Name Change 101

They were called Aquadots.

Last holiday season, cable television networks with my kids’ ear started advertising a new product. The concept seemed pretty simple: The young “artist” used what amounted to an oversized syringe to squirt colored gel dots onto a special “canvas.” Think of a gooey “Light Bright” (remember those?).

Well, just like Light Bright, kiddos swallowed a fair number of the squishy blobs, confusing them with a delicious M&Ms treat.

For most incidents like this, unless there is a risk for bowel obstruction, the problem—uh—passes all on its own within a couple of days.

No permanent harm done.

But these little blobs were different. Apparently, no one at Aquadots HQ thought little kids would eat bite-sized candy-mimicking morsels, or bothered to test the product for toxicity. As it turns out, they did, and they were.

Scientists in Australia found that the chemical coating on the beads, when swallowed, metabolizes into gamma hydroxy butyrate—the “date rape” drug. Yikes.

The ensuing recall spooked parents already jittery over lead-based contamination from China. It took little time for moms to blacklist the product and ruin the product image forever.

I, like most dads only casually aware of the outrage, put it out of my mind. That is, until my wife saw an ad on the Cartoon Network for “Pixos.” Almost immediately, she yelled across to my home office: “Hey, they renamed Aquadots! They’re back! How could they do that? Don’t they think we’d remember?”

After hearing my wife’s comments and hitting the online bulletin boards, I quickly learned that the similarity was no accident: Aquadots were re-engineered (into non-toxic candy-mimicking blobs) and christened “Pixos” just ahead of the holiday rush.

The marketer in me can see their point: Sales numbers told them people took to the idea, but a supply chain oversight sank their chances in ’07. The hope was that people would remember the product positively, and not associate it with its negative erstwhile name.

A classic case of “the idea is good, but the packaging was bad.”

This sentiment was echoed by the official company line (from the Pixos.com Web site). To paraphrase, the company is going to great lengths to assure customers that the “great play experience” will remain the same, and that the product has been rigorously tested by real-life scientists!

Before I humbly render a verdict, let me share a couple of scenarios in which the name change of a product is called for, and even beneficial, and conversely when it is not, or could be considered deceitful.

Scenario 1: The company (or product) has fundamentally changed. It is no longer what the original founder or invented created, and the name no longer represents the new reality in the eyes of its customers. In that case, a new name makes good business sense. From a branding perspective, the name is the focal point of all communication efforts—it must accurately reflect the true nature of the company or product.

Scenario 2: The company (or product) has changed hands, or merged with, another line—whether competitive or complementary. That makes sense as well. The new business relationship may not be in sync with the new brand, and a reintroduction is in order. It is a chance for the new entity to stake out a new, and more reflective, value proposition.

But the Aquadots-to-Pixos transition doesn’t pass the smell test.

As much as I can understand the want to put the past behind them, and launch what they feel to be a solid product that got caught in an unfortunate turn of events, it is hard to not feel as though the move is a bit deceptive.

Moms have a long collective memory. Do something that puts kids at risk, and you risk their collective pocketbook wrath.

A better choice? Do what the politicians do. It might seem an odd juxtaposition, but think about it for a second: When politicians really screws up—I mean really screws up—what choice do they have? They can’t change their name. They need to reinvent themselves.

And that’s exactly what Aquadots needed to do. They needed to come clean with American parents. To tell them they understood what happened and have taken specific steps to ensure it would not happen again.

Then you might have a chance. Albeit slim. But at least you won’t come off as trying to hoodwink parents.

Simply flashing a “safety tested” banner across your Pixos ad when word leaked is not good enough.

As it stands, the analytics are likely to paint a scattered picture. Retail sales across the board are trending much lower, and it will be hard for the folks at Pixos to know what effect, if any, their naming scheme had on sales, or if the whole thing backfired. In other words, they might look at bad numbers this year, and conclude this fiasco had nothing to do with it.

Maybe.

All I know is that seeding distrust—however unintentional—is not a welcome holiday treat.

Micro Lending and the Future of Macro Banks

Unless you have spotless credit—and even if you do—banks just don’t trust you right now.

One could say that is the very crux of the pickle we find ourselves in: Banks can’t trust you when they can’t trust each other, and bank-to-bank lending has essentially frozen. They also can’t trust each other when they can’t trust the government to come to the rescue—tell me again, who is too big to fail?

To make the situation worse, your neighborhood bank looks at the same jobless figures you do. They see 6 percent becoming 8 percent very quickly. They see 8 percent peaking perhaps as high as 10 percent by mid-2009. Let’s be blunt: The average “you” is risky business.

But you need a car. Or a student loan. Or a line of credit.

If the banks won’t give you the money, who will?

It turns out, everything old is new again.

