Throw away the security blanket

Another fun Super Bowl marred by tedious simultaneous broadcast commercials here in Canada. While Americans are watching inventive, high-budget commercials that are arguably more entertaining than the game, we get stuck with endless iterations of the same truck commercials we have been watching in every regular season broadcast all year. The advertisers are not served well by this phenomenon at all, because they miss out on the one time of the year when Canadians would stay glued to the tube, paying attention to the message. Instead, everyone rushes to YouTube to see what he is missing. So advertisers are unhappy and Canadian viewers are unhappy. Who is served? The broadcaster thinks he is, but I think even that is in doubt.

The CRTC rules on simultaneous broadcasting exist to force advertisers to pay Canadian broadcasters for air time, rather than just paying the American network then picking up Canada for free when the Canadian broadcaster runs the show. The premise is that Canadian broadcast companies would collapse without the American advertising dollars. This is probably true of the existing companies that have been built around the present regulatory regime. But what we see in the Super Bowl is that most American companies don't bother to buy time in Canada anyway. Whatever the CRTC and broadcasters are trying to do isn't working. They aren't even successful in driving the prices up. Commercial slots in the last Canadian broadcast were going for $115,000 - 3 percent the cost of time on the American broadcast, which is about a third what we should expect to get given the difference in populations. Yes, yes, the Super Bowl slots are special because it is an international phenomenon and the spots will be seen all over the world for much longer than the program runs, but the Canadian price still seems too low. Canadian ratings are weaker for football, but I bet a lot of that comes from Canadians seeking ways to watch American broadcasts in order to see the commercials.

Isn't at least possible that Canadian broadcasters could get a better deal by negotiating with the American networks for a slice of the advertising revenue in return for beaming those ads to 30 million relatively well-off viewers? Why wouldn't the American advertisers pay extra for an extra 10 percent coverage?

Of course, any negotiation requires the possibility of failure, but we have competing networks in Canada and if one doesn't pick up the broadcast, another can. You know, market forces. If those are what the CRTC is trying to protect Canadian broadcasters from, all they will achieve (and have achieved) is a weaker industry.

Now that bunny ears are a relic of the past, Canadian broadcasters have pretty much total control over what their viewers see. They already negotiate exclusive broadcasting deals with the American network that carries the Super Bowl. They have an audience, and exposure to that audience has a value. My guess is that Canadian broadcasters are actually seeing less of that value now than they would if they just got a slice of the U.S. revenues instead of trying to sell Super Bowl ads all over again to advertisers that have already maxed out their budgets.

Core plus marketing

This article caught my eye.

So while chatting with this group of mothers, I considered this lesson: when spreading the word about your product or service, it is just as important to promote all of your ancillary offerings as it is to promote your key features. Companies often promote just the core offering, but when selling to mothers, it is often the broader offer that will activate the sale.

The comment is about marketing to mothers, but I wonder if there isn't some food for thought here for manufacturers as well. How often do you talk about aspects of your business that surround your core product? If there's one mistake that industrial marketers make reliably, it is focusing exclusively on product at the expense of building an overall brand.

When I started out selling machine tools, I was handed a stack of brochures, given a primer on what these machines are and what they do, and sent out to beat the bushes for leads. From what my bosses had told me and what I was reading in the brochure, I assumed the conversations would be all about the product specifications. Instead, almost everyone wanted to talk about service. When I relayed this to my bosses, they waved it off. "Sure, we have service. Tell them we have great service." The fact was, no one had thought very much about how to present the service side of the company.

Part of that phenomenon comes from the distributor/OEM distribution model that exists in industrial machinery sales. OEMs want to make machines and let distributors take care of the service because it is time-consuming and requires constant attention to the customer and the daily bottom line. Distributors want OEMs to take care of service because the OEMs have deeper pockets and access to the product knowledge and parts. Good machine service techs are very, very hard to find. The result often is that the service arrangement between the dealer and the OEM is poorly defined and one or both parties are uncomfortable and pushing up against the boundaries in one direction or another. So no one is comfortable talking about service to the customer because no one is quite sure what they can or want to deliver.

Given all this, it isn't surprising that the machine tool company, Haas, that kicked everyone's butts through the '90s, was the one with the strongest service story. Haas kept service in-house, for one thing. The techs were OEM employees that drove around in Haas-branded vans full of spare parts. This meant the dealers made less money because they didn't get the higher discounts that came with a service contract, but it also meant they sold more because customers liked the Haas service story a lot. Haas' approach led to an overall brand impression of a company that really understood what its customers wanted and was going all-out to provide it.

In the industrial machinery and supplies game, it is rare that you are offering a truly unique product. Actually, that is true in just about any business. Even if you do have a proprietary technology, you are automatically limited to companies that have to have specifically that technology, if all you do is focus on the unique nature of your product. For continued growth, you have to have mass appeal, and that means offering something everyone wants, like great prices and service.

Don't keep hitting your customers with the same tired message about how great your best line is. Talk about your service. Your parts inventory. Your financing options. Your friendly, beer-buying salesmen. Your easy-to-use web portal. It isn't just mothers who want to know they are getting the whole package when they deal with a particular vendor.

Egypt matters

Freedom appears to be breaking out all over in the Middle East. The cool thing about freedom and democracy is that it leads to people getting richer. That's because, left to their own devices, people will work to better their circumstances. There are hundreds of millions of people in the Arab nations that have been living with sluggish economies and impoverished institutions because their greedy leaders' misrule. If those situations improve in places like Tunisia and Egypt, smart local companies could make a bundle rushing into those opening economies.

Finding a local agent is the big key to getting involved in a foreign market. You need someone on the ground who knows how business works in the target country and what the most effective channels are for reaching customers. Just reading up on local regulations is never enough because how regulations are interpreted and applied is at least as important as what is written in black and white. The agent will also be a key player in crafting messages for the new market because a local understanding of nuances and language is so important.

Trade shows are often good places to start looking for an agent for a foreign market. The country's economic development offices will often have booths at large, international shows and these can be good places to find contacts who can connect you to other contacts that make eventually lead to your agent. Universities are great sources as well. The nice thing about places like Egypt is there are lots of well-educated, English speaking young men there who are very hungry for a better life.

Are we ready for an export uptick?

American consumers have saved enough and reduced their debt enough to contemplate a return to spending,the Economic Development Corporation says. Welcome news. But southern Ontario's export-oriented manufacturers may have difficulty reaping the rewards if they have done what most do and cut back on marketing expenditures during the last year.

The EDC report paints a picture of pent-up demand. That means American consumers have been sitting at home, looking at ads and dreaming of what they will buy once they have their credit card balance under control. Companies that cut back on their advertising spend will not have been among the ads they were looking at.

The best those companies can do now is to try to piggyback on the growth of those who did position themselves properly during the downturn and hope the rising tide floats all boats. Exploiting internet searches is a good way to do this. Google ads with the same keywords as competitors will turn up on search pages when consumers go looking for those competitors. Comparison shoppers may be snared. Attending trade shows and home shows could put a Canadian exporter who did not promote in a booth next to one who did, essentially co-opting his marketing dollars.

Tax refund time is coming up, so the time to raise the market profile is now.