Toyota: Deer Caught in the Headlights—the High Cost of Doing Nothing.

I’m sorry about what is happening to Toyota. I drove a Camry for a couple of years and it worked just fine. And I have friends working in Toyota marketing. But right now, Toyota seems to be doing just about everything wrong.

1] The company and the world was on two weeks-notice that something was very wrong with the gas pedal. The company shut down manufacturing and stopped selling cars on dealers’ lots—but it had virtually nothing to say to the public and press about what was going on.

In such a crisis, the first priority has to be to analyze the problem and come up with a solution. But ofttimes, as in pharmaceutical or food tampering cases, this process can take weeks or months.

Toyota at first refused to talk to the world. That’s a shame because there were a lot of Toyota owners out there who were scared to take their cars out of the garage.

If the car has a bug, you have to explain that to the public –- right away—and try to fix the bug. Toyota could have said a lot more beginning in early January on what was going on –- and what theories they were testing, if nothing more than to boost its credibility. Instead in late January it simply announced it was recalling 2.3 million cars—leaving everyone with all kinds of questions. To wit:

[a] Why were the Toyotas built in the U.S. (and Europe) experiencing the gas pedal freeze – but not the ones in Japan? It turns out that some genius decided to change the specs on the gas pedal assembly from metal to plastic. I thought the Toyotas in the U.S. were exact copies of Japanese cars. Though Toyota still won’t admit the U.S.-made cars are inferior, common sense tells you otherwise.

[b] Why did it take Toyota so long to wake up to the fact it had a problem? The National Traffic Highway Safety Administration (NHTSA) has been investigating reports of sticking pedals and floor mat interference since March 2007. [Source Automotive News, 2/1/10]. Toyota should have fashioned some kind of apology for being late to the realization that its gas pedals were subject to sudden acceleration—even though I’m sure its lawyers told the company not to talk about that.

[c] There was lots of talk about floor mat interference—something Toyota in its unfortunate wisdom calls “entrapment.” But in August 2009 a family of four was killed in a runaway Lexus ES 350 driven by an off-duty California highway patrolman. All the floor mats were found in the trunk. So Toyota has known for at least four months it wasn’t the floor mats.

[2] This week the company decided to recall all affected cars and install a metal shim next to the gas pedal to give it more tension. OK, after you’ve diagnosed the problem and begun your fix, how does your communication strategy change? You have to get someone very senior to make the proper explanations. Here, Toyota did a pretty good job, introducing on Monday, Toyota Motors North American president Jim Lenz to make some weasily apologies for their poor engineering, then to promise fixes. That must have been hard for Lenz to do—but at least he got out there on the TV news shows.

Then I think, after they get the new cars and trucks on the dealers’ lots cleaned up, Toyota should do something over-the-top wonderful to re-open the sales spigot: dropping prices 20% + for the next six months would be a start. When PR had finished its initial push to reestablish communications and build credibility, and sales had begun to climb, you can turn your attention to advertising.

[3] Advertising—put it on hold at least for four or five months. Obviously advertising people know how to make a brand shine—but if they tried anything right now the company would be a laughing-stock. And don’t expect miracles. It took Audi decades to wash away the sour taste people felt with their perception that the company had a similar sudden acceleration crisis in the ‘80s.

[4] How much will putting in the new pedal assemblies, settling lawsuits, etc. cost? We’re talking a recall in the U.S. of 2.3 million cars. Automotive News says Toyota’s weeklong shutdown could cost Toyota $450 million in lost sales. They think fixing floor mats and pedals could cost another $450 million. So let’s round that up to $1 billion. Then I would plan on starting an intensive ad campaign that starts around May and keep it going for the rest of the year—at a cost of roughly $400 million. Toyota already has a U.S. advertising and promotion budget of almost $1 billion, so the extra spending could easily fit present budgets. But the other extra $1 billion the company will lose this year will force the company to show an operating loss for 2010. And they will be lucky if it’s only $1 billion.

The long-term costs, of course, are incalculable. Toyota needs to get outside help and get this right. It’s kind of like Tylenol. If you do everything right you can save the brand, but it might take five to 10 years for the public to forget. Meanwhile, in order to draw on the reservoir of goodwill built up over the years, Toyota must take care to tell the truth and be as open as it can. Some say the problem is not mechanical but electrical. Should that prove to be the case someone more senior than Lenz is going to have to fall on his sword.