At the University of Wisconsin-Eau Claire, when we teach entrepreneurship students about initial financing options, they learn the acronym “FFF.” It stands for “Friends, Family, and Fools.” It’s the good old-fashioned option to get a loan when no one in his right mind would give you one.

But for many of us with penniless friends and dysfunctional families, a new type of micro-lending uses technology to connect lenders and borrowers.

Perhaps you’ve heard of it: Peer-to-Peer lending, or P2P for short.

Essentially, individuals with small sums of money to lend (a few hundred up to many thousands of dollars) can search for needy individual borrowers. There is no bank in between; P2P lending organizations simply run the logistics of payment calculation and money transfers.

Sound risky? You bet. But is it riskier than a loan shark, a guy named “Tiny,” and a baseball bat?

For that increased risk, lenders earn a handsome return—somewhere between 7 to 30 percent.

Of course, there is a downside. Without a structure in place, default rates trend higher, especially over the medium term. To hedge that, the average lender needs to know something about risk profiling and underwriting—not unknowable, but tricky.

Given the significant risks, why is P2P lending successful at all?

The idea works on the concept of the social network: People who actually know the person lending them money are more likely to be personally bound to repay it.

All that said, the market is very new, and some would say, quite a mess. Prosper, Loanio, and LoanClub have stumbled in their early stages. All true, but the new industry will likely get a chance to stabilize itself. That open door comes courtesy of the diminishing brand image of the banking industry.

As banks become larger, they tend to become more and more isolated from their average person. TD Ameritrade’s “Ted” character and Charles Schwab’s “Talk to Chuck” campaign are two sad examples of financial institutions grasping at straws to make you feel as though you can personally connect to their company.

The larger banks get, the more services they can offer, but the less personal they become. Ted and Chuck are advertising hoopla, and little more.

There are also the trust issues. Why should we trust the bank as the sole source of financing? Two more of them failed over this past weekend: Franklin Bank in Houston and Security Pacific Bank in Los Angeles. That’s number 18 and 19, if you’re keeping count.

P2P lending, by contrast, is thoroughly authentic. It’s personal. It’s tangible. It’s one person helping one other person.

The technology has been in place for years to make this work, but the market opportunity blew wide open with tightening credit and the rise of powerful social networks. (Facebook and LinkedIn have yet to partner up with one of these providers, but I am sure that’s coming.)

The more successful P2P becomes, especially with younger buyers, the harder banks will need to work to get them back later, even if credit does loosen up—and it will.

Don’t believe me? Answer me this: How many of your 20-something friends still own a landline phone? How many, by contrast, use only a mobile phones?

Banking, for many people, isn’t much more complicated than that. P2P is unlikely to simply “go away” when credit loosens up.

So what’s the answer? The industry could flex its lobbyist muscle and put the regulatory squeeze on this business as it is doing in some states, but I think that misses the point.

The banks are letting this industry take off right under their noses. In many ways, they have lost touch with the average borrower. It seems to me the prescription here is to get closer. Get personal. Give loan officers individual control and look at unique circumstances.

But what do I know, I’m just a P2P lender . . .

AT&T–Visa Rebates: Yet Another String Attached

It was only a $25 rebate.

After months of relentless advertising and a shiny new iPhone 3G, AT&T Wireless finally lured me away from Verizon.

To console myself, I reasoned that most AT&T customer service horror stories were either apocryphal or exaggerated; my experience with the company in 1999 and 2000 seemed uneventful enough.

So there I sat in the AT&T lounge signing away the next two years of my life. And for the trouble, I was to get a $25 mail-in rebate. Fair enough.

Eight weeks later (no joke, I kept track), the rebate arrived … as a Visa debit card.

I was a bit confuddled, but I understood AT&T’s point. A debit card was not cash, but in many ways (for those who do not have access to “traditional” bank accounts—more people than we may want to admit) the Visa debit card is more useful than cash.

In addition, because it required activation, it was more secure than a check.

As a strategic partner, Visa has to like it. They get a sliver of every transaction.

Finally, because the debit card would record and store transaction records, AT&T would be able to glean customer buying habit information, link it to phone records, and boost the value of its database immensely.

So. Good for AT&T.

And as I came to find out: bad for me.

Because I ported my wireless number from Verizon to AT&T, the rebate activation code was tied to the temporary wireless number set up with the account. Do you think I knew what that was?

You guessed it. Unable to activate it, the un-activated card sat on my desk for the better part of three weeks.

Finally unwilling, in principal, to let even $25 go, I hunted through the automated activation hotline options to find a real person. Who transferred me to another real person. Who finally gave me the 4-digit code I needed.

After 22 minutes (I timed the call), the $25 VISA card was activated and ready to use.

