(This is a guest post from Josh Kimball of Iconoculture, our sister program for consumer insights. MLC members – curious about Iconoculture? Check out some of their insights here.)

Call it the year of the double teaser. And we’re not talking about the GoDaddy ads. One of the recent innovations in Super Bowl-related marketing is the early circulation of trailers for the ads that will be aired during the big game. Yes, ads for ads that appear online before any of the action even begins. One of the reasons for that is because Super Bowl spots aren’t simply commercials; they’re a mini-marketing surge that now has a growing lead up time and a (little bit of a) long tail.

Most viewers may be gabbing about guacamole during a brand’s 30-seconds of big game fame, but the Super Bowl halo shines far beyond the gridiron — and in just the past couple of years there’s gotten to be a lot more to it than just the TV coverage. This year’s Super Bowl even represented an English-language record for tweets per second. And thanks to those as-it-happens tweets noting the compelling ads, YouTube hosting all the spots for later review, and a culture of me-too consumer commentary and rating, the marketing that connects with consumers will still get outsized attention.

The 2012 Super Bowl’s big marketing takeaways:

More ecosystem, less event: While the Super Bowl is still primarily a TV event — and a mind-bogglingly successful one, at that — the ecosystem around it has boomed over the past couple years. Brands that don’t have the bucks to spend scripting Clint Eastwood spitting gravel or securing first quarter airtime still can grab eyeballs with hard work and savvy strategy.

We heard some viewers comment that it was becoming hard to keep up with both the commercials and the tweets. That split attention span offers opportunity for marketers with solid social media strategies, even as fractured attention means less immediate bang for the buck for brands putting ads on TV. Quick reactions and the online ecosystems matter. Branding author Rob Walker, commenting for AdWeek, talked about how many PR pitches he received in real time, as the very game was unfolding. And brands such as Amazon scored points by reacting to fans and tying product pitches into in-game (and even in-ad!) action on Twitter.

Nostalgia isn’t enough: From a content perspective, the obvious theme of this year’s Super Bowl ads was nostalgia. Marketers tried to hit every generation — from Gen Xer-aimed Ferris Bueller Honda spots to Chrysler’s Eastwood pitch for Baby Boomers and Budweiser’s grainy Prohibition callbacks.

Taken as a whole, the nostalgia theme wore thin with viewers, as the overall tone of looking backward made one ad bleed into the next. But individual memory-based ads were among the most effective ads of the Super Bowl. Eastwood’s Chrysler spot was direct, referenced specific events, had a point of view and therefore stirred emotion and conversation, helping the Chrysler brand stand out in tone and message from its car category competitors. It was also the best commercial for halftime we’ve ever seen. Go, halftime!

Momentum matters: GoDaddy had PR problems coming into the Super Bowl. They’ve taken heat over the past couple weeks for supporting the (ultimately shelved) Stop Online Privacy Act, a law which would have changed the way copyright laws were enforced on the Internet. They’ve also been blasted for sexist ads in years past. That combination — recent news events and a lowest-denominator approach to past spots — meant consumers weren’t as open to the company’s have-fun brand message as they have been in the past.

The night’s other just-OK performances? At least in the calculus immediately following the game’s glow, Samsung’s stylus raised many eyebrows. Oh, and Madonna’s arms got mixed reviews, as well.

Despite rumors of its demise, America’s game hasn’t declined as a media event. Last year’s Super Bowl was the highest-rated TV show of all time, with 111 million viewers. This year’s conference championship games had the highest TV ratings in 30 years. And in a cultural landscape where big events are more and more rare — even formerly bulletproof family fare like American Idol has an audience on the wane — shows that can draw millions of eyeballs and own a weekend are an even more important part of the mediascape and cultural conversation. The Super Bowl still matters — but the game has changed. As the social ecosystem has grown, the field marketers get to play on has gotten much bigger, and far less defined.

It started off innocently enough.  Back in the 1980’s when the first Special Economic Zones were established there were only a handful of places you even dared talk about as “consumer markets” in China.

As a modicum of affluence appeared in Shenzhen, Guangzhou, Shanghai and Beijing, companies began making more concerted marketing efforts on a market by market basis.

