YouTube 10th Anniversary: How the Video Streaming Site Changed your Audience Gateways..., hopefully?

On St Valentine's Day, 10 years ago, Chad Hurley, Steve Chen, and Jawed Karim, three former employees of PayPal, registered a new company devised around a simple idea: that there should be one website where people can upload and watch videos.

In an era of increasing media fragmentation, amidst falling TV viewing figures, well-targeted YouTube content provides an unprecedented means of engagement for marketers everywhere.

According to The Atlantic, YouTube is now the third most viewed website in the world, boasting over one million viewers who watch more than six billion hours of footage each month. Each minute, users upload 300 hours of video to YouTube's servers.

Whilst amateurs strike lucky with worrying frequency, it can be a relief to NAMs to realise that 29 of the site's 30 most watched clips are professionally produced music videos.

In other words, the access process is easy, but getting attention requires skillful, creative targeting and professional execution...leading the consumer to NAM-engineered fulfillment at point-of-sale...

Getting it wrong upfront will not matter, in that your YouTube output, if it even floats, will quickly sink without trace. The real pain results from seeing a competitor that has managed to strip their offering down to the bare essentials, and succeeded in touching a consumer-nerve more effectively than available alternatives, race off the shelves....

In an ocean of distracting content, in unprecedented times, the consumer wants simplicity, clarity and a way of buying optimally, with all excess removed...

What else do you think is happening at Tesco?

St Valentine’s Day passing of Nutella-man

Saturday saw the death of Italy’s richest man, Nutella billionaire Michele Ferrero (89).

His father Pietro’s great idea in the scarce post-war years was to create a chocolate-like sweet using cheaper hazelnuts, which were abundant in the countryside around Alba, instead of expensive cocoa.

He is alleged  to have been so excited at the discovery of the successful recipe that he woke up his wife at midnight - she was sleeping - and he made her taste it with spoons….

No record exists re what happened next (!), except to say that his idea resulted in a new blend where a kilo of so-called “pasta gianduja” cost the equivalent of 30 cents in today’s money compared with €1.50 for a kilo of chocolate.

Michele Ferrero’s privately-owned firm is now famous for Nutella spread, Ferrero Rocher chocolates, Kinder eggs and Tic Tac sweets, turning over €8.1bn in 2013.

‘Never patronise a child,’
Ferrero’s greatest skill was knowing what children want, and never talking down to them, a strategy that anyone with savvy grandchildren will endorse…. Ferrero started in the family business when he was 20 and was leading it by 32, growing by undercutting the fine chocolates market with products that boasted “more milk, less chocolate”.

A simple idea, consistently applied and value that is obvious to all...

A template for re-newing Tesco?

A Friday thought: Walgreens Boots Alliance = Boots Global?

Given that Alliance Boots = 1/3 WBA, it would seem that Boots is an important but unequal part of WBA.

However, the combination of AB’s global experience vs. Walgreens’ US-centricity, the fact that four of the five divisions of WBA are run by Boots management, and noting that the acting-CEO has a major 16% shareholding backing up his global vision, might cause us to conclude that we are witnessing the emergence of the only truly global H&B player in the world.

Moreover, a key objective has to be the use of Boots UK Ltd impressive results (ROCE: 26.1% and Net Margin BT: 8%), as a financial target for the £74bn group.

Besides, the more pragmatic among us might conclude that on balance, given these unprecedented times, it is probably better to have Mr. P operating inside, rather than outside the WBA tent…

When £1 morphs into £2 – the Poundland acquisition of 99p Stores

This morning’s announcement was an inevitable consequence of post-financial crisis pressures driving shoppers to the bottom layer of the squeezed middle.

But the real issue is trade consolidation.

What started as a raggle-taggle novelty retailing initiative based on suppliers and retailers finding a way of making money on a £1 version of brands, might have struggled had inflation been maintained at ‘normal’ levels.

However, pro-longed flatline demand, combined with low inflation, allowed the pound shop to flourish, but as usual, some more than others.

Suppliers' enthusiastic development of a strategic approach to the £1 channel has now made it possible for pound shops to enter the mainstream...  Mergers/takeovers will be inevitable, causing the usual issues of prices and terms dis-harmonies, just because these smaller 1-off customers were interesting, but too small to matter when it came to ensuring the national integrity of our pricing and terms model..

Impact of the Tesco-cull
Given what could be a SKU-shakeout of 30% of the range arising from the Tesco-cull, suppliers now need to reassess and optimise alternative routes to consumer, and make appropriate changes to their marketing strategies, especially as the increasingly fragmented world of TV and press advertising causes advertisers and the savvy target audience/s to embrace online/social media.