Other than the 22 minutes I’ll never get back, and the time value of money for the 11 weeks of waiting, and the fact my every purchase with this card is being scoured and sold to the highest bidder, why else is this such a raw deal for the general consumer?

First, while estimates vary wildly, AT&T knows mail-in rebate redemption rates hover between 20 and 50 percent for amounts under $50. That means a majority of buyers will never mail in the form.

Second, of the percentage who do redeem, AT&T knows the activation rate for debit cards, while high, is not 100 percent. Another slice off the top.

Third, make it tough to activate the card (there lots of people like me, who port their numbers), and you whack another few percent off the overall redemption rate.

Finally, activated and un-activated cards expire unless states have laws passed against it. And not all do.

Even though GAAP (Generally Accepted Accounting Principals) forces AT&T to keep un-activated card values on the books as a liability, that doesn’t mean the company can’t and won’t leverage the additional dollars for cash flow purposes versus hitting the commercial paper market.

Of course, all of this is designed to make the end price of the iPhone and related accessories appear lower.

But I think what AT&T risks—by making their process even more complicated than most—is the continued erosion of its brand.

In the cell phone market, most people are drawn in by the technology (the iPhone in my case), and that’s a good thing. Providers clearly are along for the ride, made evident by staggering churn figures despite early termination penalties bordering on usury.

Should that ever change—read: phones are decoupled from their providers on a large scale, and an iTunes-style phone service market emerges, or legal rulings stand forbidding exorbitant termination fees—providers are in serious trouble.

The good news, of course, is that a massive decoupling in the market would likely improve service for everyone.

Until then, they only have to worry about persistent penny-pinchers like me.

Your Hotel Television Is Watching . . . You

Selling non-television video advertising is a lot like selling vitamins.

You have a sense they’re good for you, but it’s hard to quantify. In the vitamin market, this lack of connection between concrete results and dollars/effort expended limits the overall size of the market when compared to the commercial prescription and over-the-counter pharmaceutical markets. (Chiropractors, take it easy, I’m with you in spirit, but the numbers don’t lie.)

The same can be said for video advertising in places such as hotels, health clubs, and gas stations. The demographics look good. The audience is captive. Your dollars should generate good results over time. But beyond those generalities, the details get sketchy.

Nielson On Location media is looking to fix that.

To put it simply, Nielson On Location media is a suite of measurement services designed to provide viewership data for video exposure not in front of your television, computer, or mobile device.

Make sense?

If not, let me give you a few examples.

On Location Media tracks viewer data from Gas Station TV (GSTV). In other words, when you’re filling up your tank, stations in 425 cities show short video advertisements at the pump. It’s still new, and GSTV’s reach is still limited, but it’s growing fast. This is essentially the same idea behind IdeaCast Airline TV—where you are even more captive for a much longer time—but the technology is expensive, and only really in place on longer-haul jets and routes.

In both above examples, a deeper dive of the information here could possibly link general demographic information—if you use a credit card to pay for gas, or simply merging your flight reservation data—to the ads you see. Creepy or clever? You decide.

But wait. There’s more.

Arena Media Network is similar but only on a larger scale. Detailed profile data from high definition displays inside sports stadiums is hard to come by—without advanced AI and eye tracking software, it would be exceedingly tough to tailor ads to specific groups, or to even tell if anyone was watching. But you do get another captive audience and a pretty tight demographic. You could see the same idea at work in malls with OnSpot, or in your local health club with Health Club TV.

Buzztime does the same for restaurants. As I learned from Mike Anderson of Green Mill Eden Prairie last week, always-on televisions not only provide entertainment, but also create the impression of a lively atmosphere.

The Hotel Networks— mentioned in my, perhaps inappropriately, Orwellian headline—allows data crunching from hotel room viewership. Don’t think many people spend time watching the tube on vacation or business? Think again.

So here’s the point: Besides the somewhat raw assumption that “more data is better,” what does Nielson hope to gain with these additional services?

First is most obvious: Follow the money.

On location media is a $1.3 billion market and has not been even reasonably tracked to this point. By contrast, when an advertiser wants to place a television spot to reach a specific demographic, Nielson and others can provide reasonably tight data on viewership.

But non-television/internet/mobile device video media has no such corollary. That has made advertisers skittish. It also has prevented the industry from growing as fast as it could.

Second, the proliferation of Tivo and DVR devices makes television data tracking much tougher. Nielson has data package answers for this, but ad-skipping is a huge issue. (Why do you think last summer’s Transformers movie had a role dedicated solely to product placements?)

Third, and most importantly for people like my friend Mike, is the earnings potential for the “on location” venues themselves. If Mike can show he captures a specific, coveted demographic, he can earn additional revenue. Score!

