Premium alcohol brands endanger bottom line

A report has found rough economic times have had a ‘keeping up with the Joneses’ effect on Australian’s drinking behaviour.

Consumers are opting for quality over quantity when their choices are on show says Datamonitor’s report, ‘The Future of Wine/Spirits/Beer, Cider and Flavored Alcoholic Beverages Series: capitalising on new opportunities and preferences’.

When drinking in bars or restaurants people are choosing less of premium brands rather than trading down. When at home however, the report claims consumers are drinking cheaper alcohol.

“It is typical keeping up with the Joneses behaviour just exaggerated during the recession. In a significant number of cases people are actually trading-up, so rather than drinking two or three bottles of house wine with a meal, they’re splurging on one top-end bottle” said Richard Parker, senior consumer insights analyst, Datamonitor.

“Although people are sticking with quality, they are drinking less impacting on the bottom-line of the industry. Companies that have introduced offers and cut their prices will struggle to maintain a reputation for being a premium product.”

“As a result people will start to trade-up to new products and experiment. Therefore, we can expect to see those products that have spent money on innovation do well in the near future.”

Post-GFC talent retainment

So far I’ve written about citybranding. We know that it is an emergent topic that involves large amounts of thought and practice in the field of communication. And we know that the need for cities to carefully brand themselves comes from the way capital and talent move in a globalised world. Today’s post is about the fact that, in my opinion, it all entails essential communicational changes inside companies.

The credit crunch may have slowed down that movement to a considerable extent, but before the crisis I was already amazed when seeing how talent flew from one place to another, from one company to another. Many friends and acquaintances of mine, single or married, took on the challenge of leaving Barcelona to work in the US, or changed job once every year on average. It wasn’t only people working in IT. The professional profiles ranged from that to business management, publishing, industrial production…

At some point I even wrote an editorial about it in our magazine Comunicas? (translation: Do You Communicate?)but through the lenses of quite a well-known book. You probably have read The Human Factor by Graham Greene. I asked the reader to allow me to spoil the reading by disclosing the ending. In the novel, a man finds himself before a dicotomy in his priorities. He has to chose between being completely faithful to his family or betraying his own country. The situation is especially meaningful because he works in the Foreign Office. His country is both his employer and his social community, all at once – and he betrays it for the sake of being true and loyal to his family.

Outstanding professionals are ultimately more loyal to their professional and personal priorities than to those of the company that employs them. Hence their continuous flight. As I said before, the credit crunch may have slowed down that movement to a considerable extent… but after the crisis, talent will fly again, and even more so.

These dynamics will be reinforced by two important factors. First, it is obvious that among the developed countries, economies emerging and moving away from the crisis will be the ones that best reward talent. On April 8 in Barcelona, European commissioner Androulla Vassiliou said that one in every three new jobs created in the EU between now and 2020 will be a highly-qualified working position.

Second, dynamics such as the competition among cities (read my blogposts on enjoyable Barcelona or pleasant Paris and their governments’ will to boost a knowledge-based economy) will give further reasons for outstanding professionals to fly and give new places a try.

The answer to that phenomenon or, say, to the risk of excellent professionals leaving our companies, lies in the area of internal communication. Managing people means being aware of what their professional concerns and challenges are, and it even means having a glimpse at what those concerns and challenges are at the personal stage. Graham Greene’s book has it that the mismatch between those issues is the reason for the flight, meaning the escape, of the novel’s main characters.

I hear, for instance, that 70% of women end up leaving their professional area of expertise between the age of 30 and 40. The main reason is maternity. Lack of corporate planning and support force them abandon the boat after their maternity leave: an unbearable loss of talent which costs a fortune to both employers and employees. Fortunately initiatives such as maternity coaching are becoming more frequent and allow a ‘maternity transition’ that avoids both business and career disruption.

