Tuesday, January 10, 2012 | Edited by Daniel Moores
||The Secret Behind the Long Union of Allstate, Burnett
Like in Most Marriages, There's Sometimes Mayhem, but a Lot Can Be Learned From This 54-Year Relationship
Midway through an important meeting before the launch of a big campaign, Allstate Senior VP-Marketing Lisa Cochrane turned to the dozen or so people in the room and asked, "Does everybody here besides me know 'Safety Dance'?"
Her creative agency, Leo Burnett, had just shown her an ad featuring the hit song from the '80s. But it was foreign to Ms. Cochrane, and she wondered if viewers would be just as lost. A collection of media-buying and creative professionals from Allstate, Leo Burnett and media agency Starcom sat around a conference table littered with boxed lunches, coffee cups and soda cans. After a brief silence, her colleagues began to tease her. Of course they knew "Safety Dance." Who doesn't?
"It has 8 million views, by the way," said Charley Wickman, Leo Burnett's executive creative director, pulling up the video on YouTube.
Ms. Cochrane had her answer. The meeting moved on, with more banter, straight talk and enough laughs to liven up a tedious review of the final details of ads set to launch in days for a new claims offering.
When you've worked together for 54 years, as Burnett and Allstate have, this is how things go. There are no pretenses and no political speak. Most of all, no one thinks a misstep here or there will lead to a divorce -- a common fear in adland, where client-agency relationships are measured in months rather than years.
So how have they done it, and what lessons does their partnership hold for others? To get some insights, Ad Age sat in on a late-December meeting and interviewed key members of the Burnett-Allstate team. Here is what we found:
The Burnett-Allstate people get along, maybe because they spend so much time together. Team members meet every Thursday, usually in a conference room at the insurer's massive headquarters in suburban Chicago. Burnett, which is based downtown, has its own room on the site.
Ms. Cochrane sits in a large cubicle, not a separate office, to better facilitate constant interaction. "I would say probably 24 hours a week, I am with Burnett people in some way, shape or form," she said.
The practice became ingrained early in her advertising career, when Ms. Cochrane was at Ogilvy & Mather and assigned to the Sears account. At least twice a week she worked from an office on the 73rd floor of the Sears Tower, even though her agency was a short cab ride away.
"The client wanted me there with them," she said. "It was hard, but it was great for me and it was great for them. And that's kind of how I believe in working."
There was no question about who was running the meeting last month. Between sips of soup, Ms. Cochrane fired questions as the team went over radio, digital and TV ads for the "claims satisfaction guarantee" program, which promises compensation to customers unhappy with the service they get.
But as she drilled down into the tiniest details, Burnett didn't hesitate to push back.
Ms. Cochrane asked if they really needed a period after the sentence "Get the confidence of Allstate."
"It felt declarative," Mr. Wickman shot back.
"OK, you're the boss," she replied.
They threw another ad up on the screen, featuring a man having roadside trouble in the middle of nowhere.
"What was that noise? It sounds like crickets," Ms. Cochrane said, suggesting that it was too loud. "Is it too late to make a sound change?"
She then added, "I really want everyone to tell me if I'm just being petty."
Mr. Wickman replied, "I don't think it's that big a deal."
The back-and-forth illustrates a hallmark of this relationship. No one is reluctant to speak his mind.
"We don't want suck-ups," Ms. Cochrane said. But it's a two-way street, she added. Although "you have to challenge your agency, you have to be willing to go with them, too."
Things are not always rosy between Burnett and Allstate. In fact, they were downright awful in 2003. The insurer was feeling the heat from big-spending rivals Geico and Progressive, and it thought the agency's work had turned lackluster.
Instead of firing Burnett, Allstate pressed for changes on both sides. Recounting a critical moment, Leo Burnett North America President Rich Stoddart said that Allstate CEO Tom Wilson called Linda Wolf, then the chairwoman-CEO of Leo Burnett Worldwide Chicago, and told her: "I think I've got the B team on this business and you've got the B team on this business. I'm going to change my team, and you need to change yours."
In an interview, Mr. Stoddart said, "What do most CEOs do? ... Most of them tell the CMO to call a review. Tom Wilson didn't do that. He said, "We're at fault, you're at fault. ... We need to fix it.' "
Allstate faces the same, if not greater, competitive pressures now. Though it has recently lost market share (sometimes deliberately, to limit exposure in high-risk areas), the company's ads are highly regarded -- particularly its "Mayhem" campaign.
