Friday, July 20, 2012

Skip the Commercials? Who’s Footing the Bill?

As networks are trying to fit more commercials into their airtimes, it appears that some satellite broadcasters are coming up with new ways for viewers to skip them altogether. A new feature called AutoHop, included in Dish digital recorders, allows viewers to skip commercials on recorded shows from the big four broadcast networks – ABC, NBC, CBS, and FOX. This innovation turns the screen dark when the commercials arrive, and returns to the show a few seconds later.

As a result, several broadcasting networks have planned to take Dish network to court, saying that the ad-skipping feature violates copyright laws and threatens the financial system of the television industry. Companies could decide to stop airing their commercials on networks, because they’re afraid that viewers will just skip their ads using AutoHop. Since commercial broadcasters make their revenue by airing television advertisements, networks stand to lose substantial profits without companies to fund their shows.

Original television began with commercial sponsorship and later transformed to paid commercial time. In fact, the earliest soap operas, as name suggests, started out by having laundry detergent companies act as sponsors and producers of the shows, which were designed to reach daytime viewers and the homemaker target market. Now that technology is making it easier for viewers to skip ads, how much can networks rely on advertising as a source of income in the future? Networks already incorporate spin-off games and toys, product placements and Internet advertising as sources of income.

TV commercials won’t disappear anytime soon, but AutoHop is a clear example of the industry’s changes and challenges. Even I don’t love seeing lots of commercials or hearing blatant plugs for soft drinks and Ford F-150’s. But the truth is that someone has to pay for our entertainment. In the end, that’s you and me. How we’ll pay for it is the unanswered question. 

Tuesday, July 3, 2012

Failing to Re-brand an American Brand

JCPenny’s new “everyday low pricing” policy, similar to Walmart’s, has gotten off to a terrible start. The new marketing campaign, that ditches the hundreds of sales offered throughout the year and instead goes with what is touted as a simpler approach, offering low predictable pricing, has produced a significant drop in sales - nearly $170 million - in the first half of 2012.
It's clear that JCPenny has been recently trying to revamp its marketing strategy. In addition to the sudden exit of its president Michael Francis in only eight months, the company changed its brand logo for the second time in two years to remind the consumers of its American values. What they now call "JCP" also partnered with Ellen Degeneres to make her the spokesperson of the company and has planned to build brand partnerships with Nanette Lepore and Martha Stewart Living. And all this happened in the last six months. Maybe the moniker "Penny's" came off too low end for management, but it sure does bring to mind something instead of the "could be anything to anybody" name of JCP.  

Originally, this campaign made JCP look like a serious competitor in the department store market. Unfortunately, as big sales to lure consumers have disappeared , the campaign has actually driven away many of its bargain-driven consumers. To make matters worse, the growth revenues of JCP's competing apparel retailers, such as Kohl's and Macy's, have increased because of this new marketing policy. It even appears that JCP's everyday low prices ended up being higher than its rivals' heavily discounted prices.

JCP has hinted that it will tweak its no-sale policy by offering some specials. Their strategic blunders have led to many corporations re-examining the values of their audiences before implementing sudden marketing strategies. Looking at the current economic environment, companies must determine the consumer base that will be most effected from such dramatic changes in marketing campaigns. Plus, this failure is a shining - more aptly described as tarnished - example of how critical clarity in marketing communications has become. I wonder if they would have seen better results if JCP had kicked off the concept with a "what's this all about" campaign. While it still may have been too tricky to "get" in a 1-second consumer-reaction window, step-by-step simple-to-understand is what's needed to compete in this arena. However, even that may not have been enough to save this giant. Only time will tell - but it's running out fast.

Company Overview: JCPenney or JCP is a publicly-traded company with more than 11,000 department stores across the U.S. and Puerto Rico; most are located in shopping malls. Providing middle-of-the-road merchandise, JCPenney has been a popular destination for finding affordable items without the top brand names attached, developing many of their own brands.