Joe Cappo’s book, The Future of Advertising: New Media, New Clients, New Consumers in the Post-Television Age traces ad agency consolidation, the impeding demise of television as an ad force, and more -- then lays out a startling yet ultimately logical roadmap for the future of bran marketing and advertising. Cappo recently retired from Crain Communications, Inc., where he was senior vice president. He was publisher of Advertising Age, and is a world-class speaker. Few people know the industry as well as Cappo does, or have an intriguing a perspective on what’s to come. Here’s the final installment of his conversation with moderator Doug Weaver, president of Upstream Group at iMedia's February Brand Summit. Click here to catch up on pat one and part two.
Question: Sean Cummings, American Express. Shouldn’t the promise of the digital model, aka the Amazons of the world, eventually eliminate …shelf-slotting spaces… and are we poised for yet another shift away from the traditional distribution that we just spent the last 15 years going towards?
DW: Has e-commerce and Amazon changed that model?
JC: They can. It’s possible to do that. But the limitation, of course, is in the distribution. The problem is not ordering online; the problem is getting the order to where you live.
One of the strangest things is Sears and Montgomery Ward’s largest customers were in rural areas, but biggest customers for e-commerce are in urban areas. So I don’t know what that means. I’m just telling you that maybe there’s a whole market out there that many of you folks are not looking at as an important market, and if you don’t think farmer don’t have computers, believe me, they do.
So is it possible? Yes. But what percentage is ever going to be coming over e-commerce? I don’t know. Will it grow? I think it will grow to some extent. Is it ever going to be 30 percent of total retail sales? Uh-uh. It’s never going to be more than a fraction of supermarket sales, for example.
DW: You may buy a DVD player or you may buy office supplies online. There’s a big jump from that to everyday groceries.
Question: Tim McHale, Madison Avenue Consultants. Joe, we see there’s a pressure on the sales function at marketer and, of course, a pressure on the marketing side. Yet the VP sales and the VP marketing work for the same company, but more often than not, their objectives and their strategies are often different. There are some companies where there’s one person or one group where it’s VP sales and marketing, and I was just curious, based on all the marketers in the room, how do the marketers, the brand people, really coordinate between the sales function and the marketing function so that they are reconciled and work together rather than on conflicting sides of the table?
JC: I mentioned this before, the siloization within companies. Somebody has to do the strategic function of saying what are we, where are we going, what are we going to do, who are we, how we define ourselves, how do we identify ourselves, how do we sell our products, how do we -- and I think this is even a bigger question -- how do we develop a loyalty among our clients and our company? How will they always ask for our product?
I did a seminar a few years back for Chiquita banana. Bananas are a commodity. You buy a banana. You go to the store. Give me some bananas. And you buy the banana that they have there. You don’t go in and say, “Well, do you have any of these?” No. You don’t ask for bananas. So the job of Chiquita was to sell itself into the wholesale distribution and then into the supermarket and then persuade the customer to spend five cents a pound more for Chiquita bananas because they’re yellower and have little green on the edges.
So it’s not a single product one goes out and sells, and you don’t sell it to a single customer. You have to go through this whole distribution process, and of course, in a supermarket case, the bigger the supermarkets, the less important the consumers are and the more important the buyer at the supermarket is.
So to get back to the client, it’s that everybody has to have a goal, has to know what part they play in it. And one of the most important things is that companies, ad agencies, clients, generally compensate people on how well they do in their own little particular area and not how the whole company does as a whole.
I cover the compensation aspect of this in the book, and it’s once again the sales promotion guy is paid on how well the sales promotion works, not on how well the advertising works, even though advertising might be the best way of selling this product.
DW: By the way, if you haven’t picked up the book, I’m carrying this thing around like the Book of Mormon now. It is amazing, and it’s something that I…
JC: God Bless You, my friend.
DW: You got it. Joe’s got me on a 15 percent commission. I’m not sure how long it’s going to last. We have another question.
Question: Hi. Matt Freeman with Tribal DDB. We’re part of a plucky little startup called Omnicom. I’m just wondering if you are going to start a new…
JC: Have you called your office lately? Oh, I’m sorry. Go ahead.
MF: If you were going to start a new agency today, what would it look like, and then, of course, could we buy it?