“Ultimately Toyota stands for quality, and this is the antithesis of quality,” Chris Richter, an analyst for CLSA Asia-Pacific Markets in Tokyo, told Automotive News. “They still have a lot of public good will. But at the end of the day, the customer’s patience is not infinite. I’m less worried about the impact on earnings and more concerned about their brand reputation.”

Desperation as the Mother of Invention

These are tough times for brands and the people who nurture them. CMOs and their bosses are being pressed for ideas that a year ago would have been unthinkable but are worth considering because they may move the (sales) needle.

Let’s start with Dominos. Shortly after Christmas they launched a new ad campaign that went by the name of “Turnaround.” Apparently they had hired a new ad agency (not surprisingly: Crispin Porter Bogusky & Partners, Boulder, the agency that famously did a “Truth” campaign against the big tobacco companies). Crispin did some testing of consumer attitudes and came back to report that customers felt Domino’s pizza “sucked.” That it’s crust tasted like “cardboard,” and it’s sauce like ketchup.

Nothing new there. But then the ad agency suggested, first of all that the client improve the product—and then that the effort to improve the product better form the basis for a high profile ad campaign: New sauce, new way of making crust, new mix of cheese. New guarantee of quality

Then they started having two of the company’s two top chefs personally deliver the new pizza to people who had dinged it in focus groups. This made for pretty interesting TV – especially because the campaign was touched off with Domino’s president Patrick Doyle, admitting that for years the company had been pushing a tasteless, less than wonderful product onto customers.

It will take awhile to learn whether the ad campaign was strong enough to get people the company had lost to mom and pop pizzerias back into the fold.. But early indications are that sales are higher than ever in U.S. Domino’s history. The campaign even caught the fancy of news celebrity Stephen Colbert, who devoted the opening of a recent show to sampling a couple of pieces of a new, improved Domino’s pizza and then named the company an Alpha Dog for admitting that historically the company’s product sucked.

The second example of down-in-the-trenches innovation comes from Burger King, another Crispin client. Down at the company’s store in Miami’s South Beach, beginning in February, Burger King will offer hamburgers and beer at a “Whopper Bar.” More Whopper Bar outlets are planned to be tested in New York, Las Vegas and Los Angeles, according to BK’s North American president Chuck Fallon.

Served alone in the company’s own aluminum bottles, a brewski is $4.25. But if added to a Whopper combo it’s only $2.

Marketing specialists who follow food chain antics say that BK is attempting a very dangerous move – not because beer is controversial, but because BK is known for its fast food. Now it’s going after 30-year-olds in the “fast-casual dining” category. That means they are trying to get diners to come in, order dinner and a beer, and enjoy it in the store.

Interestingly, in the beginning the restaurant will test both Anheuser-Busch and Miller Coors beers. “You can have America’s favorite beers with America’s favorite burger,” says Fallon, brimming with enthusiasm. Eventually other, niche beers may be tried, he said.

Initial blogosphere reaction was not friendly. Some parents said they would no longer be able to bring their kids to a BK store. Others complained about how the beer would add 145 calories to a meal, even without the fries, that comes in at 990 calories. “What a deal!,” rants blogger Sighard. “For only 7 bucks, you get to almost max out your entire caloric intake for a day!”

Ah my, it takes some guts to take brands, especially big hairy brands like Domino’s and Burger King in new directions. But without experimenting you start to slide. That’s what caused McDonald’s to begin offering premium coffees to go up against Starbucks and Dunkin’ Donuts. That’s why the two big beer companies are snapping up niche brands almost as fast as they roll out.

We may miss the dependable quality (or lack of it) in the old brands. But kids coming along don’t want their “father’s Oldsmobile.” So I say good luck to the innovators. We’ll watch to see if any of their experiments result in real innovation.

Meanwhile a word of encouragement to CMOs everywhere who are clawing their way through this recession, wondering how to drive revenue back to its old trajectory. First tell the truth about your brand. Dollars are too dear to be wasting them on expensive campaigns which don’t catch on with consumers.