Deng Xiaoping’s “Southern Tour” in the fall of 1992  unleashed (or ratified) individual efforts across China focused on the pursuit of wealth.  Soon, some people were talking about more markets than they could count on two hands.  Impressive.

Somewhere along the line in the run up to the turn of the century, discussion of “Tiers” emerged to facilitate sharing of information and depth of market penetration.  Where you only spending media in Tier 1?  Was your product showing up in Tier 3?  This was merely shorthand for talking about the big four markets, the other provincial capitals, and the rest.

The problem is that the rest is actually some amalgam of 361 official cities, 2,811 couties, and 34,171 townships.  Over the first decade of this century, some MNC’s were actually seeing their brands reach every corner of the country.  Others were managing points of sale across hundreds of cities.

Despite the blunt tool, business executives were stuck with tiers to discuss their market coverage.  These conversations could be quite frustrating.  We might all agree on Tier 1, and maybe had an 80% overlap for Tier 2, but then your Tier 3 was different from mine.  You had a tier 4, I had a tier 5.

The reocognized disconnect was that each company’s “Tier” definition was different.  And if I needed to create a market expansion plan to grow from 30 markets to 100 markets, which 70 were supposed to be my priority.   Some efforts started to appear that attempted to index all the markets in China by certain economic statistics, but if you’ve ever worked with Chinese economic statistics you know how you felt about that.

Well, I think the new decade is finally bringing around some sound thinking about how to talk about China market coverage without putting up a list of 600 cities:  Clusters.  Most recently advanced rather publicly by McKinsey, the concept was already in practice as executives looked at the total market and preceived newly defined regions that did not adhere to provincial boundries or other traditional market maps.

The cluster approach won’t surprise any practioner.  Afterall, who would ignore a neigboring market that absorbed your media, was easy to distribute to, and spoke the same dialect as your sales team?  Just because it was indexed 40 spots lower?

Talk of Clusters recognized not the indexing of cities, but the interconnectedness of markets that emerged in the wake of rapid infrastructure development, personal car ownership, and the reach of the internet.  Manageable in number (less than 30) these geographicly defined areas offer scalabilty and reach to brands that need efficiency.  Tackling 31 provincial capitals at the same time offers none.

With Clusters, executives can dismiss with talk of cities.  They can focus on reachable populations within defined geographies.  The market becomes manageable again – almost intuitive.  Distribution centers, media spend, and trade marketing investments scale up better.  Focusing on three or four clusters is naturally simpler than focusing on 50 or 75 markets.

Clearly, I’m a fan of clusters.  I recommend you adopt it in China.  Like all good ideas, this one isn’t new, but it sure feels good when you use it in a new location for the first time.

CAN CHINA MANAGE “QUALTY GROWTH” IN 2012?

The start of the year always presents an opportunity to step back from the day-to-day news cycle and take stock of annual China market prognostications.  This year, I attended a forum put on by the National Committee for US-China Relations at the NYSE to gaze into the future.

With prominent economists and academicians visting from research institutions in Beijing, I welcomed the opportunity to hear subjective interpretations from individuals who actually advise the government & the Party.  Some of what was said was for market consumption, but I’m also aware that being right matters to individuals who seek to influence the direction of their country’s development.

GROWTH IN THE CONTEXT OF STABILITY

Amidst discussion of the housing market, local government finances, RMB valuation, and other topics, each of the economists found a way to mention the phrase “manageable problem” in the context of the dissappointing economic trends.  This optimism is mainly founded on the recognition that China has a significant amount of money to save its bankers, bail out politicians, or distribute funds to the poor.

And though I found myself wondering if China could handle a perfect storm, I recognized that those discussions weren’t new, China is keely aware of them, and there actually is a window within which they might course correct and avoid facing any financial turmoil.  So I merely noted the expressed confidence and set these issues aside for the day.

What I did keep returning to in my mind, however, was the rationale behind slow(er) growth targets.  China used to seek growth targets of 8 to 9 percent in order to absorb its ever increasing labor supply.  Now, even 7% growth in GDP appears tolerable.  Not only has the labor market tightened, but higher growth rates appear to stimulate even faster rates of environmental degredation.  A lower rate of growth is not only acceptable, but the economists felt it enables the government & the Party to address quality of life concerns widely held by the emerging middle class.

