O2 brand cashes in on financial services

July 15, 2009

O2It’s possible to see in O2′s diversification into financial services a Branson-like instinct for strategic brand-building. Which is all the more surprising as O2 is steered not by a gifted, marketing-savvy entrepreneur but by an international conglomerate called Telefonica – the Spanish equivalent of BT.

Or rather, not BT; nor France Telecom (which has made such a mess of the once formidable Orange brand). Telefonica has been careful not to swamp the entrepreneurial drive of its subsidiary with the bureaucratic culture of a state-run, or former state-run, utility. And it has paid off: O2 retains market leadership in the UK mobile market; has far and away the most distinctive brand; and continues to be a first-mover in strategic brand innovation, as befits a market leader.

What do I mean by this last point? The big mobile networks know they are on borrowed time. Mobile airtime, once so profitable, is becoming a commodity, partly thanks to increased regulatory intervention from the European Commission. Added value is now the name of the game. But technologically, this has not been straigthtfoward. Even 3G is quite clunky and despite the advent of more user-friendly smart phones like the iPhone, access to the internet (and data revenue streams) is not all it might be.

O2 of course scored quite a few points by being the one to seal an exclusive deal with Apple over the iPhone’s UK distribution. But where it has been really imaginative is in exploring brand-stretching possibilities. Buying the naming rights to The O2 (formerly the Dome) for 20 years was one such step. At a practical level, it gave O2 users venue discounts over the mobile platform. At a more strategic level, it presented O2 as a youth brand with a finger in the leisure sector pie.

Much the same sort of thinking can be seen in the launch of O2 Money. Although the product launch – two prepayable Visa cards – is modest to begin with, the same trademarks are in evidence. Cash Manager and Load & Go (as the two cards are called) will be particularly attractive to on-the-go youth (and their parents, so far as the control element is concerned), and provide another practical vindication of the mobile platform. More widely, O2 is making a strategic move into financial services at a time when trusted brands –and we’re not talking banks here, because there aren’t any – are at a premium. It is probably no coincidence that O2 has done the service-provision deal with NatWest, the self-same bank that underpinned Tesco’s successful foray into financial services.

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RB restores lustre to dulled FMCG careers

July 14, 2009

RBReckitt Benckiser is demonstrating its customary approach to risk and innovation with an ambitious corporate marketing communications campaign.

RB has long outperformed its rivals in what to the uninitiated is the dull household sector. With the aid of a clutch of power brands such as Vanish, Cillit Bang, Finish, Nurofen and Clearasil, it regularly bests them on organic growth and profit margins, facts not unnoticed in the City. Not only that, it is virtually the only packaged goods company which continues to beat supermarket own-labels at their own game, proving the consumer will pay a premium for branded goods as long as they are a) better and b) better marketed.

While the RB success story is well rehearsed in the marketing and investment communities it is, I would guess, almost unknown to consumers, who buy solely on the strength of individually marketed products. In this, RB has been missing a trick. And the surprise is, missing it for a long time, considering the trail blazed by the likes of Cadbury or Unilever.

AndraeaThe new global campaign, which is being masterminded by corporate affairs director Andraea Dawson-Shepherd (herself a recruit from Cadbury), sets out to remedy this deficiency in the wake of RB’s corporate rebrand last spring. Handled by Euro RSCG, it is weighted towards building awareness among 22-32 year olds, via social media. But it aims to do a lot more besides.

“Our power brands are already well known,” says Dawson-Shepherd. “We need to make ourselves better known among the next generation of people considering a career in consumer goods and let them know what the company has to offer.” Noting that financial services isn’t the magnet it used to be for ambitious marketers, she hopes to restore the dulled colours of a career in FMCG.

Lateral thinking in the middle of a recession. Size of communications budget almost no object. Now there’s a thing.

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Ecclestone’s last stand

July 13, 2009

Bernie Ecclestone’s uncritical outburst of fuhrer-worship will bring down his own autocratic regime at F1, no doubt about it. The question is when.

Ecclestone, whatever his awesome reputation, is only a minority shareholder in Delta Topco, the company which ultimately owns F1′s commercial rights. The majority shareholder is CVC Capital, with about 70%. Although Ecclestone was able to haul CVC chief executive Donald MacKenzie to the phone for a vigorous denial that he was about to get the heave-ho, all is not what it seems. CVC has had enough with the way FIA president Max Mosley and Ecclestone have been running things or, as they see it, running things into the ground. Mosley’s intransigence over reform of the rules recently led to a mutiny by eight of the racing teams – representing all the powerful motor manufacturers – and the threat of a breakaway championship under the Fota moniker. No one really wants a breakaway, including the teams. It would mean diminished income all round, especially in the key areas of TV rights and sponsorship. But CVC has more to fear than most: a breakaway would either destroy or severely impair its multi-billion pound investment in the sport. So it is keen to appease the teams, who now find themselves in a powerful bargaining position.

