A few thoughts about brands/advertsing

It wasn't very long ago when brands ruled the marketplace; examples include Tide, Campbell's Soup, Crest Toothpaste, and so on. But big retailers helped to kill off brands by private labeling and producing generic products that were exactly the same. Now consumers are king, individuals make choices based on price and quality so there is a lot of parity in the market place. So how does a company succeed in this environment? One example is Nike, who created brand loyalty through the use of endorsements with athletes such as Micheal Jordan. We all know how well that worked for Nike but what a lot of people forget is that Nike took a $20.00 shoe, and with the help of Jordan's name, was getting upwards of $200.00 for its new Air Jordan; supply and demand at its finest. Once Jordan retired, Nike began its grassroots marketing campaign that is courting every school it can by creating partnerships. Another company that is great at grassroots marketing is Apple. When we first started our Post Production facility, very few people talked about Final Cut editing software. Today, because of the great discounts that Apple provides colleges, most of the young editors are very proficient on Final Cut, so Powerhouse is now starting to buy Mac's, where we have always been PC based and Avid driven.


Steve Jobs is great at making people fall in love with his products. We don't talk about MP3 players, we talk about iPods. So by creating an emotional connection through its marketing campaigns, Nike, as well as Apple, have been able to demand more for their products in a very competitive marketplace. Like I've always said, people have to want the product more than they love the money in their hand. There is no doubt that you can create brand loyalty through personalities and a sense of interaction with the people and the products they use. Television best allows this interaction and emotional connection. In the years to come, television and electronic media will become even more interactive but right now and in the immediate future, the television is still king. Televisions are accessible, most families have at least two of them, and people know how to use them. Television is the first place people go for information and on average individuals spend 2.5 hours of their day in front of the tube. It has always been our goal at Powerhouse to reach the masses and capture households, all while entertaining our viewers and educating them on a personal level. The programs we produce have been successful and the companies that have chosen us to promote their products have all benefited.


We feel in order to have insight into consumer behavior you need to fully understand your customer - advertising agencies should understand your customer as well, not just advertising trends, etc. When you understand the customer you can have the foresight to act before the competition does. Even though there is a lot of parity now in the marketplace with quality and price often being equal, it's important to establish an emotional connection to your product - and this can happen when television ad campaigns are done right.

THE ECONOMY AND ADVERTSING

If you’ve heard me talk about the economy lately, then you could probably quote me as saying, “I think consumers are concentrating on two things right now; gas prices and groceries.” But consumers aren’t the only ones feeling the pain of inflation fueled by rising gasoline and grocery prices. Inflationary pressures and a rocky economy are forcing businesses to adjust as well. Some companies are really suffering, such as trucking companies, while others are adapting and some are even profiting, like Wal-Mart and other discount chains.
The average inflation rate for all products in February was 4 percent, according to the U.S. Department of Labor’s Bureau of Labor Statistics. The food and beverage inflation rate was slightly higher at 4.5 percent but both pale in comparison to the spike in gasoline prices during the last year. The average price of all gas soared 33 percent during the past 12 months based on a sample of prices in 80 cities.
The soar in gas prices definitely has an adverse effect on the auto industry which spends more than half of its ad revenue on TV. Auto industry analysts have lowered U.S. car industry unit sales forecasts several percentage points to around 15 million light vehicles (passenger cars and small trucks). That compares to more than 16 million sold vehicles last year and a recent high mark of 17.3 million units in 2000. The much discussed economic slowdown, falling home values and rising commodity prices, particularly for gasoline, aren’t helping.
This doesn’t look good for the nation’s TV networks. Automotive is crucial as the largest category in U.S. Advertising, accounting for 10.2% of total U.S. advertising in 2007, according to TNS Media Intelligence, while second-place financial services weighs in at 6.1%. While expectations are low for automotive –a category whose fortunes ride a roller coaster- there are some bright spots emerging, according to B&C’s Robert Marich. For starters, TV is expected to keep its share of automotive ad spending despite carmakers’ infatuation with the web. “There is little evidence that advertisers are shifting budgets away from television,” says a recent report about U.S. online automotive advertising from consultant JupiterResearch. While forecasting that automotive new media spending will soar from $1.1 billion in 2007 to $3.4 billion by 2012, JupiterResearch notes consumers still watch plenty of TV.
“Research shows that TV advertising drives a lot of Web usage, so I think TV will remain important for automakers,” adds Charlie Rutman, CEO of MPG North America, the media buying agency that places $3 billion in North America ad buys annually. The places you are seeing a decline are in magazines and radio, as well as declines in out-of-home, such as conventional billboards and transit ads. Indeed, auto TV advertising seems to be holding ground even as automotive internet spending alone rose 20% in 2007 to $750 million.