JC: Absolutely. Well, I wouldn’t call it an agency, first of all. Agencies… were agents of the media when they began, which is the only reason we use that “agency” name, and that is the agencies in the late 19th century went to newspapers and magazines, bought bulk space, then went out and resold that space to people at a markup, and then those people finally said, “Well, you know, I’ll buy this advertising, but I don’t know what to put in there,” and they said, “Well, we’ll help you.” And it really wasn’t until about 1920 or so, led largely by Albert Lasker at Lord and Thomas, when the agencies finally said, “You know, we’ve got to do something, like, creatively. We’ve gotta create some catchy slogans and stuff.” So what’s why they’re called agents. So I wouldn’t use the word “agent.”
I would create a different terminology. I also wouldn’t use the word “consultant.” I would say a “marketing partner” or something else, like that would be maybe the proper name to use in that regard. And I would be the consultant. I would say, “We can create a strategic marketing plan for one of your products, and it will include all of the aspects in different ways to sell to market your product. We will emphasize what you should do most, what you should do least, or disregard some at all, where you should put your money, how you should spend it, and who you should hire to create these various things.”
That’s the position that agencies are trying. I believe Omnicom is working on a strategic partnership type of situation, but the lack of integration was mentioned to me, among other people, by Brian Williams, who is the president of Element 79, which is an Omnicom-owned agency. So did I answer the question? You want to get more detailed than that?
DW: One of the things that you talk about in the book is the fact that clients don’t trust agencies or holding companies to really deliver them agnostic strategy recommendations because ultimately, the recommendation is always, “Buy more of our stuff.”
JC: They haven’t done it. So it has to be a different entity to come in. Now, if Omnicom wants to buy somebody, buy Accenture. Buy a management consulting firm that has some credibility in the corporate world, and management consulting firms are dealing with the CEO of the company whereas the ad agencies are dealing with middle management. I think the reporting structure and the relationship has to be at a higher level, and it does have to be impartial in terms of the various media and the types of marketing strategies used.
DW: It sounds like the only vacuum that’s really left to fill here is strategy, and if you’re not providing that, then you’re just providing more of the same. Jordan?
Question: Hi. My name is Jordan Berman, with Showtime Networks, and before I joined…
DW: He loves cable, by the way.
Question: Hey, my kinda guy.
JC: I like satellite even better.
Question: Showtime, satellite or cable, we love it. We don’t care. Before I joined Showtime, I worked for a couple of agencies, including George Lois’… one of his last agencies. Many people in this room may know “I want my Maypo,” or my generation, “I want my MTV,” which I thought was an interesting repurposing. But George became a little crusty in his later years and would always rale against the death of the big idea, and I guess when you’re the crazy Greek of advertising, I guess he felt he had a monopoly on the big ideas.
I disagree with him, but I know you made comments about the fungibility of advertising. But I think there are a lot of great marketing ideas. What’s your thought in terms of is the big idea dead or are other people coming up with the big ideas and they don’t happen to work at ad agencies?
JC: You know George used to play basketball. As his game got worse the older he got, advertising got worse, and that is that the big idea ain’t a slogan. A big idea is not a new product. Purple Jell-O is not a big idea. I think the big ideas are going to be more involved with media selection, and when I say “media,” I don’t mean radio, television, magazines, newspapers, and outdoor. I mean direct contact, event sponsorship, everything else like that. We have to look at this thing very holistically.
So the big idea five years ago was “We’ll make the Rosemont Horizon outside of Chicago the Allstate Arena.” That was the big idea then. Next year, we need another new big idea. I think the changing nature of how you market and the necessity to change to reach different people all the time is the big idea itself. That is, we don’t talk to everybody the same way. We’re going to talk to kids differently than when we talk to adults, and I think that’s the big idea.
DW: Let me toss in a quick opinion here, and I think this may answer the question as well. One of the reasons why sitcoms just suck so bad -- I mean, look at the sitcoms on TV. Can you remember a hit from the last eight years? Nothing is happening in sitcoms. One of the reasons why sitcoms are so bad is that the people who write sitcoms have no point of reference in reality, other than watching other sitcoms. So they keep writing the same one again and again and again.
We have to challenge ourselves. In my opinion, we have to challenge ourselves in that are the people who are creating advertising solutions, do we have any point of reference other than other advertising? Are we breathing our own fumes so much that we’re not really out there in the real world, touching consumers and bringing back real new ideas that are rooted in consumer behavior?
So I think we’re saying very much the same thing. These good ideas are going to come from how people live their lives, not how we create better advertising.
