Volkswagen's Unprecedented GTI 2010 Launch

Yesterday, VW took an unprecedented step in marketing by choosing to launch their new 2010 GTI model exclusively via an iPhone app. According to Tim Ellis, their VP Marketing, "...it is a highly targeted strategy to directly reach the GTI customer, a tech-savvy, social-media activist who spends time on mobile devices, most often iPhones". Reportedly, the app launch will cost something in the vicinity of $500,000 as compared to the original VW launch in which they spent some $60 million and relied heavily on network TV. The app approach is unquestionably a low cost, efficient way to reach out to their core customer base. Furthermore, with smartphone usage exploding and apps being all the rage these days, it's a smart move by VW to include an app in the marketing approach.

Let's examine the efficiency of the deal, taking some liberties in projecting the initial adoption rate and viral potential. As Ad Age pointed out in their coverage of this story, one :30 spot on CBS's most popular show, NCIS, during the week ending October 18th cost about $130,000 and reached some 21 million total viewers (CPM $6.19). By contrast, let's assume that 20% of the 50 million iPhone/iTouch user base downloads this app and sends it to 3 friends, who in turn send it to 3 additional friends (total universe = 130 million). At a $500,000 cost, the CPM for this would be a very attractive $3.85 which would reflect a 38% efficiency advantage versus the network tv spot. Therefore, it would take about 6 spots in NCIS, at a total cost of around $780,000, to equal the exposure of the iPhone app, assuming the adoption rate scenario above. An efficiency winner, no doubt. But will an exposure level of around 130 million people really be enough to make a difference? I have my doubts. Rather, I believe this efficient marketing tactic should be part of an overall media- mix designed to move the needle on sales. Is the app-only introduction being strictly driven by the attractiveness of the low out-of-pocket investment?

Only time will tell whether this is a brilliant or foolhardy move but it should be fun to track nonetheless. What say you?

While we were sleeping: Invisible Web Ads

Today, the Wall Street Journal reported that Kraft Foods, Greyhound Lines and Capital One Financial bought invisible ads on several ad networks. Oh, they didn’t plan for them to be invisible, nor did they plan to pay for “phantom” viewer impressions. Quite simply, while we were all sleeping (read: not effectively auditing our online ads) some rogue web sites were busy selling more online ad space than they legitimately had for sale. Oh my!
Here’s how it works: The marketers place their online display advertising orders with various “ad networks” which aggregate web sites and offer impressions based on relatively low CPM’s (cost-per-thousands) in order to gain efficiencies. Then some of the web sites on the ad network buy create ads using specific code that makes it appear to the marketers that their ads are running on genuine web sites. However, site visitors can’t actually see the ads because they’ve been relegated to invisible Web pages on the site. The marketers have been duped!
Advertising on the Web is, no doubt, an extremely integral and valuable part of the media mix for most marketers today. But it can also be a slippery slope fraught with unwelcome surprises. So how do we do a better job to monitor our ads and ensure that they legitimately run? Should marketers insist that Web sites (and ad networks) move away from CPM pricing model to a PPC (pay-per-click) model? Will that solve anything or will the evil doers just find new ways to dupe us if we do that? One thing’s for sure, we’re all going to have to “wake up” and pay closer attention if we want to stay ahead of this.
What are your thoughts?

"Bon Voyage" Gourmet

Sadly, after 68 years, we must now say "Bon Voyage" to Gourmet magazine. Gourmet, like so many wonderful titles of late, is among the latest magazine casualties... reflective of these hard economic times.

Was it the marked decrease in ad pages that did it in? Perhaps it was the high cost of maintaining this high quality publication which, in reality, was way more than just another food magazine. Dare we even think for a moment that it might have been the result of many years of what some would consider

"freewheeling" spending among the editors and publishers? Whatatever it was, it will likely remain a deep secret between the McKinsey consultants and the Conde Nast management.

Gourmet's many loyal followers will have to hope that the magazine lives on in the digital world.

Bon Voyage Gourmet. It was a good run.