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The Top 4 Reasons…The Top 4 Reasons…Advertising and Advertising and Marketing Efforts Are Marketing Efforts Are Failing TodayFailing Today

Even the savviest Even the savviest executives need to executives need to understand the complex understand the complex issues causing advertising issues causing advertising and marketing campaigns and marketing campaigns to fail todayto fail today

Researched and produced by:

Sponsored by: Sponsored by:

2© HALO Branded Solutions - 2011

Why did HALO commission a study?

• In our work with a variety of companies, and industries we see the marketing and advertising challenges they face in connecting with their targets

• Advertising and marketing options are changing rapidly, and confusing even the most savvy marketing experts

• We know these challenges are taking a toll, so we hired an independent research company to investigate some of the reasons why and find solutions

• We are pleased to share this executive briefing with you


Areas covered• Why many businesses

remain disconnected from the prospects and clients they are trying to reach

• Why advertising and marketing efforts are failing

• The risks you haven’t thought about

• Ways to overcome marketing and advertising challenges in today’s environment


A Look at Advertising and Promotional Marketing

Trends

Consumer spending has plummeted… perhaps indefinitely• From 2000 to 2010, the US

share of global consumer spending has dropped from 36% to just 27%

• In late 2010, the savings rate for American households increased to 6.4%, the highest level since June 2009, to $725.9 Billion

• “The consumer is less willing to spend. Soft labor markets are likely to remain so through 2013”

Guy LeBasChief fixed income strategist Janney Montgomery Scott in PA

6

JP Morgan, Share of global consumer spending, 3/12/10: Bloomberg.com Consumer spending and incomes in U.S. stagnate 8/3/10

20%

25%

30%

35%

40%

2000 2002 2004 2006 2008 2010

US percentage share of global consumer spending

© HALO Branded Solutions - 2011

Brands are failing more than ever

• Annually more than 156,000 products debuted in stores globally – 75% of these failed

• 80% of those new brand failures occurred within the first 3 months

• Success or failure of a brand introduction is now determined in just 12 to 18 months

7

PricewaterhouseCoopers ,2010 Food, Beverage, and Consumer Products Financial Performance Report Forging Ahead in the New Economy, 2010

New Products

Failures

Successes


Businesses are desperate

In an effort to compensate for the drop in consumer spending businesses are increasing their advertising expenditures


Business Breakthroughs International, 2010

Advertising in vain

• The amount of money spent on advertising each year may have increased, but the number of customers gained has not

• What does all of this mean for the marketing budget?


Business Breakthroughs International, 2010

Advertising dollars are being wasted

• The message that doesn’t get through is a waste of time and money

• As John Wanamaker put it in his age old adage, "I know half my advertising is wasted; the trouble is I don't know which half"

• Experts agree with John, at least 60% of all advertising dollars go to waste

10© Halo Branded Solutions - 2011

Making Advertising Really Pay, TV Week, May 2007, Go to War Against Wasted Marketing Spending, Advertising Age, 12/17/08

How much is being wasted?• The total wasted

advertising dollars annually is over

$167,767,000,000

• With that much money, a brand new Cadillac Escalade could be purchased for every man, women, and child living in Brooklyn, NY (2.5 Million people)

11

Making Advertising Really Pay, TV Week, May 2007, 2011 Cadillac Escalade ESV 4-door Sport Utility, Kelly Blue Book, 2011, Population Estimates, U.S. Census Bureau, 2000


• It used to be easy to reach a target…

• In 1965, 80% of 18-49 year-olds in the US could be reached with only three 60-second TV spots

12

How Effective are Video Ads On Social Media Sites?, Media'ZBiz, December 1, 2009

What is happening?


• To achieve the same result today, it takes 117 prime-time commercials

• That’s a 3800% increase in the amount of advertising messages needed to reach someone

• Advertisements are not connecting with audiences the same way they used to

13

How Effective are Video Ads On Social Media Sites?, Media'ZBiz, December 1, 2009

Why has it become so expensive?


