Essential Reading for Marketing & Business Professionals
Thursday March 18th 2008

Insights in this issue:
* Is McDonald's head of marketing right?
* As the A380 arrives at Heathrow, how will the marketers fill it?
* Financial Marketing

Web 2.0 just won't stay out of the
headlines at the moment - now McDonalds head
of marketing has weighed in. Do you agree
with his views? - Read on to find out.

The new A380 has its first commercial flight
to London today - but how will the airline
fill it? Maybe the latest report on loyalty
programmes can show the way.
Bear Stearns
may be no more, but there are still plenty of
financial service companies scrabbling for
business. But collapsing profits are putting
marketing budgets under massive stress. We
suggest a possible solution.

James Pearson - Editor

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Is McDonald's head of marketing right?

Last week at the The Economist's seventh
annual Marketing Directors' European Summit
in London last week, McDonald's corporate vp
of global marketing, Johan Jervoe shocked the
audience by claiming that by using social
networking sites, marketers were forced to
relinquish control of how their brands are
perceived and surrender it to the consumer.
He then went further and suggested that most
of colleagues have no idea that YouTube even
exists.

There is a clear, and growing, divergence in
consumers - those who went the education at
any time before the internet became
near-universal and those who went through it
after that point, which, for the sake of
argument, we would say is 2001. So, anyone
under 28 experienced using the web in a
collaborative way with their school and
college peers. They are the ones for whom
social networking via the web is as natural
as breathing. For the rest of us, sadly me
included, it is very hard to see the attraction.

Johan Jervoe reflects, we believe, the
attitude of many older marketers who don't
truly appreciate this paradigm change in the
way people behave. In the short-term ignoring
social networking will do their companies
little harm. But as those consumers age and
become more mainstream and critical to the
sales success of most brands then such an
attitude will be doomed to failure. Clearly
AOL, which has just paid $850M for Bebo
believes that there is still considerable
mileage in social networking sites. But then,
the AOL/Time-Warner merger did, at the time,
result in the largest ever corporate loss of
$99Bn so it is just possible that Johan is
right and AOL have another howler on their hands!

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
As the A380 arrives at Heathrow, how will the marketers fill it?

Today marks the first commercial flight of
the A380 superjumbo from Singapore to London
Heathrow. Given the current ecological
ambivalence to flying and the impending
melt-down in the global economy it does raise
the question of how they will all its 480
seats. New research by Carlson Marketing
suggests that Frequent Flyer programmes - if
well-executed can help to ensure customer
loyalty by narrowing the perceived level of
choice that consumers have. Issues such as
price, convenience of flight-times etc.
become less important - provided that the
programme makes it easy for consumers to
redeem their rewards.

The research identified three factors that
influence the perceived quality of the
frequent flyer program: 1) how well the
attributes of the program (e.g., ease of
redeeming for award travel) are executed; 2)
how well the program encourages and supports
customer engagement activities (e.g.,
updating a personal profile on the program
website); and, 3) how well the communications
are tailored to be both relevant and
customized. Our experience suggests that it
is the third that is the most important in
keeping the member engaged. Poorly targeted
offers that invite people to redeem programme
points they don't have, or to visit
destinations they have never been to are
unlikely to succeed.

Meanwhile, back at the A380. If I was
Singapore Airlines, or any other airline with
a superjumbo, I'd be stripping out the First
Class and Business Class and focusing on
filling up the bus with the maximum 700-odd
passengers. By doing that I'd salve flyer
consciences by creating a fully 50% lower
emissions level than flying on a
"traditional" Jumbo. Yes, flying is VERY
environmentally damaging, but, people aren't
going to stop. However they will increasingly
opt for the least damaging ways to fly and
the A380 could be it - for long-haul.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Financial Marketing

The Financial services sector is in a bit of
a mess. Share prices tumbling and profits in
free-fall. Easy profits made on selling easy
credit are disappearing yet they all still
have massive sales targets to hit. How can
they do it? Well, like many sectors that
enjoy good times for a long time, they have
gained a little fat and now many of them are
looking to reduce their cost bases AND
improve their Marketing ROI. And one way of
achieving this is to look at outsourcing
whole activities - in this case the marketing
database.

Here are three reasons why it is cheaper to
outsource:

1) Far lower fixed overhead cost - in-house
IT resources are always very expensive, yet
marketing often make little use of the
available expertise.

2) Greater flexibility - making a change of
any significance on an internal system of any
kind can easily take months, the same changes
we can do in a few hours

3) Greater focus - an outsource provider
should have only one agenda - improving
service AND marketing ROI for you. And if
they don't, then you can fire them and hire
one that does, something that is not possible
with an internal resource.