Even though the economy seems weak, unemployment remains low and parts of the economy are strong, such as technology and export manufacturing (helped by the weak dollar). As families start to cut back on extra expenditures, such as movie rentals, eating out, etc, HH impressions should increase and benefit those companies that are aggressively seeking market share through consistent television exposure. I’ve often said during tough times, those companies that continue to run commercials and generate interest in a declining market will slowly gain market share from their competitors. I’ve used the car companies with their significant research dollars to prove the point that television advertising should be where you are spending the majority of you ad dollars. I also want to reiterate how important your website presence is and the fact you should consider running banners on different sites besides the ones you’re already on. For instance, Waterfowler TV receives over 300,000 unique hits each month the program is on the air. All of Powerhouse’s programs drive viewers to the web and ultimately delivers proven consumers to our advertisers.

Are you ready for Digital TV?

More than 13 million households with television sets that can only receive analog broadcasts are currently unprepared for the transition to all digital broadcasting that is scheduled for February 18, 2009, according to the Nielsen Company. Another 6 million households have at least one television set that would no longer work after that date.
“The change to all-digital broadcasting is the most significant change in the history of television, because unlike other advances such as color, older television sets will no longer be able to receive television signals without a converter, “explained Eric Rossi, Senior Mgr, Product Leadership of Nielsen’s digital transition preparedness team.
Nielsen found that adults over 55 are better prepared than younger households; and Whites and Asians are more ready than Blacks. More Hispanic households still rely on analog, over-the-air broadcast television than non-Hispanics.

· 10.1% of all households would have no access to television signals if the transition occurred today.
· 16.8% of all households have at least one analog television set that would not work after the switch.
· New York is the most ready local television market and Portland is the least prepared.

These estimates are based on the same national and local television rating samples that are used to generate Nielsen television rating.

As of November 1st, 2007, 13.7% of TV households in the U.S. were equipped with an HD television and HD tuner capable of receiving signals in HD (HD Capable), while 11.3% are equipped with an HD television and HD tuner and receive at least one HD network or station (HD Receivable).
Los Angeles has the highest penetration of HD Capable homes (20.4%) and New York has the highest penetration of HD Receivable homes (17.5%). Nielsen also reports that among U.S. Hispanic or Latino households, 10.4% are HD Capable and 8.2% are HD Receivable. Among African-American households, 8.1% are HD Capable and 6.9% are HD Receivable.

TV HHs /HD Capable
FYI- Dallas-Ft-Worth 2,435,600 /425,420
Atlanta 2,310,490 /345,680
Detroit 1,925,460 /238,830

Other Relevant TV Facts:
· There were an average of 111.4 million TV homes in the U.S for the 2006 -07 season
· The average U.S. TV home has 2.5 people and 2.8 television sets
· 28% of U.S. TV homes have Digital Cable
· 64% of homes have wired cable hook-ups and 23% have satellite or specialized antenna systems to receive television signals
· 82% of U.S. homes have more than one television sets at home
· 84% of U.S. homes have a DVD player

Housley's Footnote: All full-power analog TV stations must, by law, stop analog broadcasts as of Feb. 17, 2009. Now he asterisks: That date still holds unless a bill currently in Congress is passed, in which case stations on the border with Mexico would not have to stop analog broadcasts until 2014 so that their Mexican viewers would not be denied their signal. Stations near the Canadian border might not be switching to digital on Feb. 18th either. Rather, than send workers to the top of towers in the middle of winter in Maine or Montana, the FCC will give some stations the flexibility to shut off analog early, or decease their coverage areas. Then there are the low-power and translator stations, thousands of them, that won't be switching over to digital on Feb, 18th at all. Many low-powers won't be making the switch until 2012 or so. Anyway, the converter coupon program as going well, but the DTV clock countinues to tick.