But the team is again being reorganized, Ms. Cochrane said. "I just never want anything to get tired or stale. It always needs to feel fresh."
Allstate gives Burnett a performance review twice a year, but in reality the two are always evaluating each other. "If I start to sniff out that something's going sour -- and it goes sour every day, the pace is so incredibly hectic -- if I start to even smell that, I will go right in on it," Ms. Cochrane said. "Likewise, I want them to tell us if we're not being the best client partner and address it (rather) than let things get to be rotten."
Case in point: About a year ago, Ms. Cochrane became disenchanted with Allstate's radio advertising, so she coordinated a "radio day" at Burnett headquarters, inviting outside experts to give advice and show off great work. In October, Allstate's "Mayhem" radio campaign won a 2011 Mercury award.
Allstate and Burnett make a point of playing as hard as they work. At a holiday gathering the team ate, drank and "danced into the night," Ms. Cochrane said. Of course, sometimes people just click, like Ms. Cochrane and Mr. Wickman, who joined the team not long after the 2003 reshuffle. "Within about five minutes I hit it off with Lisa," he said.
(Source: Advertising Age, 01/09/12)
||A Good Year for Automotive? Yeah, But...
All things considered, 2011 was a pretty solid year on the automotive sales front and ended on a positive note. So, hey, happy days are here again, right?
U.S. light-vehicle sales were up 10 percent to 12.8 million in 2011 after a similar rise the year before. Forecasters expect another increase in 2012. It's a healthy market, too, with low incentives, manageable inventories and reasonable profit margins.
But stacked up against 2007, the last full year before the financial crisis, it's a dramatically different market -- a lot smaller and with share much rearranged among the top players.
Indeed, the contrast between that old normal and what might be the new one is huge when you look at the numbers.
Sales in 2007 were 16.2 million, 3.4 million higher than last year. That's a difference of more than 281,000 units a month on average.
Everyone knows that post-bankruptcy General Motors is on the upswing, with a 13 percent sales gain last year and a larger market share than it had in 2010. But it lost 1.3 million sales from 2007 to 2011 and 4.1 points of share.
"Even with the kind of growth we're projecting, we're still in recession-like industry sizes," said Don Johnson, GM's U.S. sales boss.
He says slow but steady growth would help GM "maintain that discipline" and not overproduce, as the industry often did in the 2000s.
Toyota Motor Sales is down almost 1 million units from 2007. Hammered by quality problems in 2010 and earthquake-related product shortages in 2011, Toyota is down 3.3 share points. A temporary blip? We'll see.
The outlier is Hyundai-Kia Automotive, which made it through the crisis in superb fashion, adding 358,701 sales since 2007 and grabbing 4.1 share points, to 8.9 percent of the market -- ahead of Nissan North America and on the heels of No. 5 American Honda Motor Co.
Some other winners and losers since 2007:
-- Nissan/Infiniti gained 1.6 share points since 2007, the best showing of any Japan-based automaker.
-- Ford Motor Co., which launched an ambitious turnaround strategy before its Detroit rivals and avoided bankruptcy, has added 1.0 points of share.
-- Chrysler Group, even with a 2011 sales surge, is still 2.2 share points lower than in 2007.
-- American Honda lost 0.6 points of share, falling to 9.0 percent.
Sales have become more widely dispersed among carmakers since 2007. Smaller players, those outside the top seven, have increased their slice of U.S. sales to 14.1 percent, from 10.4 percent.
Four manufacturers accounted for most of that 3.7-point gain. Volkswagen Group of America has parlayed investment in marketing and a new Tennessee assembly plant into a 1.5-point gain.
Subaru, Daimler AG and BMW have picked up a combined 1.8 points.
Most executives and analysts say they understand that the "old normal" era -- nine straight years with sales above 16 million from 1996 to 2007 -- is over.
But they aren't sure what the new normal will be.
Analyst Jesse Toprak of TrueCar.com reckons that 14.5 million is a realistic average market size in the new era.
"We're still finding the new normal and we won't approach it until at least 2013," he said.
"But the industry's breakeven point is still 11 million, so this year should be very profitable for most."
IHS Automotive analyst Rebecca Lindland's "new normal" is 15.5 million to 16 million annual sales.
"That's a level that is sustainable without a lot of shenanigans," she said. "The industry can be very profitable at that level and yet flexible enough to contract if necessary."
Virtually all carmakers expect higher 2012 volume as the economy picks up and Toyota and Honda fully restore post-quake inventories.