Consumers are bombarded

•In 1970, the average person was exposed to about 500 advertisements each day

•In the early 1990s, it was 5,000

•Today people are exposed to close to 30,000

•Thanks to technology, people are exposed to 590% more advertising messages than 20 years ago

14

Cutting Through Advertising Clutter, CBS News, September 17, 2006; Prudential Douglas Elliman, 2009


What is the effect of this bombardment?• Individuals see more

than 3,000 commercial advertising images daily

• The subconscious absorbs 150 of those images

• And only 30 reach the conscious mind

• In fact, 90% of people pay almost no attention to online advertisements

15

Celebrity Endorsements Still Push Product, Advertising Age, 9/22/10


And the message is not sticking

• In 1965, consumers recalled 34% of commercials they had seen

• In 1990, that number had dropped to 8%

• And by 2007, consumers could barely name 2 commercials that they had seen in a given day

16

Business Market Research Makes the Difference, Empire Research Group, 2011


• Companies are under increased pressure to connect with their target market

• Most industries today face more competition than ever making it harder to keep market share

• Things like clutter and consumer apathy create a critical barrier

• Wasted advertising dollars mean that it costs much more to reach each individual

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Today’s reality


What’s next?

Let’s take a deeper dive…

and explore the reasons marketing and advertising efforts are failing

18© Halo Branded Solutions - 2011

Not Knowing How To Not Knowing How To Reach a Target Reach a Target

AudienceAudience

Reason #1Reason #1

Not knowing the target audience

• Advertisements can change the way individuals view products

• For example, businesses are always trying to find ways to connect with women since they make 85% of all brand purchases

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Ad Clutter Reduces Ad Effectiveness, Burst Media, MarketingCharts.com, November 2008


Sending the wrong message

• However, nearly 60% of all women will perceive an advertised product negatively, if it clutters their web viewing

• Women are also more likely to leave a website that appears cluttered

• How well are businesses adapting to the needs of their target audience?

21

What Women Want From The Web Report, Unicast, June 2010,


Offending the target• Even the most subtle

techniques are seen

• Nearly 2/3 of consumers believe advertisers should not be able to use online tracking to match advertisements to their website usage or interests

• 2/3 also view this practice as an invasion of privacy

• Their disapproval is directed at the companies using this advertising method

22

U.S. Internet Users Ready to Limit Online Tracking for Ads, Gallup Poll, 12/21/10


How do people feel about advertising in general?

In a recent Gallup Poll respondents were asked to rate various professions on their ethical standards and honesty

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Honesty/Ethics in Professions, Gallup, 11/21/10


How trustworthy are advertising agencies?• Only 11% perceived

advertising agenciesas honest and ethical

• Only 2% viewed them as having very high ethics

• The only professions ranked lower were members of congress, car salespeople, and lobbyist

24

Honesty/Ethics in Professions, Gallup, 11/21/10


Ad agencies don’t always get it right

• Choosing the wrong partner can be costly

• Palm, Inc. worked with it’s long standing ad agency Modernista to promote their new line of smart phones

• Palm invested $35 Million in marketing the new phones

• But in the end reported a net loss of $22 Million

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Palm and Modernista Part Ways, Advertising Age, Apr 5, 2010, Smartphones Last Quarter, Business Insider, 3/18/10


Paying More For Less Paying More For Less ROIROI

Reason #2Reason #2

Companies are desperate to reach their audience

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• In 1980, businesses collectively spent $53.5 Billion on advertising

• In 2007, that increased to more than $279 Billion

• An increase of 421%

• Even in 2011, with a struggling economy, marketing budgets showed large increases over 2010 budgets

• Businesses are spending more and more for advertisements that are less effective

Internet Advertising Expenditures, Compilation of sources (Cohen, Galbi, etc.), 9/14/08


The high costs being paid

• Lets say a company hired a specialist to generate leads through E-mail advertising

• The cost of 100 leads would be $8,385

28

2010 Response Rate Report, Direct Marketing Association, 6/15/09, Benchmarking an Average Conversion Rate, ClickZ, 6/4/04


The low value received

• Now, lets look at the actual conversion rate

of those 100 leads

• 2 people bought the product/service

• Which means it cost $4192.50 to acquire each new client

• Was it worth it?

29

2010 Response Rate Report, Direct Marketing Association, 6/15/09, Benchmarking an Average Conversion Rate, ClickZ, 6/4/04


Why is it costing so much?

