BCA

Procter & Gamble, the FMCG giant, is looking to substantially increase the amount of revenue it generates via the internet, and will heighten its digital adspend to help achieve this goal.

Forrester, the research firm, reported that eCommerce retail sales reached a value of $156.1 billion in the US last year, a figure it predicts will grow to $229.1 billion by 2013.

Nielsen also estimates that only one third of Americans currently buy packaged goods on the web, although it forecasts sales levels will see an uptick of at least 20% each year in the short-to-medium term.

At present, online delivers just 1% of P&G’s annual revenues, or $500 million, a total the world’s biggest advertiser hopes to drive to $4 billion going forward.

Lucas Watson, P&G’s global team leader, digital business strategy, said “some categories see as much as 30% to 50% of their business in e-commerce. Our forecasts don’t suggest consumer products will ever work like that.”

Despite this, he argued it is “not out of the realm of possibility eCommerce will be more than 1% of our sales. Getting north of 10% would be an aggressive goal, but somewhere in between that would be, we think, within the realm of possibility.”

The Cincinnati-based company has recently started adding links to the online portals of various retailers to its own brand websites, a programme it now intends to roll out globally.

During the first quarter, the owner of Tide and Pampers also boosted its digital advertising expenditure, taking the medium’s share of its budget to 4%, TNS found, and this did not including all search, video and targeted ads.

“Whether it’s an investment in a banner ad, in a search-marketing ad or in a shopping experience … we will look at all of those and their ability to drive revenue for our company,” said Watson.

“The ability whenever the consumer raises her hand and says, ‘I’m ready to buy,’ to connect her directly to a purchase rather than have her wait and go to a store, we think of it as providing better service,”  he added.

Moreover, Watson suggested marketing mix models have shown digital advertising is providing P&G with a strong return on investment, even though “many people predicted it would not happen that way.”

Printed with permission of the World Advertising Reseach Center

Data sourced from AdAge; additional content by WARC staff, 09 September 2009

By John Riley

Company culture is so pervasive and omni-present, it often goes unacknowledged.  And yet it is one of the most powerful business forces impacting on employees trying to do their jobs and outsiders seeking to do business with the company. The casualty rate can be high.

 For example, take the up and coming young manager who is trying to sell his management on changing the production process of a major product.  The unwritten cultural norm that developed over time says each product would be inspected by the Quality Assurance manager or his designate rather than using a statistical sampling system which the young manager advocates.  If the young manager is going to succeed here, he will need to know how to change the culture.

Cultural habits and norms are powerful reinforcements of the status quo.  If you don’t understand the culture, you can’t change it.

When a consultant tries to do business with a company and is retained to undertake a project, she walks into a cultural environment of which she knows nothing.  Her acceptance and ability to be effective in the company depends on how well she assimilates the nuances  of the crowd and quickly identifies the informal thought leaders with whom she will need to bond.

 Because the outsider is not of the company organization, her ability to change a cultural element will depend largely on her creditability with and trust of the CEO or President when she makes her report and recommendations.

 A culture develops over time, is deeply rooted and varies by industry.  Most often it is directly or indirectly driven by the CEO and his or her management style. 

 Whether an employee or an outsider, a culture change may be the only solution to achieving a desired result. It may not be quick nor will it be easy, but it can be done. Here are five approaches to consider.

 Change performance measures and incentives and realign employee objectives

Set up a pilot project to test the new method; let employees experiment with the new method.

Bring in new people with new ideas

Brainstorm different approaches to the quality inspection process

Benchmark best-in-process organizations

 Firewalls, or in this case the company culture, generally serve the best interests of the company, however, there will be those occasions where change is essential to the further development and success of the company.  The key is knowing what and when.

Today’s businesses, communities and leaders are all about change. The business media, the popular press and even many recent issues of Leading Effectively have focused on the fast pace of change, the need to adapt and the challenges of leading in times of great uncertainty. All the talk about change might have you believe that leadership itself has completely transformed, too. David Campbell begs to differ.

Campbell, whose groundbreaking work on career development made him renowned in the field of industrial and organizational psychology, is a CCL Honorary Senior Fellow.

