The client came to the Agency for the annual pre-campaign meeting. My bit was simple. Television was the automatic choice of medium and there was little planning involved in the days when ITV was the only commercial station available.
The star performance would be the presentation of the TV commercial.
But Chris had not done the work and since the meeting could not be postponed, he had to think fast.
At the meeting he said:

"Gentlemen, you have a great product but despite our strenuous efforts we couldn't come up with a commercial that did your brand justice. Until last night. We came up with an idea that we liked so much that we threw out our earlier efforts to concentrate on this new notion. There was no time to produce storyboards, so I will just tell you about our advertisement.
First lets start with the proposition:
Wrapping a turkey with BacoFoil reduces dehydration losses. We have tested this and discovered that a BacoFoil wrapped turkey has an extra one and a half portion than an unwrapped bird.
Now we need a catch phrase.
Your oven ready turkey isn't ready for the oven till it's wrapped in BacoFoil
Every time we mention BacoFoil, the word will shimmer out of the foil.
Now we give it pace and wrap it around a Christmas carol.
Your oven ready turkey isn't ready for the oven till it's wrapped in BacoFoil. (Imagine this and add the shimmer of the brand logo on the screen).
The camera shows a warmly lit home with the family around the table which features the Christmas turkey. Outside in a snow-covered garden, two boys are singing the BacoFoil carol.
One is tall and his friend quite small.
The end shot shows the young boys invited to join the family at Christmas dinner. The voice-over makes it clear that this generosity is possible because BacoFoil has delivered one and a half extra portions"

Chris Sharpe sat down to enthusiastic applause.

Could this happen now in our over researched world?

Advertising spend trends in the recession.

For a while it looked like there was no stopping the Internet advertising juggernaut.
In 2008, it accounted for £3,350 million in advertising expenditure -19.3% of all advertising revenue in the UK. Its growth rate was an impressive 19.1% since 2007,when all other media showed a decline of 8.5%.
The reality that has eluded most commentators is that the Internet is in the main a classified advertising vehicle. 77% of its revenue in 2008 came from this form of advertising. Paid for search is its main generator of income. It is the equivalent of yellow pages and Google dominate the market in paid for search.
In a recession all types of advertising suffer.
In 2008, online display advertising - banners, skyscrapers and MPU’s accounted for 5.6% of total display advertising. New estimates from Nielsen Media research suggest that the Internet’s share of display advertising dropped to 3.5% during the first half of 2009.
If this is so, then it’s bad news for mainstream media owners who have led the surge of investment in on-line display advertising infrastructures. Even shrewd newspaper barons bought into Internet ventures like My Space without working out a financial model for recouping their investment. ITV paid a very large sum for Friends Reunited and only now have publicly announced their decision to wash their hands of it.
Quality newspapers have discovered that their on-line readers are younger and more mass market than their newspaper counterparts and as such less valuable.
Newspaper on-line inventory is ending up with blind networks for a fraction of their rate card price.
Advertising Agencies who invested in digital expertise and systems have discovered the days of high margins are over. In truth there is an over supply of online display opportunities. Advertisers once very keen, are now repenting their early enthusiasm.
Another digital collapse is imminent.
This is not to say that Search has had its day. Advertisers with transactional web sites will still exploit the Internet, but they will look for better bargains.
The absurdly high cost of demanded key words, like cheap car insurance, is over.

Another year and another travel health scare.

It’s as if the tourism industry didn’t have enough troubles. Everywhere there’s the spectre of recession. The strength of the Euro and the US Dollar, relative to Sterling has adversely affected tourism prospects in the Eurozone and the USA. Airline traffic has fallen in BAA airports by 11.3 % in March 2009 compared to the same month in 2008.
Destinations more dependent on international tourism are acutely aware of how precarious the situation has become. And yet………..
In the UK, householders with tracker mortgages are now much better off, and once the supply/demand equilibrium has been re-established, things will begin to get better for all of us. Recessions end when people get tired of feeling poor and begin to regain their nerve. One sign will be if the two months of March and April 2009 show encouraging airline traffic. Easter was in April this year, so by comparing these combined months in 2009 and 2008, we will cancel out the Easter timing effects.
There are a number of things you can do to mitigate the effects of the recession.
1. Keep in touch with past guests. Most hotels retain addresses and some actually keep in touch at Christmas and on birthdays. Co-ordinate a direct mail campaign with private sector partners and offer special “friends” incentives for them to revisit.
2. Encourage ex-pats to come home for a visit. Scotland has done this in 2009, but doesn’t mean you cannot do so too. Ask them to re-acquaint themselves with the culture, beauty and friendliness of their homeland. Special events could be held in the towns and villages, with local hotels offering special rates. The idea is thank these economic migrants for their financial support.
3. Promote your green credentials In particular, solar technology, re-greening of the towns, country and hill sides, reduction in carbon emissions, marine parks, successes in conservation and so on.
4. Develop your niche markets. Find ways of creating new reasons to visit. Cultural events like jazz festivals, yachting regattas, kite surfing contests, and special golf tournaments such as the ones organised by Dubai.
5. Work closely with private sector partners. Hoteliers, airlines, ground handlers, tour operators and travel agents. India offers incentives to visiting travel agents. Hotels are already offering additional free nights and ground handlers throwing in local excursions for free. Airlines can offer subsidised upgrades and everyone can be encouraged to do more.
6. More than ever, ensure that your country is kept at the forefront of prospective visitor’s minds. Ad spends on tourism products amounts to £441 Million in 2008. Maintain your share of voice and be relevant. Tell prospects that the country is beautiful sure, but emphasise its unique differences. If possible stress affordability. Say visiting is essential, not discretionary. Tell them that a holiday in your country is very special, not a commodity experience.
7. Mount an integrated campaign that joins seamlessly, press relations, above and below the line activity including on-line.
8. And don’t forget to have a well planned and well rehearsed crisis management programme in place. I hope you will never need to implement it.