Go into the attack with crazy strategies and weapons never before tried. You probably can’t lose whatever wacky new product or customer experience you introduce. And you may connect in new, meaningful ways. Consumers still have money to spend. It’s just that they’re being bloody careful with their dollars.

Finally listen to your ad agencies. They probably know more about your brand than they are telling you—partly because they’re afraid you will fire them for delivering a negative message. That’s nonsense. When brands are in trouble, anyone with experience with the brand and your customer, is a valuable source for new thinking.

Pulling off a real turnaround is one of the most difficult efforts in business today. It’s going to be as hard for GM to convince consumers it’s cars are of high quality and value, as it is for Domino’s to convince pizza lovers its pizza no longer “suck.” But it’s worth a try.

The Soul of That Intrusive Duck: Who Owns It?

When NY ad agency Kaplan Thaler won the Aflac account ten years ago it was given an interesting challenge: Make employers subscribe to Aflac as a premium auxiliary health plan for their employees.

Most agencies would have rushed to come up with a B2B solution. But Kaplan Thaler had a better idea: How about going direct to employees with a big-budget TV campaign and get them to “ask about it at work,” in other words bug their bosses to take on Aflac as an added benefit.

Today few people in America don’t associate the name Aflac (the company until recently was formally called the American Family Life Assurance Co. of Columbus, Georgia) with that intrusive duck which became the singular icon of the campaign.

Awareness is sky high, but more important Aflac has enjoyed double digit sales growth almost throughout the entire period – at least up until the 2007-2009 recession, which resulted in companies cutting back in benefits across the board. But there has always been grousing inside the company that many people responded to the duck – but didn’t have the faintest idea what the duck would do for them.

In recent years the Aflac campaign tried to be less entertaining and more descriptive: Aflac pays cash benefits to people who are unable to work due to sickness or injury. But a lot of people just enjoyed the way the duck got in the way.

Sales recently have been way down with Aflac as with almost everything else employers are asked to give away. So the decision was made by Jeff Charney, senior vice president and chief marketing officer for Aflac, to call a review in order to solicit ideas.

Charney enlisted the services of a first-rate search consultant, who immediately learned that Kaplan Thaler wouldn’t be defending. That’s written in stone at the agency and is probably a good policy. [The agency won’t be suffering having recently won the Wendy’s account; the lead agency on NAPA Auto Parts; and is now a finalist in the rush for Ikea.]

Time will tell whether the new agency, the Zimmerman Agency in Tallahassee, Fl., will be able to get the sales meter zooming again.

“We wanted to make sure we have the agency that could portray the duck in the most relevant way,” said Charney, complimenting Zimmerman for a new campaign – that appeared on giant billboards in Times Square—that drove people first to one site, youdontknowquack.com, and then to another, knowquack.com. Zimmerman has come up with elements that include an Aflac presence on Facebook, YouTube, a line of duck clothing (?); a Quack energy drink, commercials during NBC’s coverage of the Winter Olympics; and on and on. It almost wears me out just listing where you’re going to be asked if you know quack.

But wait a minute. Go back a frame. Charney wants to portray the duck – and therefore Aflac –“ in the most relevant way.” Aflac is a brand owned by American Family Life. No question about that. But what’s intriguing and what hasn’t been spelled out in the NY Times coverage of Zimmerman’s win is who owns the duck.

You could say, “Well, eh bien, the duck is generic is it not?” Sort of, I think the IP lawyers would tell you. But not when you add that voice and its other attributes. (Wikipedia credits the famous voice for the duck to Gilbert Gottfried. The idea for the voice supposedly came over lunch when one of the agency’s creatives kept saying, “Aflac. Aflac.” And realized the name sounded to him like a duck’s quack.).

Anyway the duck is a package of IP. Some agencies have been able to resist client demands that anything they produced for a client in connection with the advertising belongs to the client. That’s too bad. Normally the advertising, and perhaps any advertising the agency produces after the icon first appears, should be the client’s.

Or so says the Association of National Advertisers. But some would argue as I have in my book, “Chasing Big Ideas,” the IP rights to characters, graphic ideas, etc. should reside with the agency. If the client wishes to use it after leaving the agency—a rights fee should attach. And even while the client is with the agency, if the client wishes to use the agency-created icon in any medium other advertising, further payment should be made—at least I believe so: You make that duck into a line of clothing or an energy drink, you pay.