JC: But let’s look at the market and how consumers are changing. If you take away the people watching cable and the people watching satellite and the people playing video games and the people on the Internet, what’s left are the least educated, the least affluent, sort of the older audience that’s still watching old-fashioned network television.
So what’s happened is that the best part of the audience -- and that is the best educated, the most affluent people who are in the best years in terms of consumers -- has migrated from television, except for those places like the Academy Awards, the Final Four, the Super Bowl, the Golden Globes, which are invented for television. So that’s the problem we face. The better part of the audience has left network television. Their cable, to them it’s television, but to the advertisers, it’s not television, it’s cable. It’s more specialized.
DW: It’s like Atlas Shrugged. All the really smart people are finding their way out.
JC: Well, they have disappeared from the scene.
DW: We have time for two quick questions and quick answers.
Question: I want to get back to ‘Bewitched.’ Oh, I’m Melissa Barron from Salon dot com, and I wanted to get back to ‘Bewitched’ because I think Joseph Jaffe yesterday was saying let’s talk about the sexy part of the business. And to me, creative execution, the big ads, the Super Bowl ads, the Got Milk? Campaigns… I’m wondering if you think one of the liabilities of our medium and why we won’t get, as one agency said a year ago, our natural-born right of this big pie is because the creative executions have really sucked and we’re trying to quantify something that inherently has an emotion attached to it and that we lead with technology and technocentric and media placement versus creative execution sometimes? I know it’s a little bit against the grain of the group sometimes, but where is our Got Milk? campaign online? We saw some good stuff from Kraft earlier, but generally, when I first came into this business five years ago, a gerbil exploding and saying, “Click here” was good creative.
DW: Yeah. How can we avoid the creative pitfalls and come up with great creative ideas on the Web, given the technology?
JC: I haven’t seen great creative ideas on the Web. I don’t want to criticize anybody that’s here, but the Web has proven to be, and will prove to be, a terrific sales tool. It has yet to prove itself to be a good advertising tool. Can it create brand names? Yes, it can create brands. But it doesn’t do it with effective advertising, which tells me that you don’t have to have effective advertising to create a good brand. Amazon? Starbucks? Yahoo? Google? All global brand names that have never really advertised very much.
So I think we’re going back to the thing of where is the big idea, and the big idea is as much in the medium as it is in the message, and that you talk to people in different ways, depending upon who they are, what their background is, and we just have to learn cookies. That’s what we have to do, and learn how to work those cookies.
DW: And one thing that I think we might have to get used to is the idea there may not be a big idea.
JC: Yeah. Right.
DW: It might be a million little ideas. One of the things that I tell my customers all the time is go out and solve a business problem today for a customer and you’ll get rewarded. I think we keep waiting for the big breakthrough campaign or the big breakthrough technology that’ll get us there. It may not be coming.
Joe, we are out of time. I cannot thank you enough for just a fantastic -- I’m sorry. One more. I’m going to thank you profusely in just a minute. Next question.
Question: Colleen Braithwaite from the Dannon Company. I wanted to get back to the question Matt was asking about what can an agency do to help integrate marketing. One of the things that our company started a couple years ago was getting all the agencies around the table and trying to identify what role each medium would play meeting the brand’s objective. I wonder if you see that as a trend in other companies, and does it work? I think it’s still an open question for us.
JC: We live in an era of change, and what works today might not work tomorrow. Remember when we were all on bulletin boards? It’s not just technology. People are changing. Your competitors are changing. The marketplace is changing. Distribution. Everything is changing all the time. If there is one mantra for the future, it’s you better have track shoes on…
If you use Twitter, you've likely seen the "#" preceding certain words or phrases. It's called the hashtag. By placing it in front of a word or phrase, the word or phrase becomes easily searchable. It also makes those words or phrases more easily categorized. They are a great way to monitor visibility. They are also a great way to establish it.
The ubiquity of the Twitter hashtag has been growing since 2009, but it's only been this year that we've seen the advent of aggressive use of the hashtag in marketing.
Though there might be some debate as to who was truly first, current conventional wisdom gives Audi the "first mover" moniker when it comes to using a Twitter hashtag in its marketing.
The company's Super Bowl spot for the new positioning surrounding the A8 sedan, "Luxury has progressed," was sniped with the hashtag "#ProgressIs." People who used the hashtag and the URL www.audi.us/ProgressIs in their tweets were entered into a contest where the grand prize was a trip to Sonoma, Calif., where the winner gets to test-drive the Audi R8 supercar.