Experts have discovered there are two main sources for the majority of wasted advertising

1. Advertising the wrong message accounts for $30 Billion annually

2. And having the wrong timing accounts for $20 Billion more

30

Industry Identifies Fifty Billion Dollars In Ad Waste: Wrong Messages, Wrong Timing, Advertising Research Foundation cited by Media News Daily, 9/21/04


Ineffective Brand Ineffective Brand StrategyStrategy

Reason #3Reason #3

The top 3 brand strategy mistakes

Industry experts have identified the top three branding mistakes as follows:

1. Inconsistent corporate identity

2. Poor visuals

3. Lack of brand controls

32

Top Ten Branding Mistakes, Precision Intermedia


Inconsistent identity

• When trying to manage a brand, companies often focus more on their intentions for the brand without adopting the consumer’s viewpoint

• For example, Cadbury spent over $32 Million rolling out a new campaign with the intention of promoting the rich smooth qualities of their chocolate bars

- Customers came into contact with huge stacks of candy bars in the stores

- The Cadbury logo was emblazoned everywhere

- Customers bought candy bars at 2 for 1 pricing during the promotion


Sending the wrong message• Rather than receive the

message that the chocolate bars were uniquely smooth and rich, customers viewed the product as a mere commodity

• Although there was a huge surge in demand during the promotion, there was a sudden drop once the promotion ended

• The message did not get through


Poor visuals

• Many companies confuse their audience by using different logos and taglines

• Constant change leaves people unsure of who they are dealing with and what type of service they will receive

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Lack of brand control

• No branding control is costly and irresponsible!

• By allowing every department to make branding decisions you jeopardize the integrity of your brand and create additional expense for the company

• The choices made by unqualified buyers may be putting your company at risk

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The importance of brand control

• Brand Managers need to govern the use of your logo and advertising messages and approve all purchases in order to:

– Ensure branding success

– Maintain brand integrity

– Save the company from risk

© HALO Branded Solutions - 2011 37

Public Relations Public Relations DisastersDisasters

Reason #4Reason #4

Promotional product safety• The number of incidents

reported to the Consumer Products Safety Commission has been increasing at a rapid rate

• Despite the risk of litigations and bad PR, companies continue to source their promotional product needs to overseas third party vendors they know little about

• Promotional products continue to be a source of an increasing number of safety incidents reported

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Source: US Consumer Product Safety Commission, November 2011


Destroying relationships and more…

• Consumer safety incidents that involve promotional products can lead to a lack of trust from clients as well as litigation

• The following examples show companies that thought their promotional advertising campaigns were on track


Lead paint lunchboxes

• The California State Health Department gave away promotional lunch boxes in a campaign to promote healthy eating

• The lunch boxes were found to contain high levels of lead

• This prompted an embarrassing recall of nearly 300,000 lunch boxes

41

Lead-Tainted Lunchboxes Trigger $10 Million Fine, San Mateo County Time, 5/22/08


The cost of negligence

• In a promotion for the movie Shrek Forever After, McDonald’s sold collectible glasses for $2 each

• They were forced to recall and refund 12 Million glasses

• The glasses contained cadmium, a poisonous metal that can cause kidney and liver failure

42

McDonald's Recalls Movie Themed Drinking Glasses Due to Potential Cadmium Risk, CPSC, 6/4/10


Endangering customers• Nissan recalled nearly

87,000 mugs that it had given to customers in Japan as part of a promotion

• The mugs contained lead-laced paint that exceeded the legal limits by 30 %

• The mugs put thousands of customers at risk for lead poisoning

• Nissan did not even know the identity of the manufacturer in China

43

Test-drive a Nissan, win a lead-laced mug, Reuters, 9/7/07


The ultimate cost

• As a promotion Reebok gave a charm bracelet with the purchase of every pair of children's shoes

• Sadly, a child swallowed part of a bracelet and later died of lead poisoning

• Reebok settled with the family of the child for an undisclosed amount and had to recall 500,000 bracelets

• According to US health officials the bracelets were 99% lead

• Reebok said they were manufactured by a contractor in China, they did not know how the bracelets reached the market with such high risk levels

44

Reebok Recalls Bracelet Linked to Child's Lead Poisoning Death, CPSC, 3/18/08, Reebok to Pay Record $1,000,000 Civil Penalty for Violation of Federal Hazardous Substances Act, CPSC, 3/18/08


Why do PR disasters happen?