It’s hard to be firm with a client who is dangling a multi-million dollar assignment and playing hardball. It starts with agencies early in the pitch process establishing the own ground rules. You want us, with our dynamite ideas and new thinking, then there are certain things we demand.

Jay Chiat is the last guy I knew in American advertising who would have walked after winning an account if the terms weren’t right or the client tried to change the deal. There ought to be plaque put up to honor his orneriness.

Toyota Finds Itself in the Brand ER – and Most of Its Wounds are Self-Inflicted

Irony of ironies, now Toyota is a poster child for brand neglect. Having bested GM for two years running to become the largest sell car company in the world, Toyota finds itself losing market share in key markets; losing its reputation for quality for the first time in the U.S.; being criticized for faulty engineering, making ho-hum cars with no zip; and losing touch with its customers.

The December 12^th issue of the Economist has a cover story entitled “Toyota Slips Up” arted with a big fat banana. It details many of Toyota woes. In China, for instance, where it lags behind VW and GM, it has been “slow off the mark” to compete on performance and pricing—with market share dropping two points.

In Europe it is criticized for offering too many boring models. In the U.S. it is experiencing a series of image and engineering problems across a wide spectrum of measurements, including those of J.D. Power, Consumer Reports and Strategic Vision, which bases its “Total Value Index” on feedback from 48,000 buyers. In an annual study of three-year-old vehicles J.D. Power placed Toyota behind Buick and Jaguar.

But what is not mentioned is Toyota’s long history of lackluster marketing, which in the U.S. has been particularly pathetic over the last 10 to 20 years. People working at Saatchi & Saatchi and DentsuAmerica, Toyota’s current agencies, will not talk about Toyota’s marketing.

But I know from research on my book, “Casting for Big Ideas,” that Toyota’s North American management has little interest in creating impactful advertising, saying that it could virtually sell out its inventory of Camrys and Corollas without any advertising and post its near $1 billion in media expenditures towards sales discounts and profit. When asked why Toyota didn’t do that, my source merely shrugged his shoulders, and told me: “They don’t want to be accused of not understanding the value of good advertising—but they don’t want to commission it either.”

The fact is part of the loss of a halo effect around Camry and Corolla has to do with the failure of Toyota to upgrade styling and in-car features to keep pace with market gainers Hyundai and VW. But also to Toyota’s failure to re-enforce brand loyalty and perception with memorable advertising. You can’t keep pumping out semi-annual Toyotathon marching bands and silly commercials with balloons and stupid sales patter and expect to have any lasting emotional impact. Toyota’s advertising at all levels is predictable and forgettable.

Toyota’s new CEO, Akio Toyoda, 53, grandson of the founder, was blunt in speaking to the Japanese press that the company could be locked into a spiral of decline. And certainly some of Toyota’s problems have to do with how any big company ossifies as it reaches No.1 and begins to regard itself as a Master of the Universe. We here in America have lived with that realization while we watched our three great automakers, GM, Ford and Chrysler, slowly slip into irrelevancy over a 40- to 50-year period.

But improving Toyota’s reputation in the U.S. is not just a matter of better engineering—although for a brand whose bedrock values quality and safety its problems in these areas must be immediately corrected. Brands also need nurturing. I like to compare mature brands to great singers such as Paul McCartney whose new CDs are still very much in demand. Like McCartney, legacy brands must be continually re-invented and renewed with the creation of new sounds and ideas, new kinds of connections in the digital space and old kinds of promotions such as a national tour to spark interest. Most of all they need to have their contribution to the culture trigger excitement and interest.

When you talk about cars you may be talking about simple utility – four wheels and a motor to get you to the grocery. But you can’t help wanting more than transportation. We choose a car that makes us happy every time we crawl behind the wheel and becomes such an extension of ourselves that we are proud to show it to others.