Reflecting on a long career working with leaders from around the world, Campbell shared 21 observations of leadership with readers of his publication. His comments include:

1. Leadership can be taught, or at least learned. I am also fairly certain that it can be stomped on fatally.
2. A definition of leadership that makes sense to me is, “Actions that focus resources to create desirable opportunities.” I have been using this definition for years, but no one else seems to be impressed by it.
3. The world will inevitably focus on the frailty of the leader. If a leader scores a 9 on a 10-point scale, the 10 percent gap between reality and perfection will be what draws public attention — but, as the English say, better a diamond with a single flaw than a perfect pebble.
4. Creative leadership is distasteful to most organizations; it almost always creates unwelcome turbulence. The status quo will usually reign or, perhaps, suffocate. Leaders who attempt to be creative either have to be brilliant or be completely in control. It helps if they are both.
5. People in charge will hang on too long.
6. Two basic dimensions of leadership — task orientation and relationship orientation — have constantly appeared and reappeared in the leadership research literature. Both people and productivity are important.
7. Sooner or later, and it is often sooner, almost all organizations will demonstrate dysfunctionality. Even the simplest organizational tasks escalate in complexity over time, creating either bad feelings or poor performance. Simply assigning parking places or getting the coffee pot cleaned daily will eventually lead to friction.
8. Poor leadership is far more visible from below than from above, which means that in most organizations, those responsible for evaluating leaders — usually their superiors — are poorly positioned to do so.

Printed with permission of Center for Creative Leadership. Adapted with permission from Leadership in Action, Volume 28, Issue 4, 2008; Copyright (c) 2008 Jossey-Bass Publishers/A Wiley Imprint

By Giselle Tsirulnik

Mobile commerce still has a few years to go before consumer adoption gains strong momentum, according to research by eMarketer.

There are a couple of key growth engines such as the increasing number of smartphone users and new mobile shopping applications offered by retailers and third-party developers.

“One surprise is that upscale apparel brands like Ralph Lauren and Net-A-Porter have launched apps in the belief that some people are ready to buy $3,000 gowns and $1,000 pairs of shoes from their mobile phones,” said Jeffrey Grau, senior analyst at eMarketer, New York.

The report also found that more than 70 million U.S. mobile phone users will access the Internet from their device in 2009.

A number of recognized retail brands including 1-800-Flowers, Amazon.com, Ralph Lauren and Sears have launched mobile commerce programs so they can be where their customers go.

Nevertheless, mobile commerce is still in its infancy.

Web-enabled mobile phone users are much more likely to employ their devices to get weather forecasts, read news, find movie times and bank online than to buy products.

Consumers are willing to use their mobile phones to buy items such as pizza, movie tickets and travel reservations. And some have even used their devices to purchase consumer electronics, computers and apparel.

But mobile phone users say they would make more purchases if the process were not so cumbersome, products were easier to find and their devices supported secure credit card transactions.

A number of retailers and third-party developers have introduced mobile apps that give consumers powerful new shopping tools and added convenience.

But most retailers are either standing on the sidelines or in the midst of planning their mobile commerce strategy.

The main obstacles retailers cite for not moving more quickly are capital constraints, followed by consumer privacy issues and security concerns.

Retailers expect the primary benefits from mobile commerce will be improved customer loyalty and greater customer spending.

“One piece of advice is that retailers must take the time to understand how their customers like to shop and then design apps that are practical and that integrate with features on smartphones such as GPS navigation and address book,” Mr. Grau said.

“Also important, retailers need to consider the unique characteristics and constraints posed by the mobile phone,” he said. “Do not assume that an app can be designed in the same way as a Webpage.

“A Web designer does not think about the world from a touch-screen perspective. Trim down the shopping experience and make it easy to search and navigate.

(c) Copyright Napean LLC.  Reprinted with permission from Mobile Marketer (linked)

 

By John Riley

Starting a business can be an exhilarating experience. It’s your vision, your company and your bountiful legacy for the sons or daughters who follow you. But there’s another unintended course that your efforts might take and that’s the one you want to avoid. So the purpose here is to try and minimize the chance your energies and assets might follow the latter path.

 Before you spend a lot of time and money on pursuing your dream, some self examination is in order. If you can objectively evaluate four areas of your personal standing, the answers will give you a strong indication if you have a realistic shot at starting a company successfully.

 Business Skills:  Most likely, the business you have in mind is going to be a reflection of your experience and training over the past few years while you have worked for someone else.   Pre-existing contacts in the industry are an important result of that association.  Your business and market knowledge, and/or that of your associates, help establish your credentials.  Now you will need to assess how well you qualify in this category.