The land of wonder.

Australia is truly a land of wonder, but it’s not an easy sell to British tourists. It shares a problem with another attractive country – New Zealand.
Their distance from the UK makes short holidays impractical, which explains why the British holiday taker spends an average of six weeks in either country. Many of those long stay tourists are from both ends of the age divide, young backpackers and retired folk with time to spare.
Australia has had problems with its communication in the recent past, most notably about objections to their “Where the bloody hell are you?” campaign.
I rather liked it. It was brash and very Australian, but enough people objected and it was withdrawn, underlying the case for pre-publication ad research.
Australia’s visitors from Britain numbered 493,000 in 2008, exactly 100,000 less than in 2006. New Zealand, despite some attractive and persuasive ads lost 25% of British tourists in the same period.
Both countries need something special in their communication policy, and Australia has started its journey of innovation.
Hamilton island is a beautiful island off the Great Barrier Reef and has been the setting of two films screened across the world: “Muriel's Wedding “ and “Fool's Gold “. In August, the island hosts the popular week-long yacht races in which 150 boats compete, culminating in a big beach party on Whitehaven day.
The Queensland government decided Hamilton Island needed a caretaker.
Ben Southall won the challenge. He beat 35,000 other hopefuls and will spend six months on the idyllic island off the Great Barrier Reef, Australia.
Mr. Southall will have his romantic stay shared by his Canadian girlfriend and get paid a whopping 75,000 Aussie dollars to boot. His job is to swim, snorkel, explore, relax and occasionally write a blog about his positive experiences.
The real winner is of course the Australian tourist board, who have garnered tons of free publicity worldwide, estimated at $100 million Australian dollars, on television and in the press. Queensland’s premier Ms Anna Bligh, no relation to the infamous Captain of the Bounty, said it was the most successful tourism campaign in history.
This PR exercise will be backed by an ad campaign worth $1.7 million.
No one could possibly object to this stunt and many, including me, will applaud and wish Queensland every success

Recession or the slippery slope to disaster?

The news is bad and gets worse each day. We have moved from a subprime problem that only affected the feckless and the poor who the financial sages said “should have known better”, to a full blown financial crisis orchestrated by the clever chaps in banking circles who taught us that not only was debt good, but that it was essential to the global economy.

Now governments are rushing to rescue these financial institutions in the USA, the UK, Germany and China. Other European legislators are cautiously pointing to flaws in this type of support. They encourage risk taking without pressing for better and tighter regulations. Giving money to people who cannot pay their mortgages only delays foreclosure and even governments can only borrow so much.

Commentators in London expect that Government borrowings will rise from £63.3 billion in 2008/9 to £90.1 billion in the next financial year. This means that debt will exceed 43.3 % of the gross domestic product by 2010/11, considerably higher than the so-called sustainable investment rule, which stipulates a ceiling of 40%.

For people, anxious to get onto the housing ladder the news is mixed. House prices are down by nearly 15%, but lenders are being more cautious and demand higher deposits. Homeowners who don’t have an urgent need to sell are staying put. The results-an even greater fall in approved mortgage applications of about 40% in August.

Imported inflation on fuel and food prices are adding to the general gloom and most people are feeling poorer. They have responded by reducing their driving mileage, switching off the lights, turning the thermostat down a couple of degrees and shopping more in discount stores.

In the travel industry, the fall-out includes airlines like EOS, MAXJET SILVERJET, ZOOM and XL. Fuel is the highest single cost for airlines so expect further failures, consolidations, closures of routes and flight cancellations. Even national airlines are not exempt, as Alitalia’s troubles make clear.

Tour operators are consolidating but as Thomas Cook and TUI are finding out it is difficult to raise the standards of rescued companies to that of the White Knight.

Carbon emissions are a handy excuse to reconsider travel abroad, though the terrible British summer of 2008 might cause people to reconsider the domestic option.

So whilst Spain may suffer, Turkey and countries further east, with reputations for good value may fare better, particularly now that more efficient aircraft like the Airbus 380 and the Dreamliner are coming on stream.

The British love their holidays and will be loath to abandon their trips to sunnier climes. However unemployment or the fear of redundancy may make people reassess their priorities. Now it is even more important to keep your Brand top of mind when planning your marketing campaigns.

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.