Toyota has somehow forgotten that simple lesson. You can be sure it has been told about its failings by countless consultants, ad agency gurus and car magazine writers. But I don’t hear Mr. Toyoda including marketing in his calls to the troops. At the Tokyo motor show he said, “I want to see Toyota build cars that are fun and exciting to drive.” Great if you can do that. But meanwhile start selling the inventory of Camrys and Corollas sitting on dealer lots right now. And down the road, re-discover Toyota’s core values and find innovative ways to communicate those values to the car buying public.

Toyota should expect more competition from Ford and GM—if not the newly reformed Chrysler-Renault partnership. And VW and Hyundai are not far behind. So Toyota has to make cars that fun to drive in a hurry. And I’m looking for advertising that is fun to listen to and watch. It might take three years for Tokyo to begin spitting out a new generation of Toyotas. I believe a new attitude toward brand communication should start right away. For a brand that is already caught up with a failure to live up to the brand promise it took half a century to build, starting this new kind of conversation with consumers can’t start soon enough.

When It's Time to Pass the Baton

Compass Points today is about the fine points of building an agency brand, with a salute to the life’s work of my good friend Mike Hughes.

In the early ‘70s Mike was a newspaper writer who was bored with being “an ink-stained wretch” and was starting to think advertising might be an interesting career. He walked his news clips around Richmond, Virginia to show Harry Jacobs, then the legendary creative director of the South’s only interesting agency, Cargill Wilson & Acree, then to David Martin of the Martin Agency, and finally to a little Richmond office of Chicago agency Clinton E. Frank, where they put him to work writing ads for Reynolds Metals.

Finally Harry Jacobs, who had just moved over to the Martin Agency as a full partner with Martin, called Mike in for another look and hired him. In those days the Martin Agency was a swinging Southern hotshop, where writers and art directors like Luke Sullivan and Cabell Harris would put in a day’s work, and then repair to a bar or someone’s home, and do ads for non-profit clients. Their after-hours agency had a several names like Drinking Buddies Advertising, and Harry tolerated it because he was getting good work from these “kids” – and because their clients were no threat to the Martin Agency’s trajectory.

In the ‘80s the Martin Agency had the standard roster of accounts like banks and utility companies – but where it excelled was in ads for agricultural BtoB clients who wanted to sell their herbicides to farmers in obscure publications—and didn’t mind what the agency did in their ads as long as they worked. Suddenly the Martin Agency’s quirky work for cattle feed was winning metal in the big national shows.

Then, about 1990, Harry and Dave decided it was time to sell the agency to a big national or international agency – and settled on becoming a wholly owned subsidiary of Scali, McCabe Sloves, which, in turn, had become part of Ogilvy. About this time, Martin Sorrell bought Ogilvy to fill out his other network purchases and inherited Scali and the Martin Agency. Marvin Sloves had some issues with Sorrell and arranged for the agency to buy back its stock; only to turn around and sell it again to Frank Lowe, whose London-based agency had in turn become part of Interpublic. (Dizzying, isn’t it.)

These deals couldn’t happen in today’s universe, but Martin Sorrell had been beat up by another creative shop he bought—and didn’t see how letting Scali/Martin go would interrupt his longer term strategy.

It’s not clear why Frank Lowe wanted Scali and its Southern appurtenance—other than that he admired the work being produced by these agencies.

As things settled down, David Martin took his money and pushed off—leaving the agency to Don Just and Harry Jacobs. As the ‘90s wore on, Don handed off client service and administrative duties to John Adams, who took the title CEO, and Harry became chairman and handed off creative to Mike, who took the title President/CCO.

Mike was able to light up the creative sky again—thanks to a campaign starring a wily, green lizard with a funny British accent, which [along with some cranky cavemen] made Geico the country’s top automobile insurance company, and, then again, when he made drab, dependable UPS a talking point, with the campaign “What can Brown do for you?”

At the same time, in his off hours, Mike was serving as chairman of the board of the “The AdCenter,” the country’s only masters-awarding, creative advertising graduate program, at Virginia Commonwealth University.

Mike recruited Rick Boyko from Ogilvy to run the AdCenter. Under Rick, some new faculty members and a distinguished board, the school suddenly became the leader in portfolio-based, creative advertising training. The school (recently renamed The BrandCenter), continues to rank high not only as a creative center but against the MBA programs at the leading business schools which increasingly are adding a creative branding component to their curricula.