 Business Plan    A business plan is essential to your success for two reasons. First, it forces you to think about all aspects of your vision and the strategy you will employ to achieve that vision. Second, the plan will be a necessary requirement to get the attention of an Angel investor or venture capitalist. At this stage you probably have not written a business plan so you need to obtain a recommended outline of one from the many internet, academic or professional organizations that offer them free. With an outline in hand you can take each heading and ask yourself how you would deal with that subject.

 Financial Resources   In general, an entrepreneur should have enough funds to survive for six months to a year without personal income. It takes time to develop accounts and convert them to customers so you need to be prepared to operate for a few months without income. If you are selling a technology product or an engineered product, the time elapsed before you receive an order will be longer because of all the up-front specification and prototyping work that has to be done prior to a sale.

 Commitment    The brutal fact is that an entrepreneur who does not believe in his product or service will not have the fortitude to withstand those bad business cycles or customer indifference.  Some will think they are committed and can deal with adversity, but when the first difficult moments arrive, they bail out.  If you don’t feel the passion for what you want to do, then you should reconsider what you are about to do.

 When talking to a prospective entrepreneur, these are the four measures I use to assess if or not he or she has a realistic shot at starting a business successfully.  If nothing else, the entrepreneur will be much better prepared to meet the venture capitalist.

 

General Motors is planning a seismic shift in its marketing spend during the next three years – and where the world’s number one automaker leads, others will inevitably follow.

According to unnamed company executives, half GM’s $3 billion annual budget is to be rerouted from traditional media to digital and one-to-one marketing, including gaming, mobile and interactive.

The trend away from TV and print is reflected in recent changes in the corridors of power at GM Planworks, the dedicated Starcom MediaVest Group agency that services the automaker’s media planning and buying needs.

New president/general manager Ken Taylor is charged with reintegrating Planworks into its parent company (part of the Publicis Groupe conglomerate) although Starcom USA ceo Laura Desmond insists the unit would not disappear.

She declared: “As GM has streamlined and got more agile, it seemed only appropriate to move from a siloed business approach to a more flexible, nimble approach that’d allow them to access all our centers of excellence.” 
  
It will give GM, for example, access to Starcom’s branded-entertainment division and allow it to take advantage of the group’s buying and planning power. In addition, the automaker can tap Publicis’ prize acquisition, Digitas, for digital planning and execution.

GM’s North America vp for vehicle sales, service and marketing, Mark LaNeve remains zip-lipped about numbers and strategy details but did say: “Like all major marketers, we’ve moved into digital media in a big way, but the other media types are still very important and will still be a big part of our mix.”

Small consolation for broadcasters and publishers facing the consequences of economic meltdown in the US and elsewhere.

Rival Hyundai Motor America is also doubling its online adspend this year compared with 2007. Marketing vp Joel Ewanick proclaims ominously: “Online is getting to the point where it may be more important than the 30-second TV spot.”

Data sourced from AdAge.com; additional content by WARC staff , 19 March 2008  Reprinted with permission from World Advertising Research Center

Getting the most up-to-date business information has always been important for business executives. In the past, they scoured newspapers and the trades for information and insights on trends and developments. But now, to find information fast, they turn to the Internet.

According to the “Rise of the Digital C-Suite” study from Forbes Insights and Google, the Internet has become the most valuable information resource for US executives.

 Online ranked ahead of at-home and at-work contacts, personal networks, trade publications and outside consultants as an information resource. Newspapers and magazines trailed behind.

When it comes to locating business information online, search engines were rated higher than other digital tools, such as blogs, social networking sites and subscription search services.

 The most important information executives searched for online was competitor analysis (53%), followed by customer trends (41%), corporate developments (39%), technology trends (38%) and compliance and legal issues (26%).

Surprisingly, 53% of executives preferred to gather information themselves rather than delegate research tasks to employees.

“Senior executives of all ages found the Internet to be a profoundly useful tool,” wrote the survey authors.

Online information sources will likely grow in importance, as executives under age 50 use new media tools more often than their older counterparts.

C-suites will be even more wired in the future.

(c)2009 eMarketer Inc.  All rights reserved.  www.emarketer.com

Reprinted with permission of eMarketer, but we were unable to reproduce the charts. E-mail azjogger@cox.net and I will send you copies of the two charts.

Search is first.

While the answer may vary slightly depending on the size of the ad budget, a Forbes study says marketers of all sizes should start with search.