• There are a number of reasons PR disasters occur in promotional advertising, but topping the list are:

– Using multiple disjoined vendors

– Cutting cost in the wrong places

– Not building safety management into contracts

– Not knowing the supplier

– Vendors that don’t know their suppliers


Key oversights• Focusing more on

promotions rather than the consumer relationship with the brand

• Purchasing promotional items over the internet and not investigating their overseas manufacturers

• Even financially capable companies that have the resources to manage things properly, often don’t


The result of these challenges…• Businesses are not

connecting with their targets

• Billions of dollars are being wasted

• Brands are being forgotten

• Liabilities are ruining brand reputations

• Businesses need to rethink their strategies before its too late


How To Achieve Success Where Others Are Failing

Change your brand strategy

• Corporate Branding is changing and companies need to find ways to differentiate their brand from the competition

• Targeted promotional marketing is fast becoming the medium of choice because of it’s strong pulling power

• Today more and more companies are using dimensional direct response advertising to achieve marketing objectives


Consider this example…

• Jennifer worked for a relatively new technology firm. The company was going to be involved in several upcoming conferences and it was the perfect opportunity to make some valuable connections and grow the company

• After researching the benefits of promotional marketing she decided that giving a gift to the conference attendees would help get the company’s name in the hands of the right people and make a lasting impression

• She tasked one of her employees with finding a product. The employee went online and found a great price on laptop cases and ordered them in a hurry since the first conference was right around the corner


What went wrong?

• After the first conference, Jennifer saw several of the cases in trash cans at the conference center and afterwards they had little success with leads

• Jennifer discovered the cases ordered were outdated and built for 14 inch laptops and most of the people at the conference were using larger laptops so the laptop cases were useless to the attendees

• The laptop cases became an embarrassing situation and a waste of money


Jennifer changed her strategy • Jennifer recruited the help of a brand

marketing specialist who was able to help her strategically plan for using branded merchandise

• With the specialist’s help she found an effective product at a great price to give as gifts, she also found other strategic products that she could use at trade shows and in connection with their online marketing efforts to boost sales and create buzz

• Jennifer appreciated the fact that she had a working plan for the products and was guaranteed against any safety risks

• The trade shows were a success. The company made many valuable connections, website traffic increased, people were saying positive things about them in the blogs, and sales were increasing


New Team Strategy

Some companies are starting to find solutions• More companies are

focusing on promotional marketing to get their products seen

• The money spent on promotional programs has increased more than 100% in the past decade

• Yet, many companies are still learning about target marketing

53

GMA Insights into the Food, Beverage, and Consumer Products Industry GMA Overview of Industry Economic Impact, Financial Performance, and Trends


Targeted marketing builds relationships and motivates

• Which medium has the greatest ability to provide someone an incentive to take action?

• Consumers overwhelmingly favored promotional products

• The goal of all marketing efforts should be to motivate the target audience to action

• Some marketing tools motivate better than others

54

Promotional Products Association International, 2010


Speak to them often

55

Unaided Ad recall Comparison by media, Marketing Charts, May 2007, Promo Products Relatively Strong on Consumer Recall: PPAI Study, Promo Magazine, 2/24/10

Promotional marketing creates a message frequency that other forms of advertising can’t achieve


The other benefits of promotional marketing

• Promotional products stimulate all 5 senses simultaneously

• 55% of people keep promotional products for more than one year

• Nearly 50 % of people use them daily

• And 76% can recall the name advertised on the product

• This is why companies are turning to promotional marketing, because their clients remember them 15% to 50% more with promotional products than they do with other media

56

Come to Your Senses, PPAI, 2009, Promotional Products and Other Media: How the media compare on reach, recall, and reaction, PPAI


Getting face time

• Businesses can no longer rely on passive advertising methods as primary relationship building tools

• It is essential to have one on one personal contact

• For example, trade shows offer an incredible opportunity for relationship building with existing clients as well as generating new leads

57

Do Trade Shows Pay Off in Big Sales?, Oxford Economics cited by BNET, 3/10/10


Making it personal • No one likes feeling like a

number

• Personalizing the message and medium to clients and prospects is a great way to connect with them

• Branded gifts are a powerful tool in building a personal connection

• Remember “business goes where its invited and stays where its appreciated”

58

Promotional Products And Other Media: How The Media Compare On Reach, Recall And Reaction PPAI Research, Market Tools, Inc. 2009

Thank You!