So we’re talking about a cultural change in business organizations that the Anglo-Saxon economies have addressed a lot more than we have in Europe and in Spain. Generally, Human Resource departments have transformed themselves from being a mere administrative unit to assessing each department leader for the sake of intellectual and human capital management…

…but have they, really? That’s what the usual quote from Dave Ulrich is all about: “HR must give value”. It was a need in the field of internal communication before the crisis, but it will especially make a difference after the credit crunch.

Speak soon,
Pau

Staff equally content and dissatisfied

A recent Robert Walters report has found 49% of professionals nationally will be looking to move roles when the economy stabilises. Correspondingly, 51% will be happy to stay put.

Sales, marketing and communications professionals were the second most unsettled, behind secretarial and business support staff, with 62% keen to look at the employment market when the economy recovers. Of those looking to move, 38% are motivated by better pay/bonus structures, while 31% are seeking a new challenge.

From the 49% looking to move roles in a recovered economy, 37% want to begin their search in the next two months and 40% will wait until the New Year. Those in the legal profession are most loyal, with nearly 100% happy to stay in their current position. Queensland professionals are most content, with 65% claiming they won’t be looking to move roles when the economy picks up and positions are more plentiful.

The majority of those looking to move are motivated by career advancement opportunities (31%), followed by 21% who are seeking better pay and bonus structures. Just 6% sought a larger, more stable organisation.

“Retention is key for organisations even during times of increased unemployment. A downturn is traditionally one of the hardest times to motivate staff, yet it is one of the most important. Companies should have clear retention strategies in place to ensure they keep hold of their top talent – the market will turn once again and companies who have fought to retain their top talent will be ahead of the game,” said James Nicholson, managing director of Robert Walters.

Consumer confidence up year-on-year

According to Roy Morgan, consumer confidence is at 124.9, up 3.7 points week on week and 27.7 points in the past six months.

The current rating means consumer confidence is up 23.7 points from September 2008. Roy Morgan asserts the upswing is a result of positive consumer belief for Australia in the long and short-term. In the long-term, 50% (up 2%) of Australian expect ‘good times’ economically for the next five years, juxtaposed with only 10% expecting ‘bad times’

Short-term, 43% (up 4%) believe we’ll have good financial times for the next 12 months. Conversely, 19% say we will experience ‘bad times’. This figure, down 1%, is the lowest since December 2007.

Australians expecting their family to be ‘better off financially’ this time next year have risen 1%, to 42%. Correspondingly, Australians expecting to be worse off this time next year dropped 1%, to 12%.

“Significant for Australia’s important retail sector is the strengthening of the ‘buying major household items’ indicator with 50% (up 2%) of Australians saying now is a ‘good time to buy’ and only 18% (down 5% to its lowest level for two years, since October 2007) saying now is a ‘bad time to buy’ major household items,” said Gary Morgan, executive chairman, Roy Morgan.

How the economic downturn will mature internet marketing

The world economy has been in state of disarray. As companies fail we can take some small comfort in the fact that these types of events help markets evolve. So what is going to happen to marketing on the internet over the next few years?

Before we dive into that it is worth looking back to other major technological booms and their influence on the marketplace. Electricity and rail were both boom industries when they first hit. They were new and exciting and everybody wanted to get in on the action. In both of these industries there was an initial burst of investment and some people got very rich very quickly. Then the bubble burst and many of the companies that had set up to take advantage of these new technologies, yet had unsustainable models, failed. Standardisation, centralisation and ubiquity followed.

The dot com crash, starting in the year 2000, had much the same effect on internet based business. This has caused the IT industry to mature over the last few years. The economic models are better and there has been a lot of effort devoted to standardisation.

The real difference between the internet based industry and other technological bubbles is that the internet is decentralised by definition. In the case of the dot com crash, the rest of the world’s economy was incredibly buoyant and was able to absorb the impact of that crash. What we are seeing now is that the stage of internet ubiquity is moving incredibly fast. It is most other industries that are failing now: banking, automotive, retail and traditional media, comprised of print, television and radio, are all suffering. These industries are going to have to evolve to survive. It is widely understood that the way the market was interacting with each of these categories was changing, due in large part to the way the market was using the internet. The current environment is only going to speed that process up. In many ways, banking, media, retail, automotive and many other industries were already in trouble. This recession was simply the straw that broke the camels back.