There is an important subtext to this dynamic – political stability.  If the middle class believes in a better future, and the poor believe in that same future while having access to social services in the present, then stability will largely reign across the country.  As stability equates to leadership continuity, it is not a surprise that dealing with the satsifaction of the majority of its citizenry is a higher priority for the Party than whether or not someone needs a bailout.

As we enter this election year in the US, it is worth remembering that it is also a transition year for China – only the second formal leadership transition since the founding of the PRC.  In the year leading up to it, and for the year afterward as power consolidates around the new General Secretary/President, matters of internal stability will take precedence.   In the interim, I wouldn’t expect radical economic policy changes unless the Party was supremely confident in the outcome.

QUOTES & MATERIALS FROM THE FORUM

I’ve offered up some quotes of note from the day.  You can see some of presenters materials here.

“Our accepted estimates of national debt as a % of GDP is 50%. Outside pessimists place it at 60%. But that would still make us a good EU Member if our application was accepted [jokingly said]. Frankly, as a policy we are more concerned with income inequality than our current debt management.”

- Professor WU Ho-Mou Exec Dean of National School of Development at Peking Univ.

“Our estimates by quantile for Household Income show a that the top 10% earn 93 times what the bottom 10% earn. An income range of 613RMB-19,000 covers 90% of the population. An average of 30,000RMB covers the next 5% and an average of 75,000 RMB covers the final 5%. Overall, the top 20% account for almost all the savings.”

- Prof. YAO Yang, National School for Development at Peking Univ.

“Current inventory of unsold residential property estimated at 14 months. Therefore slight softening of housing prices predicted in first half of 2012. M&A among developers likely. Building (starts/re-starts) likely to pick-up in second half.”

- Prof. ZUO Xiaolei , Advisor to the President, China Galaxy Securities

“Economic stress test conducted: if a total of 15% of outstanding developer loans become non-performing & 7.5% of personal mortgages default, the GDP CAR impact would be about 1% point. “Manageable”.”

- Prof. ZUO Xiaolei , Advisor to the President, China Galaxy Securities

“Remember, home ownership in China is at 90%, but the majority of that was housing allocated to citizens during the reform of State-Owned-Enterprises. So the majority of Chinese seek to upgrade from existing “owned” homes.”

- Prof. HUANG Yiping, China Center for Economic Research (former Chief Economist for Citigroup, Asia)

“We expect to see / want to see Real Estate drop below and stay below 10% of GDP (9.9% last quarter). We are watching for an overall price correction of about 20% to trigger consumer demand and stabilize price drop, but we don’t know what the bottom will be.”

- Prof. YU Yongding, Chinese Academy of Social Sciences

“As for purchases of homes, the new requirements of 60% down-payment makes us feel better about consumer defaults because the banks won’t lose principal. But you might ask how does a person earning on average $5,000 a year afford a home. Refer back to hidden income speculation.”

- Prof. YU Yongding, Chinese Academy of Social Sciences

“Systemic under-reporting in the National Statistics – especially at the high end with one estimate showing 90% under-reporting in the top decile.”

- Prof HUANG Yiping, China Center for Economic Research (former Chief Economist for Citigroup, Asia)

“Retail sales under-report consumption because of system errors and neglect of service sector. Household Survey reports 13 Trillion (RMB) in income, but National Accounts show 18 Trillion (RMB) – maybe as high as 23 Trillion by some estimates if other off book income is considered.”

- Prof. HUANG Yiping, China Center for Economic Research (former Chief Economist for Citigroup, Asia)

Editor’s note: We put this up (and in our member newsletter) prior to last night’s news that Apple co-founder Steve Jobs had passed away. We’ll have thoughts on his legacy later this week.

The following is a guest post from Robert van Alstyne, a media and technology analyst with our sister program, Iconoculture.

It’s a testament to technology’s ascendant role in pop culture that today’s Apple press conference had more consumer buzz than any new TV show this fall season. With media-saturated consumers’ tastes increasingly splintered, gadget lust is now one of the last common denominators uniting the masses.

Heading into today’s press conference, professional pundits and John Q. Public speculated wildly, debating what new treats Apple would unveil. Would we get an iPhone 5 or just a new iPhone 4? Prior to the event, rumors of a slimmer, 3X-faster iPhone 5 reached a crescendo. By the time new Apple CEO Tim Cook took to the stage this morning, online chatter had reached such a pitch that one colleague speculated on Twitter, “I wonder, did America stop what it was doing in, say, 1953, when the next model *car* was announced?”