Since then, Twitter has introduced -- though still technically in beta -- the ability for an advertiser to promote a trend called out by a hashtag. Think of it like keyword targeting -- only the trend is that word or phrase that follows a hashtag.
Prognosis for next six months
This trend is only just now getting off the ground. Conversational marketing and its synonym, social media advertising, are continuing to grow. This is yet another consumer touch point. Twitter is largely mobile, so it lets the advertiser get close to the advertised, potentially getting closer to where members of the target audience live throughout the course of their days. Its efficacy is far from concluded, but that's never stopped some advertisers from trying new things. When the metrics for social and conversational marketing are settled on, and the means by which we collect and read them are made standard, hashtag marketing might prove to be quite valuable.
Speaking of social media metrics...
It's not that the quest of meaningful social media metrics has only come upon us in the past six months. Rather, in the past six months there's been a definite push on the part of advertisers to focus on one metric in particular for determining the success of their social marketing efforts: the Facebook "like."
Clients are desperately interested in building their communities. The lesson of the "Cluetrain Manifesto" -- that all marketplaces are conversations -- has finally become an axiom. Accordingly, advertisers want to create communities where either they are the conversation, or they can be insinuated into it. The Facebook fan page, where users can indicate that they "like" a brand, product, TV show, performer, or just about anything else, has become the place a lot of marketers look toward for doing that.
The challenge, of course, lies in what the advertisers do with the communities they create (or discover). The metrics that can be teased out of Facebook, as of now, are fairly anemic. Yes, one can pull reporting on engagement -- essentially "likes" -- and uniques and demographics (age, gender, geography, for example). But things like influence of certain groups of "likers," or ways to target the community within the environment, are not very robust. Social listening tools like Sysomos, Radian6, BuzzMetrics, Trackur, or myriad others can be deployed to collect and process data that can be used to draw a picture of what's going on in the conversational marketplace as it pertains to a brand. But what is a meaningful metric?
The BuzzMetric methodology funnel
Prognosis for next six months
There's already some grumbling about the value of a Facebook fan. Quantifying it has been the query du jour for some months now. It was a year ago that Syncapse released a study declaring that a Facebook fan on average spent an extra $71.84 they would not otherwise spend on products they are fans of, versus those who are not. The company estimated a Coca-Cola fan at the high end was worth something just shy of $400. But we've come a long way since then, and now there are early signs that more fans might yield less engagement from the collective community (which isn't a surprise; we see the same thing as customer email databases grow).
In the future of social media metrics, it's going to become important to distinguish the product or service category to which a particular brand belongs. Not everything lends itself to the kind of conversational marketing that Facebook can help facilitate. I mean, really -- I challenge you to name one person you know who is seeking a deeper relationship with his or her mayonnaise. And yet, Hellman's thought it important to have a Facebook page. At this writing, it has 107,910 "likes." And I have no doubt that someone at Kraft responsible for this brand is desperate to see those "likes" numbers improve. Do these almost 108,000 people influence their friends' mayonnaise-buying behaviors? I bet nobody knows, but without doing the research, I bet you the "likers" of Hellman's have no influence at all on whether or not others in their social network buy Hellman's. (Full disclosure: I like Hellman's, but I have not "liked" Hellman's).
Some products and services are perfect for this kind of thing. I'm referring to "instant brands" that the entertainment industry -- TV, music, movies, video games -- need to create in order to generate the kind of steep take-off these kinds of products frequently require to be successful. But Charmin? I'm not sure that the brand needs to have an "enjoy the go" Facebook team to have success as a toilet paper.
Let's hope that the Facebook "like" does not lead us into the same cul-de-sac of broken dreams that the click-through rate has.
One would be hard pressed to say that concerns about privacy are an emerging trend. They've been of concern for online advertising, in one form or another, since DoubleClick bought Abacus in November 1999. It's been over the last year that privacy concerns have really spent a decent amount of time in the news, starting in earnest with the Wall Street Journal's "What They Know About You" series that started running last July.
Questions about Facebook's privacy controls, the potential uses of data the network has on its members, concerns about Apple Inc. tracking iPhone owners' movements, or what kind of picture Google can put together of a user based on search queries have all seen daylight in the last six months. Accompanying that, the government has paid lip service to the issue, to the point where The Personal Data Privacy and Security Act has been introduced in the U.S. Senate for the fourth non-consecutive year since 2005.