Now, almost 40 years after joining The Martin Agency, Mike has brought in John Norman from Wieden & Kennedy to be his successor as chief creative officer. Mike will continue as president of the agency to help John Adams, try to begin to make it a global creative shop—similar to what Wieden, Fallon and Bartle Bogle Hegarty have become.

“Establishing distance offices has always been difficult for me,” says Hughes, “because I was anal and wanted to watch the work all the way through [from concept to execution].” But Hughes says it’s time. He and John have named three younger partners-- Beth Kelley, head of HR and “manager of creative:” Matt Williams, a senior planner and John Norman-- to begin the transition to running an international shop on their own.

Mike is a gentle giant, known the world over in creative circles, but hardly a household word among clients. That’s, in part, due to the way he generously credits others for the agency’s successes and, in part, due to his seemingly light but firm management style. He says he isn’t disappearing from the agency scene and if anything is more "motivated" by his new duties. But he has earned almost every accolade the agency world has to bestow, because of who he is and what he and John Adams have accomplished from their out-of-the-way, red-brick-and glass base in Richmond.

Mike gets the Compass Points 2009 award for brand building—both the agency’s and his client list (which now includes Wal-Mart), hands down.

One of the hardest tricks in all ad-dom is to manage this kind of transition. We’ll see if he and John can pull it off. There was nothing sadder for me this year to see Cliff Freeman have to close its doors and go out of business; and, earlier, to see Fallon/Minneapolis essentially become part of Saatchi & Saatchi. There should be another way to keep great agency brands alive.

Building Brands Online: A Contrarian View and a Wal-Mat Whopper

I’ve never felt comfortable with specious arguments, pseudo-science and voodoo-thinking that has sought to prove that brands can be built online with the same speed and depth of feeling as occurred in “old” media—or, as I call it, “legacy media.”

I agree that a brand should have roughly the same message wherever consumers touch it: in advertising, through customer-service, on a website or when they meet a brand at an event or in the social media jungle now growing up around Facebook and Twitter. But merely giving the consumer a clean, honest interaction – even if it leads to a sale—isn’t the same as engaging consumers and connecting them to the brand, long-term.

Or at least I’m skeptical of that claim.

Now the Interactive Advertising Bureau and Bain & Co. have combined to produce a report, based on an in-depth survey of 700 brand marketers, that shows most online sales organizations have lacked the “sophistication” to turn perceptions and encounters into real brand building as opposed to direct response transactions or sales.

This must have been a hard report to release for the IAB, which has argued for years that the Web is a premium brand building territory. But Randall Rothenberg, the IAB president and a trusted writer and editor who toiled on the edges of the industry back in the legacy heyday of the ‘80s and ‘90s, said that most brands are missing the opportunity for “engagement” and other interactions that will create long-lasting bonds with consumers.

So this segues nicely into a solid analytical piece from Adweek by Brian Morrissey on how brands have to be more careful in cracking the code to becoming a treasured iPhone App.

“Many brands have tested its waters,” he writes. “[But] brands face an uphill battle getting noticed in the iTunes App Store.” And even when they do, it’s amazing how many of them stumble into the trap that they are creating their own media properties, according to Eric Litman, CEO of Medialets, an iPhone analytics ad platform.

Says Ken Wilner, CEO of Zumodi, brands that hire an outside developer and end up with nothing more than a glorified ad are kidding themselves if they think they have built a meaningful connection with consumers. “There are a lot of snow globes and novelty-type ideas [in the Apps space]. They don’t sustain usage,” says Wilner.

Morrissey singles out Amazon Mobile; Bank of America; Kraft; The North Face; Virgin Atlantic; Volkswagen; and Pizza Hut, as brands which best delivered the critical value of “utility.” MasterCard’s Priceless Picks; Budweiser’s Bud American Ale Finder; Puma’s Puma Index; Burger King’s Burger King Now; and General Motors’s GM Mobile were among the Apps he tags as having missed the real opportunity in this space.

It seems to me a no-brainer what can be done with Apps. If I’m looking to book a flight, some airline should give me easy access to what they charge on that route—and if appropriate, what the competition is charging—and what are the times. That’s utility. But what happens if you’re Coca-Cola? Then I think Coke should help me get involved with some of the great events they sponsor—like the Winter Olympics—or just do something that is obviously fun and, if possible, refreshing in its wit, so at least the brand’s “tone of voice” and core message is maintained.