The Impact of DVR Playback

From time to time, I am asked how I think DVRs are affecting outdoor television and especially how time-shifting has affected commercials as a whole. I didn't want to give just my opinion so I did some research-

Playback from Digital Video Recorders (DVRs) is increasing the amount of time people spend watching television, according to new data from The Nielsen Company. In comparing total television usage (Live viewing plus DVR playback) for persons 18-49 in November 2007, to total television usage in November 2005 (before Nielsen measured DVR homes and penetration was very low), Nielsen found that viewing had increased slightly throughout the day and was three percent higher at 9:00 pm and five percent higher between 11:00 pm and midnight. This has implications for prime time viewing levels in the future because as the number of DVR households in the U.S. population grows, DVR primetime viewing will likely rise as well.

We all know that consumers/viewers are watching more television because of DVR playback, and in reality, they are creating their own personal television schedules based around their favorite programs and interests.

Providing new insights into time-shifted audiences, Nielsen identified three distinct groups of DVR users based on how much they time-shift:

• Heavy Shifters are primarily middle income women, ages 18-49, who record and later watch nearly 26 hours of televison - or about half of their TV viewing - a week. Males, 18-34, are least likely to fall into this group.
• Medium Shifters watch somewhat more televison than the average person; about a third of their viewing is time-shifted.
• Light Shifters, who represent nearly 70% of all persons in DVR households, watch less televison than the average viewer. With incomes that exceed $100,000 and the most prone to own a high-definition TV set, they spend only about 10% of their television time with time-shifted programming, watching shows they would otherwise have missed.

Nielsen also reports that time-shifting is not evenly distributed by forms of programs. As would be expected, most viewers prefer to watch news, sports and movies live. On the other hand, general dramas, such as House, Grey's Anatomy and Heros, are most often recorded and viewed later, for one-third of all time-shifted content. Among other types of programming that is heavily time-shifted are talk shows like Oprah, soap operas like The Young and Restless and reality televison shows such as Survivor, The Biggest Loser and Dancing With the Stars.

So, how does all this relate to outdoor televison? Frankly, outdoor advertisers are getting a great deal for their ad buys on average. Outdoor televison is reality TV at it's best and consumers are DVRing the shows right and left as well as watching them live. Having a good airtime is nice but not totally essential. From an advertiser's angle, you want to be involved with programs that are more engaging. Typically what happens in a show that is more highly engaged - where people spend more time focused on it - the attention to the ads is higher. Generally, the attention to the ads depends on the strength of the creative, but a good commercial in a highly engaged show will perform better than a good commecial in a show that is not highly engaged. So you want both. I also believe you can purchase block time from the networks and request to run these commercials next to the programs of choice but those companies that are promoted and a part of a popular program over time will come out the big winners.

Broadcast and cable networks are paid based on their programs' ratings(this is unusual for outdoor television), and are pushing forward with their annual upfronts(time buys), with some kicking off as early as this week. Some of the networks are even pushing for "live plus seven", this shows the strength of DVR statistics. Last year, despite having to cut deals based on a new currency, which included three days of DVR statistics (The C3 metric was adopted last year), as well as live viewing, networks were able to squeeze out increases in upfront sales, closing the market with $9.19 billion committed from advertisers. This was up 5% from the year before.