The industry itself has spent a great deal of time over the last six months talking about what it's going to do about privacy, putting together a conglomerate organization of organizations called the Self-Regulatory Program for Online Behavioral Advertising, borne of the tenants of the "Self-Regulatory Principles for Online Behavioral Advertising." The document is a list of seven principles (I guess having eight spokes would make it look too much like Buddhism) by which advertisers and media companies that employ behavioral marketing or use targeting data must abide -- things like education, transparency and data security. There have been articles written, speeches given, and conferences held about issues surrounding privacy and use of consumer data on the web. The outcome?
That's right. The little logo above. And for the low, low price of $5,000, it can be yours. Of course, you do have to be in compliance with the seven principles. But even if you are, you've got to kick down the bucks for the right to use the logo. A logo that signifies being in compliance with the seven principles. And a logo that, by the way, consumers -- those people whose privacy is of concern -- have no clue about.
Prognosis for next six months
The same ol', same ol'. The media will make noises about privacy from time to time. The online advertising industry will continue to talk about how it's going to regulate itself. But in the same breath, the industry will espouse the "value" that marketers' pursuit of consumers brings to them: free content (getting less and less free all the time), auto-fill of fields in sites that you visit often, not having to remember your user name every time you go to Amazon.com, etc. And the consumer will continue to not understand just what's going on, and whether or not the fuss is something to fuss about.
Marketers will continue to argue, "Would you rather get an ad that relates to you or more mindless drivel cluttering your page?" They will continue to complain that politicians who have no understanding of technology shouldn't talk about how evil it is.
But that's like asking whether I would rather have a broken leg or cancer. If those are my only two choices, I'll go with the broken leg. But I don't like either, really. If targeting makes a turn toward what roboticists call "the uncanny valley," you have a different kind of phenomenon on your hands. (Wikipedia's definition: When facsimiles of humans look and act almost, but not perfectly, like actual humans, it causes a response of revulsion among human observers. The "valley" in question is a dip in a proposed graph of the positivity of human reaction as a function of a robot's lifelikeness.)
All the tools we bring to bear in the targeting enterprise attempts to get the message to the audience based on a set of variables that can be read right now, in the moment, based entirely on a collection of data points that are mistaken for intelligence but are really just -- data points. Jaron Lanier gave a speech at the iMedia Breakthrough Summit in March, the content of which caused a great deal of ambivalence among the audience. He said that in order to satisfy the algorithm, we are all making ourselves dumb so that the machine can look smart. If advertising ever hopes to have a future, it has to get out of the targeting ghetto and into the light of seeing people as people, with a complex set of histories.
Nothing will happen with privacy until people suffer from it enough. People aren't suffering enough as a result of targeting and its methods. But it will only take a few examples of geolocational or social targeting methods leading to a kidnapping, or a stalker-related murder, or a timely ad for Vagisil served to a woman when she checks in on Foursquare at her local bar (the "uncanny valley" of targeting, if you will), to get the masses to demand action. And then? Well, it took Congress less time to pass the "do not call" legislation than it did for it to declare war on Japan in the wake of Pearl Harbor.
The sin: Hackers infiltrated the Sony PlayStation Network (which includes Sony Online Entertainment) and stole data pertaining to more than 77 million users. Just a few days later, the cyber criminals struck again, hacking an out-dated (2007) database that contained sensitive customer information including names, addresses, birth dates, passwords, and even credit card information.
The penance: After taking a 26-day hiatus to restore its systems, Sony offered its customers a welcome-back program that included upgrades and purchase credits. Sony also offered to enroll customers in identity theft protection programs -- such as cyber monitoring -- at no cost to customers.
In the welcome-back video, Sony executive Kazuo Hirai offered his "sincere apologies for the inconvenience the service outage has caused" and went on to thank Sony customers for their patience.
"We know you've invested in Sony and the PlayStation network and Qriocity services, and we will do everything we can to regain your trust and confidence. We also realize that actions speak louder than words, and we're taking aggressive action to address the concerns that were raised by this incident." Hirai explained that Sony had "greatly upgraded" its data security systems with "increased levels of encryption" in addition to improved firewalls and an updated detection system.
Sony was able to successfully launch its newly fortified systems in early May. However, despite the new security measures, Japan -- where Sony is based -- initially refused to allow the company to launch the PlayStation Network within the country until additional security measures were in place.