Footnote: Wal-Mart gets caught in one big fib.

Wal-Mart makes the claim in its advertising (out of The Martin Agency, Richmond, VA.) that the “average family” will save more than $3,000 a year shopping at Wal-Mart.

It turns out, according to a report from “Marketplace” on National Public Radio, this calculation is based on a study by IHS Global Insight. But what it doesn’t say is that the IHS study showed the “average family” would have to spend more than $83,000 a year shopping to achieve such savings. And that a family earning closer to the national average of $51,000 would only save $640 a year.

Furthermore, in making its claim, Wal-Mart is taking advantage of the way it screws down manufacturers to the lowest possible price point, creating a “floor price” that competitors (Target, Home Depot, Amazon, etc.) then have to meet. According to Charles Fishman, author of the book, ‘The Wal-Mart Effect,” “the headline number is technically accurate but misleading.”

Getting Wal-Mart to tell the truth has, historically, been a problem. But the brand is supposed to have mended its evil ways, under the watchful eye of Richard Edelman and his PR gnomes—who for a time, reportedly took in a hefty $10 million fee. Having paid that kind of penalty to rejoin the family of “civilized” brands—it would be a shame if Wal-Mart started getting slimey again. Come on, Wal-Mart, make an honest connection with consumers that stands the test of time.###

Hot off the Compass Points ticker...More on Starbucks, Maurice Levy!

If you’ve reading this blog these updates will make sense to you.

1] Nescafe Fights Back. The instant coffee field may be a $17 billion market, but there are already some established players and they aren’t going to let Starbucks in without a fight.

Nescafe has been spotted in New York setting up tastes tests where Starbucks’ Via is presented in a Starbucks-like cup and Nescafe’s Taster’s Choice in a mug. A poster behind the table reads, “A lot of hype OR a lot of flavor?”

It still seems wacko to me that Starbucks, while giving Via another name and separate packaging, is having its baristas try to hondle Starbucks customers into trying it. Why not just put it on grocery shelves and promote it on its own?

Well anyway now we’re in the middle of an Instant Coffee war. You can be sure this war will soon be extended into advertising and street promotions. That reminds me. Our troops in Iraq and Afghanistan have to drink instant coffee as part of the MRE (meals ready to eat) packages. Who makes it?

Writes blogger rubberbrandman (Chris DiAlfredi):

“The Starbucks board of directors, and the brand decision-makers that answer to them, will happily continue to dismantle everything that was good about the brand. "Via" dumb moves like foraying into instant coffee.

“The sheer magnitude of the Starbucks investors' greed, versus the sanctity of the brand defies logic. These short-term goals and thoughtless brand extensions, like Via, represent a new lesson for what not to do with a successful brand. 



“Howard Schultz is practically a marketing genius, but his biggest mistake was letting Starbucks go public. His second biggest mistake was coming back to his baby after his eight year break. This is really just sad to watch.”

2] Maurice Levy feeling the heat from client procurement officers.

Levy, of course, is not alone. I’ve seen data that up to 75% of the very big (over $200 million) advertisers are using procurement officers, and obviously their job is to keep pressure on agencies to cut their fees. Why? Because to them it’s a commodity business.

Levy is quoted in Media Daily News as saying: “There is huge pressure on procurement. I’ve seen a few heads of procurement in 2009. And they’ve said it is not a job anymore. It’s a mission. I am on a mission. I need to cut by X, Y, Z percent…we are facing serious difficulties.”

But he was happy to report that his “sophisticated” clients are moving their business to Digitas and Razorfish, his two leading digital agencies. “What will happen in the future – which could be very good news for people like us—is that we may come to a solution where we will be paid not on service, but on value and on deliverables. And deiiverables are measureable…which will be highly, highly positive for us.”

Levy said at Razorfish, his newest purchase, it’s seeing a rather pathetic 6% to 8% margin this year. He didn’t give the margin on Digitas, his biggest play. So his optimism here seems to be for the near future. He also said while the two shops might share tools and practices, he planned to keep the brands.