Forty-eight percent of marketers said that search engine optimization (SEO) was the best method for generating conversions online. More than one-half of marketers with budgets over $1 million agreed.

 The next-most-effective conversion tactic for smaller marketers was e-mail and e-newsletters, followed by pay-per-click and search ads, behavioral targeting and page sponsorships.

For larger marketers, the list of effective online tactics was nearly the same, except search and e-mail were flipped. Pay-per-impression ads were also more effective for larger marketers (presumably because they have the funds to experiment in an expensive medium).

To build, maintain or change brand perceptions required different tactics, however.

For both small- and large-budget marketers, site or page sponsorship and SEO were considered the most effective ways to build a brand online.

 Pay-per-impression ads came next on the list for big spenders, while the more budget-constricted focused on e-mail newsletters, pay-per-impression and viral marketing.

Perhaps in anticipation of the end of the recession (see A Short-Term Marketing Focus), marketers are changing their spending priorities in the six months after March 2009 to feature more viral marketing, SEO, behavioral targeting and pay-per-click.

Overall, 57% of respondents said they still spend less than 25% of their marketing budgets online.

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©2009 eMarketer Inc. All rights reserved. www.emarketer.com Reprinted with permission of eMarketer.com, but without the charts since we were unable to reproduce them.  E-mail azjogger@cox.net and I will send you copies of the three charts from Forbes 2009 Ad Effectiveness Survey.

Many executives believe that setting strategy is easy. Implementing strategy is the true challenge.”Our clients, like so many managers and executives, are pretty savvy when it comes to developing business strategy — even in today’s challenging context,” says CCL’s Laura Quinn, a researcher and manager of the Developing the Strategic Leader program. “They are more likely to struggle with leading in a way that helps them to implement and refine strategy. In other words, they need help with the ‘strategy for doing strategy.’”To close the gap between strategy and execution, organizations need to understand strategy as a learning process, says Quinn. “Formulating strategy is not an event followed by implementation. It is a learning process.” CCL works with senior leaders and management teams to develop the individual skills and organizational processes for strategic learning. Based on both research and practice, CCL’s Strategy as a Learning Process (SLP) helps clients focus on the external environment and apply the right deployment of resources to the right initiatives. The SLP model has five primary elements: Assess where you are. Strategic leadership requires a clear understanding of the competitive climate facing your organization. Do you effectively collect and interpret information about the organization’s external environment? Are you clear-eyed about your internal situation? Do you regularly and realistically assess your organizational strengths and weaknesses? Understand who you are and where you want to go. Strategic leaders need to understand the spoken and unspoken culture of the organization and its leadership. Examine your vision, mission and values. Imagine the company 10 or 20 years in the future — then look at the distance and direction you must travel to succeed. Do people throughout the organization share a common vision of its future? Do they embrace a common set of core values? Are the vision and values driving the behaviors you need to get where you want to go? Learn how to get there. How do you draw on insight, information and vision to determine priorities and formulate the strategy? Business strategy should be based on an understanding of key strategic drivers: the relatively few but critical determinants of long-term success for a particular organization in a particular industry. Do both bottom-up and top-down direction inform and shape the strategy? Does your organization have widespread, clear agreement on the two or three most important priorities in which it should invest its limited resources? It’s also important to develop a leadership strategy for addressing the human and organizational capabilities that are essential to implementing the business strategy. Do you have broad agreement about the culture and leadership behaviors required for future success of the business? Make the journey. How does strategy translate into action? What are the tactics to take to implement strategy? How does strategy seep into the lifeblood of the organization? Are decisions and behaviors throughout the organization consistent with the strategy? Check your progress. Strategic leadership requires a continuing assessment of your organization’s effectiveness. This involves looking at indicators of current performance compared with expected performance. Do your key metrics keep your organization focused on the two or three top priorities for strategic success? Do you have metrics related to developing future capability? Are adequate investments being made now to assure your organization’s sustainable competitive advantage in the future? “Strategic learning is much like the scientific process of hypothesis testing,” says Quinn. “Leaders formulate theories about what it will take for the organization to be successful. They then test their theories using, in effect, business experiments in which they implement tactics arising from those theories.” “Through these experiments everyone in the organization learns about what is and is not working, and the leaders use that new information to amend their theories of the business.”