The aftermath: While it's too early to detect the long-term effects of the breech, it is certain that Sony still faces an uphill battle: A slew of lawsuits cropped up when consumers learned that their information had been leaked, and the company has yet to fully regain consumer trust. According to Business Insider, analysts are certain that the breach will cost Sony more than $1 billion.
The sin: In May 2011, the names, account numbers, and email addresses of 200,000 Citibank customers were compromised when the company was hacked by thieves.
The penance: Citigroup's response to the situation was mysterious: It took the company more than a month to contact its customers about the breach. When the situation was leaked to the public, Citigroup's spokesman, Sean Kevelighan, admitted to the hack but refused to divulge any information. "For the security of these customers, we are not disclosing further details," he said.
The aftermath: It's too soon to tell how severely this security breach will affect Citigroup. However, the Sony situation is a good indicator of how things might go for the company. Sony waited a week to go public with the information -- many customers viewed this as a gross violation of trust. One can only assume that in waiting a month to disclose this vital information, Citibank customers will be in an uproar over the company's negligence. Citibank is sure to face some serious legal and financial difficulties over this debacle.
The sin: In April 20111, a ticket rep for the Yankees accidentally sent out an email attachment that contained the names, addresses, email, phone numbers, and Yankee.com IDs of 21,466 of the team's season ticket holders. Ticket holders were infuriated, as this gaffe left them vulnerable to spammers and possible thieves who, upon guessing the right password, could gain access to the actual tickets.
The penance: The Yankees franchise wasn't as penitent as it could have been. According to Deadspin, the Yankees didn't even bother to let subscribes know of the breach until the incident was made public on the internet. Only then did the Yankees send out a message to subscribers itemizing the confidential data disclosed in the ticket rep's errant email. While the email did state that "the Yankees deeply regret this incident, and any inconvenience that it might cause," there was no solid apology or effort to rectify the situation. The only conciliatory act detailed in the email was that "remedial measures were undertaken so as to assure that a similar incident could not happen again."
To compound matters, in what can only be assumed was a secondary mistake, the subject line of the apology email was left blank.
The aftermath: To many, this email came off as a half-hearted attempt to save face. According to mediabistro.com, there was no official apology, no effort to "make things up" to those that had been affected, the rep kept his job, and the Yankees made no further comment.
While it's too early to tell what the fallout will be from this incident, one thing is certain: The Yankees franchise, unlike Sony, is confident that its brand is beyond the need to recompense fans whose accounts were compromised.
The sin: In 2009, consumers were horrified by what became known as the Domino's "gross out" video. In case you live under a rock: These videos demonstrate unsupervised employees snorting, sneezing, and passing gas on Domino's edibles -- presumably before the food was delivered to unsuspecting customers.
In an act of absolute idiocy, the aforementioned employees then decided to post their videos online. In a matter of hours, the video went viral, and Domino's found itself at the center of a very sticky situation.
The penance: Dominos immediately fired the two employees, Kristy Hammonds (who also happens to be a registered sex offender) and Michael Setzer.
And, 48 hours later, the company issued a video apology.
In the video, Domino's President Patrick Doyle made it clear that while the offending workers claimed the video was a hoax, Domino's intended to take situation "very seriously." To illuminate just how serious, Doyle stated that "the two team members have been dismissed and there are felony warrants out for their arrest."
Domino's made good on its word; the employees were apprehended and arrested.
Kristy Hammonds, who was charged with felony adulterating food, received a 45-day suspended jail sentence and 18 months of probation after entering a deal in which she pleaded guilty to a lesser charge. Michael Setzer also pleaded guilty and was hit with a six-month suspended jail sentence followed by 24 months of supervised probation.
The aftermath: Unfortunately, this incident spelled out doom for the North Carolina franchise. Despite a thorough disinfecting of the location and a new set of employees, customers shied away from the store. Several months later, the franchise owner was forced to close down his business due to shoddy sales.
By the time Domino's removed the video from YouTube, it had garnered almost 1 million hits. Naysayers cited this, and the fact that Dominos took a full 48 hours to apologize, as the reason for the immediate nosedive in positive feedback for the company online.
The following chart, created via Infegy's Social Radar, measured the damage in the social media arena.