In a move that disappointed some true believers, there was no iPhone 5 announcement, “just” the iPhone 4S, which will hit stores October 14. The new phone still boasts impressive hardware advancements. Among the iPhone 4S’ selling points are the ability to switch intelligently between two antennas to transmit and receive (thereby doubling data download speed), along with a serious camera upgrade. Initial online reaction was “meh,” but we’d be shocked if the 4S doesn’t sell extraordinarily well, just like its predecessor.

Right now, Apple’s main selling point is its image as a cutting-edge company, so the product details matter relatively little to the average consumer. By tirelessly turning their brand into an essential emblem of digital savvy, Apple has carved out both a cult-like following and an ever-broadening base of users. Apple’s old-guard faithful might be disappointed, and they might not “need” the latest iteration of the iPhone. But whatever the specs, in a growing number of consumers’ eyes, Apple’s latest remains a cherished status symbol, broadcasting to all that they’re in step with our fast-moving information-driven world.

MLC members, for more great Iconoculture insights, check out the selected pieces we publish each week on the latest consumer trends.

For a decade now — since the rise of the global economy — political pundits from Mumbai to Madrid, Hamburg to Honolulu have argued about “American exceptionalism”: the idea that the US is unique and can hold itself to different standards than all other nations. When it comes to love and war, you can argue both sides. But when it comes to the hard facts of economics, not so much. Last week Standard & Poor’s downgraded US creditworthiness from a top rating of AAA to a less-than-top AA+. That’s the first downgrade in America’s credit rating since credit rating began, early in the last century (WashingtonPost.com, 8 August 2011). It also puts the US behind many of its European allies, not to mention Canada. (Canada!) Read More »

As the 2010 Census figures revealed, there are over 50 million reasons marketers need to pay attention to the U.S. Latino market. Latinos make up 16.3% of the total U.S. population, accounting for more than half of the total U.S. population growth from 2000 to 2010. And while this rapidly expanding market continues to influence and make contributions into all areas of American life, we’re also seeing significant transformation happening within the market itself.

On June 21, Iconoculture will host a deep-dive into the U.S. Latino landscape, using observational and psychographic insights to dimensionalize the shifts transforming the Latino experience. During the session, we’ll analyze the increasingly complex Latino identity paradigm by exploring changing cultural tendencies and interpretations, as well as the role of technology in addressing unique cultural needs and aspirations.

One of the shifts we’ll cover: as Latinos endeavor to balance their American and Latino cultures, we’ve been tracking a new trend emerging in 2011 that we call Contextualizing Culture. Latinos embracing this trend are peeling back the layers on tradition and heritage in order to create meaningful and relevant cultural connections between their roots and modern U.S. Latino culture.

In addition to exploring the trends shaping Latino behavior, we’ll share cultural implications that will help brands adapt to the demographic reality. We’ll also look at best practices for ensuring cultural relevancy and examples from brands that are successfully connecting with Latino consumers.  Council members can register to join the conversation on June 21 by clicking here and read more about recent trends and observations of Latino consumer behavior on the North American Trends page.

Where are consumers headed next? It’s a question almost all of us have asked.  Brands that get the answer right often win, and brands that get it wrong find themselves playing catch up.  In recent months, Iconoculture has developed a series of roadmaps to help marketers shine a little light on where their target consumers are going.  To get there, we look at the challenge from a couple of different angles:

Categories: How will consumer behavior change in a given category?  What are consumers migrating away from?  Where is their attention (and wallet) headed next? (think media, technology, home, health, food, finance, etcetera)

Segments: How are the needs, motivations, and behaviors of specific demographic and lifestyle groups changing?  What do demographic groups have in common?  What makes them unique? (think Moms, Millennials, Xers, and so on)

Based on these perspectives, we’ve laid out where we see consumers headed in a series of “state of the union” summaries organized around the two lenses, categories and segments.  We call these overviews Consumer Outlooks—our one-page stories of where consumers are headed next.  For Council members, we’re providing a selection of these outlooks on our site to inform your strategy setting and hopefully spark a few new ideas.  Check out the Consumer Outlooks for North America here:  Segments, Categories; and get a preview of our new global Consumer Outlooks here: Global. Read More »