Sorrell: Not amused

Sorrell: Not amused

On the board of the Formula One holding company are two prominent Jewish businessmen, Peter Brabeck, former head of Nestlé, and Sir Martin Sorrell, ceo of WPP – both Delta Topco investors in their own right. It scarcely requires me to articulate their thoughts on Ecclestone and his continued tenure. The question is, who could replace him? No easy answer comes to mind. Not, for example, the flamboyant Flavio Briatore – head of the Renault team and close confederate of Bernie (both, among other things, have a major stake in football club QPR). The other teams simply wouldn’t wear it. Nevertheless, a replacement looks likely by the end of the year. It’s a gripping Mexican stand-off in which Ecclestone has yet to fire his last shot.

We might ask, while all this unseemly wrangling is going on, what of the sport, what of the brand, what of the sponsors? More in my magazine column this week.

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Falling out of Phorm

July 9, 2009

BadgerPoor old “Badger” Lamont. The former chancellor of the exchequer must be ruing the day he lent his name to controversial behavioural targeting company Phorm as a non-executive director.

Earlier this week, Phorm brushed off its rupture with British Telecom (only the UK’s leading internet service provider, after all) as nothing more than a hiccup in a global expansion strategy that also involves, er, Korea. Now the number 2 ISP, TalkTalk, has also dissociated itself from Phorm’s proprietary Webwise service. Which leaves Virgin Media as its only prospective customer in the UK. Except that Virgin has neither tested Webwise, nor entered into any exclusive arrangement with Phorm. Which doesn’t, on the face of it, leave the company with many sizeable alternatives in the UK.

BT – targeted advertising that is – holds great promise for the advertising community. The possibility of giving the lie, once and for all, to Leverhulme’s adage about wasted ad budgets is one evident attraction. But there is also subtler potential in the way that the generic version, practised by Phorm, works. Because ISPs harvest the behavioural data, they would be able to charge advertisers for the privilege. It was hoped that part of this extra revenue stream might in some way – perhaps through government levy – be channelled into the reconstruction of our ageing broadband infrastructure. That at least was the aspiration voiced earlier this year by head of Ofcom Ed Richards.

Unfortunately for advertisers, Phorm’s notoriety as an alleged agent of “snoop culture” has preceded the widespread adoption of generic BT, placing a hand on its windpipe at birth.

The generic version – enshrined in Webwise – is, of course, not the only type of BT in use. Big portals, such as Google, Yahoo! and Amazon, all have their proprietary version of what is sometimes euphemistically referred to as “interest-based advertising”, derived from tracking the behaviour of their customers via cookies. To what extent these may be regarded as an invasion of privacy, as opposed to satisfying the customer’s needs, is a matter of debate.

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Diverted Boulton makes safe landing at Nationwide

July 9, 2009

James BoultonJames Boulton, the ex-HSBC marketing director and brother of Sky TV presenter, Adam, has finally landed at Nationwide after a bizarre mini-Odyssey involving British Airways.

In circumstances still not entirely clear, Boulton seems to have quit HSBC at the beginning of the year in the belief that he had a job in the bag – a good one too – at BA as global marketing director, following in the footsteps of Tiffany Hall.

Only to discover that he did not. Having led him up the garden path, BA either withdrew the offer or halted the process. Boulton had been applying for a job that would no longer exist, due to a management “rationalisation”…

It’s another example of just how ruthless companies have become in slashing key personnel once they are deemed too expensive. Equally unsettling was Cadbury’s recent decision to get rid of its European president, Tamara Minick-Scokalo, only six months after elevating her from group commercial director.

Boulton may not have got the CMO role he was evidently looking for after HSBC declined to expand his duties (I note his successor, Brendan Cook, has been given additional responsibilities – product development and research). But he could have done a lot worse than end up at Nationwide.