However, all is not lost. Today, Domino's sales are going strong. According to Yahoo Finance, the company recently opened its first store in Poland and expects its global retail sales to increase from 4 to 7 percent in the near future -- not too shabby for a food chain that had to apologize for unsanitary practices less than two years ago.
The sin: In the summer of 2009, Amazon remotely deleted George Orwell's "1984" from the Kindle devices of users who had bought the book online. Consumers were not just angry -- they were horrified to discover that the book had suddenly vanished from their Kindles along with any highlighting, earmarking, and notes that they might have stored on the device. It was an absurdly ironic act (to say the least) considering that the book's central theme revolves around censorship and oppression.
Amazon cited legal issues as the reason for the recall. Apparently Mobile Reference, the company that added the books to the Amazon site, did not own the rights to sell the titles.
The penance: Jeff Bezos, founder and CEO of Amazon, posted an apology on the company forum, where he admitted that the act was "stupid, thoughtless, and painfully out of line with [Amazon's] principles."
Bezos then went on to prostrate himself and the company by saying, "We deserve the criticism we've received. We will use the scar tissue from this painful mistake to help make better decisions going forward, ones that match our mission."
The aftermath: While many folks were outraged at the time, it appears as if the whole incident is water under the bridge. Kindle sales are at an all time high; according to Bloomberg Businessweek, Amazon exceeded its projected Kindle sales by 60 percent in 2010. That's more than 8 million devices -- which goes to show that consumers tend to have short-term memories.
H&M and Walmart
The sin: In 2010, The New York Times ran an article about companies that destroyed unused and unwanted clothing. The offending companies -- H&M and Walmart -- left piles of slashed clothing in trash bags outside their stores in the dead of winter, when many of the cities' poor were freezing and in need of warm garments.
According to the article, New York City resident Cynthia Magnus stumbled across multitudinous trash bags filled with damaged clothing from Walmart and H&M stores. She collected the clothing in an effort to patch up the items, which she then intended to donate to a local shelter.
Magnus repeatedly attempted to contact representatives for H&M -- she proposed to align the company with a charity to which it could donate the unwanted clothing. Much to her chagrin, she was repeatedly ignored. So, Magnus tipped off The New York Times in hopes of revealing the shoddy practice to the public.
The penance: According to New York Magazine, The New York Times attempted to contact a rep from H&M 10 times before spokesperson Nicole Christie finally offered a response. Christie asserted that it would "not happen again" and insisted that normally H&M donates its unworn clothing to charity. Walmart spokeswoman Melissa Hill claimed to have absolutely no knowledge of why that particular store destroyed the clothing, and contended that it was Walmart policy to donate or recycle unwanted materials.
Neither company issued a formal apology and instead opted to go on the defense -- claiming ignorance.
The aftermath: Despite the initial wave of negative media attention, the scandal died down fairly quickly. A year and a half after the event, it appears as if it's business as usual for the two mega-brands.
The sin: In the summer of 2010, Apple released the iPhone 4. Devoted customers -- some had waited in line for hours to purchase the device -- were sorely disappointed when it was discovered that the phone's antenna placement inhibits its functionality. Left-handed users found that the iPhone 4 constantly dropped calls because the position of their hand on the back of the device blocked the antenna signal.
The penance: When Endgaget inquired about the mistake, Apple responded with an email that encouraged users to "avoid gripping [the iPhone 4] in the lower left corner in a way that covers both sides of the black strip in the metal band, or simply use one of many available cases."
Yes, you read it correctly: Apple made a critical mistake in the design of the iPhone 4, and when confronted, the company responded by telling users they should change the position of their hand or purchase additional accessories to improve antenna utility. Not much of a penance, was it?
Customers became even angrier after Apple's response to the oversight, and eventually irate consumers and the critical press pressured Apple into offering a free phone "bumper" to users who were having problems with iPhone 4 reception.
The aftermath: Apple continues to grow exponentially; the introduction of new generations of devices has eclipsed the scandal and, for the most part, the whole calamity seems to have been forgotten by the general public.
These eight examples demonstrate how different brands respond to a diverse array of scandals. The anatomy of these "apologies" only proves that there is not necessarily a right way to say "I'm sorry" to your customers. Much depends on your brand's threshold for scandal and the expected damage (both in image and bottom-line sales) that a given incident might ultimately have.
The key is to keep tabs on what is being said about your company and to act according to popular demands -- consumers, at the very least, deserve some type of response.
Jennifer Marlo is an associate editor at iMedia Connection.
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