One thing that we do know is that we can’t tell what the world economy is going to look like at the end of this economic slump but it is going to be very, very different to what it looks like now; and the internet is going to be at the centre of everything. Going back to the topic of this article, how is this going to affect internet based marketing? Simple answer: massively.

Over the next few years far more transactions are going to be moving online. With the internet’s potential for marketing campaigns to go viral, most industries will have to start thinking about sales beyond their own geographic boarders. As a user’s activity can be tracked with far greater accuracy than most conventional media so the definition of what marketing is, and the whole advertising industry in general, will have to change as well.

There are still a lot of unknown factors about the future of internet marketing. What we do know is that all research suggests that the internet seems to following the famous Moore’s Law. By all estimates it will double in size about every five years. At this rate the web will surpass all other media in the very near future.

The future is unmapped, and to many the unknown is terrifying. To others it is the most exciting time to be alive.

What pints did for Royal Mail

Maybe it’s because I am a home brewer, but I love the idea of strolling down to the pub and collecting my mail. That’s what you can do in the UK now thanks to the UK’s Royal Mail and www.useyourlocal.com.

According to useyourlocal.com there are 52 pubs a week closing due to the tough financial conditions. Together with the Royal Mail, they are giving pubs another service option which hopefully means they do more business and stay open as an integral part of their local community. Already 500 pubs have signed up for the service.

I also love this as a PR story. It has everything – a real human connection, big business support, a topic that is close to the heart of a nation and a great outcome – and they have been getting media attention from all over the UK to boot.

This idea kicks goals for everyone because the businesses involved fit so perfectly together in terms of what they can contribute and get out of the equation.

Royal Mail gets ‘Post Offices’ that open longer, in more locations, and parcels delivered the first time (their big issue solved for them). The receiver of the parcel gets to pick it up at a time and location that suits them (ditto). The local pub gets to offer more to the local community which gives the customer another reason to visit and the possibility of buying more product from the landlord (and ditto again).

It’s interesting that it took a global financial crisis to make something like this happen – adversity is the mother of invention and all that. The Royal Mail has always had the same issue of some 40 million unsuccessful first-time delivery attempts per year but hadn’t found a solution to the problem until now.

If you want to craft a new service or opportunity and want to know what will make it appeal to customers and the media alike, this is a great example of what to do.

The companys website says:

At UseYourLocal we truly believe that local pubs and clubs can be a real force for good in our local villages, towns and cities and hope that this is just the first in a series of great ideas aimed at finding creative solutions to help breathe life back into local communities.

I for one am looking forward to the next instalment.

What do you think?

  • A clever idea or just encouraging more alcohol consumption?
  • What is the Australian equivalent – dry cleaning pick ups at the footy?

New data shows ad market on rebound

Standard Media Index (SMI) data indicates Australia’s advertising market may be recovering.

Figures were down on the previous year, but average spend across channels was up 9% in August compared with July. Individually magazines, OOH and cinema were big winners, up 41%, 32% and 19% respectively. Other channels experienced recovery, with TV, radio and digital up 5%. Newspapers gained 8%.

SMI said the online advertising market had slowed to 8% growth from highs of 22% in the first half and 10% in the second quarter of 2009. Online advertising was the only major category to register growth between July and August.

This is the first good news to emerge for the media sector for months. SMI figures show the media agency advertising spend has been falling most of the year, so to see a change in direction can only be seen as positive news for the media sector, said SMI publisher Jane Schulze.

If sustained into September, it could suggest the end of the worst advertising downturn in living memory.

SMI aggregates the booking data of Australia’s top media buying agencies by individual media each month.