Why is promotional marketing so effective?

• Higher rates of recollection are linked to positive emotions

• For example, branded products have a high recollection rate

• This may be due to the fact that 59% of individuals that receive a branded product have a greater positive reaction than they do with other forms of advertising


Vendor selection and planning


Look closely and take your time

How to find the right partner

• Look for a vendor that you can Trust

• Look for a vendor that offers marketing program solutions

• Look for a vendor with international purchasing power

• Look for more then just a product vendor, look for a Strategic Promotional Marketing Partner


Things to watch out for

• Beware of vendors who only talk about products with low prices

• Never make an online purchase from a vendor until you research the company

• Look out for the vendor who does not offer a written guarantee

• Beware of the vendor that asks for a cash pre-payment


Ask the important questions

• Do they require indemnification from all suppliers to protect their clients?

• Do they guarantee comprehensive product safety to their clients?

• Can they help with goal setting?

• How do they measure success?


Steps to achieve branding success


Key points to remember

• Know your target audience

• Focus your marketing message on your customer

• Initiate branding controls

• Enlist the help of a Brand Marketing Specialist

© Halo Branded Solutions - 2011 65

Making your plan successful

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• Choose wiselyResist the urge to pick trendy items and opt for items that are a true reflection of your company image and theme

• Beware of poor qualityLow quality or poorly made products cheapen the image of the advertiser – quality ensures that the product will get used and protects businesses from costly PR disasters


Things to remember

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• Know your target market Unless a product is a good match for the audience it will not be used – utilize testing and market research

• Enlist the help of the right expertA brand management specialist can help you avoid wasteful mistakes and ensure that your choice in products makes the most sense for your business and your plan


SummarySummaryKey Points To RememberKey Points To Remember

1.1.Build Marketing Messages with the Consumer in MindBuild Marketing Messages with the Consumer in Mind

2.2.Test, Track & Measure Advertising Messages and Test, Track & Measure Advertising Messages and ProgramsPrograms

3.3.Re-Think Your Current Advertising Media MixRe-Think Your Current Advertising Media Mix

4.4.Strengthen Branding Controls and Purchasing PracticesStrengthen Branding Controls and Purchasing Practices

5.5.Work with Your Primary Vendor to Help Set BudgetsWork with Your Primary Vendor to Help Set Budgets

6.6.Always use a Secure Source Vendor Always use a Secure Source Vendor

It has been a pleasure to share the results of this study with you• Our hope is that you learned

how to improve advertising and marketing effectiveness with the help of the right promotional marketing specialist

• This presentation was sponsored by HALO Branded Solutions

• We have a three minute presentation about our company that we would like to share with you


Introducing…

We are the relationship experts


What we offer

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• Personalized attention from an experienced brand marketing specialist

• Expansive global product sourcing with pricing leverage

• Complete fulfillment capabilities

• Online and traditional marketing solutions

• Comprehensive product safety and social compliance


How we do it• We combine cutting edge

technology and caring personal service to create an exceptional dimensional advertising product purchasing experience

• We have spent decades as the global leader in client promotional solutions with one simple philosophy, "Success is created one order, one Client and one promotion at a time"


Value we bring

• We offer more than just products, but guidance and strategy on which products to use as well as how to use them and why

• We provide a team of experienced brand management specialists to help you increase income, reduce expenses, and manage risk

• Through operational efficiency we can meet the tightest deadlines every time on every order

• Our effective supply chain management ensures low-cost, safe and compliant products


Some of our other partners• We specialize in brand

management for clients with national presence and global reach

• Let us bring our experience, expertise and value to you

• Experience the HALO difference – Innovation, Trust, and Strength


Thank You!

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