In effect, he takes over the high-profile position occupied for many years by Peter Gandolfi, although the title, like much else, is different. Plenty has changed at Nationwide under the leadership of Graham Beale, including most of the key personnel. That’s only to be expected. The sleepy mega-mutual is well positioned (unlike almost any other financial services organisation) to benefit from the Credit Crunch. Big mutuals – friendly, conservative and, above all, reliable (it says in the script) – are back in fashion. And since Nationwide is by far and away the best branded and biggest – at over half the sector’s capitalisation –  it should be able to exploit this new mood much better than anyone else.

Beale has, perhaps justifiably, been whingeing about the ridiculous capital ratios (money kept back as security) being imposed on his organisation (given it is not particularly reliant on the wholesale money market, exposure to which has been a major cause of vulnerability). I notice this has not prevented Nationwide from launching an eye-catching 125% mortgage aimed at attracting people in negative equity who want to move.

Boulton, with his packaged goods skills acquired at Unilever and PepsiCo, has a promising canvas to work on.

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Food for thought over research findings

July 6, 2009

FairtradeWhy am I not entirely convinced by new research from PR agency Cohn & Wolfe that claims about two-thirds of British consumers will cut back on organic food and pay less for ethically-sourced products even after the recession is over?

Let me say straight away that my reservations have nothing to do with the methodology of the survey – carried out by Lightspeed – which seems entirely beyond reproach.

My qualms have more to with human nature. People don’t tend to tell the truth, or at least the entire truth, when quizzed about this sort of thing. To be sure they are preoccupied with value lines, as the current success of Lidl and Aldi demonstrates. But then, we’re in the middle of a rather severe recession and every penny counts – doesn’t it? – especially if you’ve been made redundant.

Where I’m more sceptical is about reading consumers long-term intentions. They’ve said this sort of thing before, in previous recessions. But they’re quite happy to go back to premium lines (upmarket, fairtrade, or ‘green’) once prosperity returns. Lidl and Aldi tend to disappear off the retail analysts’ map during such periods, as they assiduously monitor the waxing margins of Waitrose, M&S and the like.

However, I have no reason to doubt Geoff Beattie, head of Cohn & Wolfe Global Practices, when he says: “A more prudent shopper is emerging”. These shoppers are internet-savvy about price comparisons, even where supermarket groceries are concerned. It would seem from the survey that they are also comparing supermarkets more critically with locally produced food – and quite often finding the supermarket value-for-money mantra a bit of a myth.

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Bernie: Why Hitler was on the right track

July 4, 2009

EcclestoneIf you’d asked me – up to now – which of the Domineering Duo at Formula One is a Germanophile, I would have answered unhesitatingly, “Max Mosley”. It stood to reason, didn’t it? Both parents Teuton-crazy, went to school in Germany long enough to be fluent; even carries out his sexual perversions in the language.

But it turns out I’m wrong: they both are. Mosley’s long-term collaborator Bernie Ecclestone is evidently a passionate student of German history, if a frank interview with The Times is anything to go by. Bernie takes a pride in not being seen as politically correct, and refreshes our memory every now and then with his unconventional views on women, colour and naughty racing teamsters who tell lies and steal. But he has so far kept his views on the course of German history carefully under wraps. No doubt because he fears his findings are so explosive that if they got into the wrong hands they would cause appalling mayhem.

And they are? Apparently, Adolf Hitler has been badly misunderstood. During the Thirties (I paraphrase, but only a little) he was a great guy, building motorways and bringing full employment back to Germany after the Slump. All right, things got a little out of hand every now and then – like on The Night of The Long Knives and during Kristallnacht – but basically Adolf was just giving the Germans what they needed, the smack of firm government. Come to think of it, that’s precisely what we need now, a bit of firm dictatorship, instead of these mealy-mouthed democrats like Brown and Blair, who lie instead of lead; and Max would be just the man to provide such leadership…

But, I digress on his behalf. Things went a bit haywire after 1939. Inexplicably, Hitler became a hopeless victim of invasion complex, causing him to trample roughshod all over Europe. And then there was this holocaust thing. That was a bit of a mistake, wasn’t it?

Why Ecclestone, 78, chose to privilege us with his views on political governance only now is a matter of speculation, but there are several possibilities. One is that The Times reporters are highly persuasive and Ecclestone has been very gullible. I don’t think so. More likely, this is a two-fingered salute to the establishment. A reminder that Formula One cannot do without him, in case any of us is deluded into thinking he might follow Max off-track.

Ecclestone says he is no great planner of events. But he is a consummate bluffer. Let’s see if anyone – from the Formula One holding company majority shareholders CVC to the sponsors and constructors – has the guts to do anything about what, by any standards, is an act of extreme provocation.

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