By John Riley

In representing a group of venture capitalist firms in the western states not so long ago, I learned just how important the business plan process is in raising money for a business. My responsibility was to look for young companies that showed promise, do some due diligence and then if the company still looked promising, I would select one or two venture capital firms interested in the market involved and turn my recommendation and report over to them.

 It’s important to realize we are talking about a process, not a single act of writing a plan and submitting it. The decision to finance or not finance can occur at any point in the process. So understanding the process can make the difference between success or failure.

 Your objective is to create sufficient interest in your business that the investor will consider your plan viable and want to meet with you.  The business plan alone won’t get you the money.

 In general, venture capitalists are reluctant to fund start-ups that have no financial history. After a company has been in the market for three or more years, they have a record of success or failure in the marketing of their product or service. At that point, the venture capitalist can learn enough about the company and its product or service to evaluate the degree of risk.

 When you’re looking for seed money to start a business, the most likely source, other than friends or relatives, is the angel investor.  They are ready to invest with limited or no business history, but  the amounts of money are usually smaller than what the venture capitalist is willing to invest. If you decide to seek out an Angel, you can go to the Internet and post information about your company on GoBig.com.  Angel investors visit the site often.

 But, there is an exception.  When a company comes up with a product or service that is truly a breakthrough in design or technology and stands alone in the marketplace, investors, with checkbooks in hand and minimal concern for their business history, are ready to deal.

 When the company is ready to go to the market for capital, the need for a business plan comes front and center.  While there is no shortage of Internet and professional sources of information on the recommended outline for a business plan, the important thing is to have the information the investor wants in creditable form. While some entrepreneurs have written their own business plans, if the money involved is substantial, hiring a consultant to write the plan seems to be the preferred course. Depending on the size of company and the complexity of the business, costs for the plan can run from $4,000 to $35,000 or more.

 While there are many important information needs that must be provided in a business plan, there are four questions that are a good place to start:

1. Why does the market need this product or service?
2. How big is the market and what will your share be?
3. What’s your competitive edge; how will you protect your intellectual property or technology?
4. How much money do you need and how will you spend it?

 All business plans should have an Executive Summary up front to summarize the most important  information/data in the plan. It must be very well written because investors are usually swamped with business plan submissions so  they read the Executive Summary first and if it doesn’t capture their interest , the plan will probably go into the recycling bin.

 Among the reasons business plans fail, three are the most common:  1) the data and or information presented is exaggerated or unrealistic. Keep in mind, most venture capitalists work in firms that often have professionals on their payroll who know the markets they target very well and can quickly spot misleading or inaccurate information.

 2)  You don’t want to minimize or omit your plan’s weaknesses. No plan is perfect and the investor expects to see a problem or two that might threaten the accomplishment of your goals.  The key is to recognize the problem and then tell how you plan to deal with it. 3) minimize or eliminate opinions and present sourced data and professional or expert commentary on the market situation.

 Although there are many business plan structures, I use this one:

0.1              Background

1.0               Executive Summary

2.0               Financial Plan

3.0               Company profile

4.0               Products and services

5.0               Manufacturing

6.0               Market Analysis

7.0               Market Plan

8.0               Contingency plan

9.0               Addendums

 When your business plan is in hand, you may opt to contact your banker before considering a venture capitalist since the banker is primarily interested in interest income while the venture capitalist focuses on equity in the enterprise. Entrepreneurs often make the mistake of contacting only one or two banks and if that is unsuccessful, they give up and go looking for a venture capitalist.

 That’s a mistake.  Banks, like other businesses , target the markets they want to pursue. So if you talk to a bank about giving you a loan for your software company, the bank may not be interested in that market. However, other banks may be looking for software opportunities. The rejection may not have anything to do with you or your plan. The point is, contact five or six banks to give yourself better odds for success.

When you finally meet with the investor, he may tell you to redo part or all of the plan and suggest you format it his way. No need to be alarmed. Every investor has a way they like to have information presented and if they do want you to revise the plan, that’s actually a favorable reaction because you know he’s interested.

 Now that you have met the investor, she will have answered four basic questions about you in her mind… Does he:

1.  know this business and the market he wants enter?
2. have good business skills
3. have good people working for him?
4. really have commitment to his business?

 If you pass that test, chances are you are about to enter a serious negotiation for money.

 On average, approximately four to six months will have passed from the time you start the business plan process until you get money from the investor.  Don’t forget, this is a process and you can succeed or fail anywhere along this timeline.