Those are all good reasons, but they don’t touch the core issue.

Perhaps most importantly—and certainly important to a data cruncher like me—is the increased role the on-line analytics experience has played in shaping the expectations of advertisers.

Answer me this: If I can use Google Analytics to follow the viewer of my video banner ad through to my landing page, then into my Web site, then into my on-line store, then through checkout, and then through follow up survey, then why can’t you tell me who’s watching the television in the health club?

Oh, but it’s different, you say. That’s Google. No one is “clicking” at the health club. It just can’t be done.

The excuses are no longer good enough. Advertisers have a taste for data now—and they like it.

If you can’t provide data to justify an ad expenditure in today’s market, you’re done. And you answer had better be compelling.

Nielson lives in a new world. To remain the dominant information broker for off-line advertisers, this new service package is only the first step.

Destroying Tiffany Lamps Won't Be Enough

It was a $2.39 Diet Coke (the price for which I could not find on the menu) that got me whipped up.

I was very close to an indignant diatribe on rapidly escalating (and cleverly mysterious) drink prices compensating for shrinking main entree margins. Ruby Tuesday was my intended target.

But then I thought better of it. Wisely, I think.

If you consider the situation restaurants like Ruby Tuesday are in, you could forgive a bit of creative pricing.

Applebee’s has the “neighborhood bar and grill” image going for it. Their strategy is part celebrity chef, part cheap drinks, and part real estate saturation. It works for them.

TGI Friday’s is “fun.” Though not as ubiquitous as the apple, they are a bit livelier. Seems to be working.

Bennigan’s tried for a bit more upscale. It didn’t work. Houlihan’s is trying the same thing. It’s working. For now.

Red Robin does burgers. And free fries. Okay, I can see that (the parking lot in Shoreview, Minnesota is always full).

And I will bet you could name a half dozen other restaurants—just like these—that fill the “casual drinking/dining” segment.

Even as a schooled segmenting analyst, this market leaves me a bit confuddled. I think it would take a Ginsu knife to slice this tomato any thinner. And that’s precisely Ruby Tuesday’s issue. What segment can you possibly, realistically, believably, own in the hearts and minds of the dining-out public? Their answer to this point has proved pretty weak: Slightly upscale, yet still casual, American cuisine.

As their new ads profess, gone are the “flared” uniforms (remember “Office Space” and Jennifer Aniston?—very funny). In their place are simple black T’s. Gone are the fill-your-face, 10-for-a-dollar appetizer specials. In their place are better tasting selections, slightly smaller portions, and reasonable—but not rock-bottom—prices. They kept the salad bar. They ditched the gaudy Tiffany Lamps. (In fact, the commercials feature what appears to be a drunken interior decorator unleashing pent up anti-1980s angst.)

But in the end, do you believe it? Is it different enough to make you want to change your plans?

Perhaps the bigger question is: Does it have to?

Industry data shows this segment as the fastest growing dining-out category. That beats all categories of fast food, even as new sandwich shops spring up like weeds to dethrone Subway. This segment is an analyst’s dream: You get to tease apart race and ethnicity data, time of day analysis, menu combination testing (who orders what with what), taste trends, snacking patterns, and even facial recognition and real-time customer profiling—every piece of data becomes gold when branding at the macro level fails to produce tangible results. That’s why these chains tweak their menus as often as they do; throwing more money into broad-based advertising won’t cut it. Those days have passed. They bank on number crunchers.

All that said, I remember the proliferation of casual steak places in the 1990s and early 2000s. They did all that stuff too. Name three that remain today.

Needless to say, none of that helped me dissect this situation.

To get some perspective, I called Mike Anderson, the owner of Green Mill in Eden Prairie. I asked his advice for a pretty simple reason: He doesn’t have a staff of analysts, nor can he rely on an eight-figure advertising budget. Despite all that, Green Mill has a solid brand and a loyal, consistent clientele.

At first, he explained Green Mill’s differentiators: solid food, a great bar, lots of activity in the restaurant (live television is key)—and unique to Green Mill—pizza delivery. To his customers, Green Mill is the better alternative to a cheap Pizza Hut/Papa John’s/Domino’s pizza. If you could get Green Mill pizza delivered right to your door, would you pay a bit more? Sure you would.

All well and good, but that was not the real secret.

Here it is: A great restaurant is only as good as the personal attention of its owner. An involved owner is the key to building the one-on-one relationships that keep people coming back week after week, and year after year. And the better your regular customer base, the less you rely on big-budget advertising.

Could it really be that simple?

Could it be that when branding delivers diminishing returns, and the number crunchers are out of answers, that it comes down to good old-fashioned customer service?

I think Mike is right. And he didn’t have to defile a single lamp to do it.