"Timing is everything," said Toyota Motor Sales U.S.A. President Jim Lentz.
"We are entering a growing market that will grow 1 million units, in an improving economy, with growing interest rates, with 19 new and refreshed models to launch," he said.
GM's Johnson is encouraged by the Toyota and Honda recoveries.
"That brings back some buyers into the market who may have sat on the sidelines," he said. "We will get a shot at them."
Johnson expects to build on GM's 13 percent sales growth, which boosted its 2011 market share by a half point to 19.6 percent. GM is predicting industry sales of 13.5 million to 14.0 million in 2012.
Ellen Hughes-Cromwick, Ford's chief economist, said economic fundamentals are improving and that will help auto sales grow.
"The latest statistics show some very positive momentum," she said.
Toyota sees 13.6 million sales in 2012; Chrysler forecasts 13.8 million, and Volkswagen echoes GM at 13.5 million to 14 million.
Ford expects 13.5 million to 14.5 million, including medium- and heavy-duty trucks, which means about 13.2 million to 14.2 million light vehicles.
Toprak says the midyear sales stumble of 2011 may turn out to have been better for the industry than a rapid acceleration.
"This may be a healthier, more sustainable pace," he said. "It turned out to be a year of stable growth."
Toprak expects 13.8 million sales in 2012, which would be an increase of 8 percent.
Lindland said today's auto market is vastly improved from the 2007 version.
"It's much healthier," Lindland said.
"We got rid of the fast food -- the bad habits and the need to make products because it was cheaper to make them than not make them."
(Automotive News, 01/09/12)
||Recorded Music Sales, Concert Revenues Rose in 2011
The music industry showed signs of potential recovery in 2011, as sales of albums and concert tickets reversed declines, though it would be premature to declare a full-fledged recovery.
The year's biggest concert tours made more money at the box office than they did in 2010, thanks to sharp price increases that offset declines in the number of tickets sold, according to Pollstar, a trade magazine.
The 50 top-grossing tours, led by U2, took in a total $3.07 billion, up 3.7% from 2010. Those tours sold a combined 35.5 million tickets, down 8.7% from the year earlier. Average prices for those shows, however, leapt 13.6%, to $86.53, the magazine said.
The box-office uptick was welcomed by the concert industry, which suffered a down year in 2010. But the ongoing decline in number of tickets sold could be a sign that consumers are still put off by ticket prices.
U2 made $231.9 million from 34 shows in 26 cities. The No. 2 tour, by a reunion of the '90s British boy band Take That, made $224 million from 35 shows in 17 cities -- none of them in the U.S., Pollstar noted.
Recorded-music sales in the U.S. edged up for the first time since 2004, according to Nielsen SoundScan, thanks to lower prices, growing digital song sales and a massive hit from the singer Adele, whose album "21" sold more copies than any title in the last seven years.
The increase in yearly album sales, as measured in units, was only the second such increase since 2000, just before digital piracy and other problems began eroding the music market. Even at 330.6 million units, up 1.3% from 2010, album sales were almost 58% below their peak level in 2000. The retail value of those albums is unclear, since SoundScan measures only units sold. Physical retailers and record companies cut prices of albums last year.
Individual song sales grew 8.5% to 1.27 billion songs, a more robust increase than in previous years, when growth flattened.
Combined album and song sales increased 3.2%, using a measurement that counts 10 songs as the equivalent of an album.
Adele's retro-soul "21" sold 5.8 million copies in the U.S. The previous year's biggest seller, Eminem's "Recovery," sold 3.4 million copies. The last album to sell more than the Adele album was Usher's "Confessions," which in 2004 sold more than 7.9 million copies. That was also the last time album sales edged up.
The 23-year-old British singer also had the top-selling song of the year, "Rolling in the Deep," which sold 5.8 million copies.
CDs, though declining in sales, continue to be the dominant format for album sales. Last year saw 223.5 million discs sold, down 5.7%. Digital album sales totaled 103.1 million, up 19.5%.
(Source: The Wall Street Journal, 01/06/12)
Daily Sales Tip: What Works for You?
When generating leads, focus on the activities that work best for you.
Just because social media is all the rage, for example, doesn't mean that's a good strategy for you. If you're not a fluent Tweeter or facile Facebook fan -- or more importantly, if your prospects aren't -- don't make that a cornerstone of your plan.
Are you especially good at personal phone calls or hosting webinars? Focus on your tried and true lead generation strategies and combine them with something new to expand your base of lead sources.
Source: Sales consultant Kendra Lee