Ad Agencies and the Outdoors

One of the trends I've noticed in recent years is that companies in the outdoor industry feel they need to hire large advertising agencies in order to promote their products. It's almost as if some of these companies feel the more they spend on "marketing expertise" the better decision they have made. The funny thing, is that nationally larger companies are hiring smaller and smaller agencies everyday to create their ad campaigns. Why is this? For one, the internet has leveled the playing field. It's now easier than ever for an agency, based wherever, to create work and share ideas with the push of a button. Also, as audiences have become harder to reach, larger firms have started using smaller agencies that are often more in touch with the potential customer. I remember one time while sitting in a wall tent in Montana on an elk hunt, I asked the president of a large outdoor company who it was that oversaw his marketing and advertising plans. He informed me that there was a new young lady at the advertising agency he'd been using that would be handling his account. I asked him, "Is she a hunter or has she grown up around hunting?" He told me that she was not a hunter. My next question was, "Then how can she decide how to market to hunters and what avenues of advertising will be the best for your company based on the products you produce?" He paused for a moment and then asked himself the same question. Now don't get me wrong, I don't believe that you have to know everything about a product to market it well, but as far as the hunting industry is concerned, where dollars are very limited and competition is as fierce as ever, I would want to make sure that I was reaching my target audience, with the right message, through the right avenues.
"When choosing an advertising agency, companies want to see a return on their investment", said Bart Cleveland, who writes for Advertising Age. "The larger agencies work like larger corporations," he said. "The more levels and layers you have, the more time it takes, the more money it takes." Cleveland says clients with large marketing budgets are finding that smaller agencies sometimes offer the experience and capabilities of larger agencies without the overhead costs. "And companies want a personal relationship with the people creating their ad campaigns, he said". "At the larger agencies, the people who pitch the account to potential clients are rarely the ones who work on it", Cleveland says.
At Powerhouse Promotions, we believe in a personal relationship with our clients. I used to think that being a small production house was a negative, but not any longer. I see us doing a better job for our clients than what they had experienced before because we know the outdoor marketplace inside and out. We are real hunters with creative ideas. Everyone at Powerhouse has a college degree in different fields and experience in different areas. Almost everything we do is outdoor related but that is what we are known for and what we are good at, and our clients realize this.

Advertising / Marketing Principals

I’ve had numerous inquiries lately about my advertising background, consulting services, and marketing principles. First of all, I do consult businesses on an hourly rate as well as formulate marketing plans and construct media buys on a percentage basis. I do accept additional work from time to time, but keep the number of clients I work with very limited.

A lot of advertising agencies talk about the amount of research they do for a client, and research can be very important especially if you aren’t an outdoorsman or are new to the sport. I’ve been very surprised by the number of large and small outdoor-related companies that hire either a full time marketing manager or an advertising agency that has little to no hunting and fishing experience; no wonder they need to do research. Often times their marketing plans are quantified by the numbers only. I agree that the number of households, demographics, etc are very important but they are not the only thing to consider when it comes to outdoor advertising. Outdoor marketing is a different beast, and knowing outdoorsmen's perceptions, thought processes, past product successes/failures, the different types of hunters and game by region, are just a few things that also need to be considered and can lead to better market share and penetration. One of the main reasons I was successful in the fishing industry is because I had it in my veins, I lived and breathed fishing, boat designs, trailer designs, national advertising campaigns, etc; and that’s actually what I’ve been doing in the hunting industry. I base marketing plans off what other industry professionals tell me, what the networks are saying, what I hear from hunters at dozens of hunting camps/shows across the country, what the numbers say, and what my years of sales experience has taught me.

I started selling early in life; at first, door to door for school projects, then at age 14 I started selling newspaper subscriptions after school, and eventually moved on to selling athletic shoes at the mall after wrestling practice. By the age of 18, I became the youngest salesman in the Tulsa area for new and used cars. My point is that I have a lot of different sales experience and I've always been a top producer. I’ve done well because I’ve always studied my customers, studied my products, educated the consumer, and I always make sure the deal is win/win for both parties. By doing a good job for your clients through sales/marketing, takes hard work, determination, and drive. I've always been an extremely hard worker but I’ve learned through the years, that being the hardest worker doesn’t always make you the most profit. You need to have a good plan that is flexible to change and revision, as well as evolve and become stronger as it reacts to the market. I’ve always believed in keeping marketing plans fairly simple so that they might actually be fully implemented, if a marketing plan seems complicated then it probably hasn’t been thought out thoroughly enough.

I tell companies in order to be successful with any business you need four things:

The right PEOPLE
The right PRICE points
The right PRODUCTS
And the right amount of PRODUCTIVITY

One of the things you’ll notice in the outdoor industry is that most of the companies copy one another. They copy products as well as concepts. The outdoor industry as a whole needs more original ideas and companies need to look outside the box more often. Businesses are unique so their marketing plans should be as well. If you’re advertising is too conventional, then how can you expect to outperform the competition?

All in all, it’s about a return on your marketing dollar; you spend money to make money, you want and need to stay competitive. I believe in not only staying competitive but thriving as well, taking market share from the competition, creating new avenues, and seeking new markets.
Thank you for your time. If you would like to consult with Jason about your outdoor product or idea, give him a call at 501.525.9240 or send him an email at Jason@Pwrhousetv.com.