(the following is a guest post from Robert Mulrennan at Iconoculture, MLC’s sister program that tracks consumer trends)

China is the world’s most populous country and the fastest-growing economy.  With 1.3 billion people, it’s a giant piece of future market potential for global brands.  As marketers try to tap into the growth offered by the Chinese market, many are watching Chinese brands beat them to the punch, making rapid inroads into established, western markets.   Haier is a noteworthy example: an established home appliance brand in China, this brand has carved out a prominent space in the highly competitive US appliance market.  Watching Haier we can learn a few lessons that might inform our own strategies for entering growth markets outside of our current footprint:

• Finding White Space: Haier Group made initial inroads in the U.S. market by focusing on novel product categories such as refrigerated wine cellars; Haier has since captured 50% of the market for these devices, gaining a foothold that they can use to migrate from niche to big ticket purchases.
• Leveraging The Halo Effect: After establishing itself in compact refrigerators and wine coolers, the company has entered other categories—it now sells 2% of all full-size refrigerators in the U.S., 16% of window air conditioners, and recently introduced a line of flat-screen TVs and DVD players.
• Playing to Local Perceptions: The name Haier was adapted from German to deliberately obscure the company’s Chinese origins and play to North American perceptions of German quality and reliability.

So what about western brands entering the Chinese market?  Join Iconoculture’s lead Consumer Strategist covering East Asia, Jeff Yang on May 3^rd, for an overview of recent trends, developments, and shifts in consumer behavior in China. We’ll unpack the unique “cultural DNA” of this incredible market and take a closer look at brands that have successfully captured the mindshare of Chinese consumers. Council members can register here.

For a quick look into what consumers are doing in China, Council members can also check out a few of Iconoculture’s latest global consumer observations.

Catchy title, huh?  I must admit I stole it from two good friends, Jeff Yang and Kate Muhl, here at Iconoculture.  They’re going to be diving into a handful of the cultural, political, and market differences between China and the U.S. in a few weeks at our Iconosphere 2011 event in Miami.

As Iconoculture members ask us for insight into the changes their marketing strategies will have to undergo to compete in (and with) China, here are a few of the most common questions we hear brands asking:

• Where do the aspirations and values of Chinese and American consumers converge? How can brands take advantage of these convergences for a competitive advantage?
• How do consumer perceptions of our national “brands” differ?  What do Americans think of China? What do the Chinese think of America? What does this mean for the next era of “Made in Chimerica” brands?  (I’ll leave that term to Jeff and Kate to explain)
• What realities will brands need to embrace as we face a new, multipolar power equilibrium?

All big questions that our brands will need to answer to confidently tackle competitive and increasingly international markets.  We’ll explore each of these in a few weeks at Iconosphere.  If you’re interested in learning more, MLC members can check out the details at Iconosphere 2011.  We look forward to seeing you there.

In the mean time, MLC members can check out the “Latest Iconoculture Insight” link on the Global Insights page for some of Iconoculture’s latest consumer observations from China.

On the highways here in Delhi, the past and future share a lane. Creeping one way are shiny PR campaigns meant to thwart the raucous honking that accompanies any congregation of more than a couple of cars. Headed the other direction? The very audible, commonly agreed upon rules of the road, signified by armadas of old trucks, their tailgates painted with instructions begging for a sonic blast (“Honk please!”).

For most consumers, traffic’s an interminable, unavoidable, incidental cost of urban life. For the cities themselves, though, traffic is a perfect manifestation of the present. Outside Delhi, every morning jam is a horn-honking, engine-idling purgatory of acceptance and frustration. But it’s also a daily, ritual affirmation of aspiration. It’s an inherent part of a world that millions of consumers here in India’s biggest cities have chosen to participate in.

Late last year Iconoculture launched a new consumer advisory service — in and about India. It’s the culmination of years of groundwork we’ve labored very hard to lay, but it’s also a mere glimmer of what promises to be a fast-moving future.  With that work behind us, our next step will be to collect your feedback on what you need to know about this dynamic market and infinite variety of the consumer base in India.  MLC members, contact your account manager if you’re interested in joining the conversation.

In the meantime, here are some of our latest observations from a fascinating market: Read More »