Taking the mainstream pound shops even more seriously, might help… 

Onshelf price discounts, Moscow-style

                                                                                                                           pic: Business Insider

With inflation in Russia running at 11.4%, maintaining the retail price represents a discount!

Meanwhile, in deflationary Western Europe, holding the price steady indicates a price increase!

Fortunately, in each case, the consumer is savvy, and understands these subtleties!

More on Russian pricing here at Business Insider

The Two Aldis - Some concerns for the future? - and a lot more anecdotal detail..

For decades the Albrechts, the billionaire dynasty behind the Aldi retail empire, have lived by two golden rules: live modestly and avoid publicity. Aldi founders Karl and Theo Albrecht were also as obsessive about thrift as privacy.

Having been accustomed to having access to far greater degrees of personal and business background re our other major customers, we have all watched the growth of Aldi with a mix of curiosity and frustration at the lack of anecdotal coverage to provide insight.

For this reason alone it may be worth a glance at this Irish Times article, revealing that Aldi are now just like most other family businesses, and perhaps a little easier to understand…

The Tesco 30% product cull: key issues arising

News first reported in The Grocer on Friday 30th January, of a cull of up to 30% of SKUs stocked by Tesco raises important issues for NAMs.

Given Dave Lewis marketing background, and an outside agency, Boston Consulting Group working to a brief, the starting point has to be the needs of the consumer-shopper.

Possible candidates for culling have to include:
- Obvious over-laps by function, and undifferentiated me-toos
- Products that are in the assortment because of back margin, rather than consumer demand
- Slow-yielding 'experimental' products outside the core Tesco offering

However, given the 30% culling target, it is unlikely that the above steps would generate sufficient numbers of discontinued SKUs, so it will probably be necessary to eliminate entire sub-categories to achieve the numbers...

In which case, candidates could include any sub-category that fails to reach Tesco's 25% average Gross Margins and ideal Net Margins of 5%. Other criteria could include minimum space productivity levels of 1,000/sq ft /annum. Finally, as regular store checks of Tesco Extra will reveal, those sub-categories that have been progressively reduced over the past three years in terms of instore presence, such as home entertainment software (CDs, DVDs, and games) and books, have to be due for re-assessment...

Also, if we add the idea of the long product tail in large space retail, accounting for insufficient sales levels, redundant space in-store arising from the onset of the 'squeezed middle', and reputed to be of the order of 20% of the selling area, any culling of assortment could generate additional redundancies in store space...

Private label - a special case?
Again, given the brand-marketing background of Dave Lewis, and the help of an agency tasked with meeting consumer-shopper need, profitably, we  would suggest that Tesco's private label will be granted no special privileges in the culling process. Accordingly, private label SKUs will have to fight their corner vs. established brands in order to justify their on-shelf facings...

Finally, given the presence of independent consultants, and the 'non-involvement' of buyers, NAMs will not be able to use the traditional supplier-buyer relationship to directly influence the process...

Accordingly, it will be necessary for NAMs to revert to the satisfaction of fundamental consumer demand within core Tesco traffic as a criterion for justifying their brand's presence in the assortment.

In practice, this means making an objective re-assessment of the appeal of their brand vs. alternatives available to the target consumer within the Tesco environment.

In addition, given Lewis' shift in emphasis from Back to Front margin, it is vital to re-assess and re-engineer their trade offering in order to optimise the appeal of the total offering vs. available alternatives, as viewed through the new Tesco lens..

Then find a way of getting the revised offering onto the Tesco table, before the cull shortlist is finalised...

In other words, an unprecedented set of assortment decisions is being made by Tesco using commercial logic based on demonstrable consumer demand and aimed at providing a simple choice for the consumer-shopper.

Suppliers would be well advised to adopt a similar approach... 

Argos-Sainsbury's Digital store test - an opportunity for two-pronged shopping missions?

News of Sainsbury’s addition to its concession portfolio (30 firms including Timpson, Jessops, Virgin Holidays and Thomas Cook) by opening ten pilot digital Argos stores in Sainsbury's that will aim to offer a broad range of general merchandise, in a combination of in-store purchase and click & collect.

The concessions route has to be a no-brainer for Sainsbury’s (or any other over-spaced squeezed middle player) especially as the quality of the partnership can be optimised using the old Kwik Save formula of a basic rent + a percentage of sales…

Whilst this is another way in which Sainsbury’s can optimise the 6% underutilised space in larger stores and add to its general merchandise offering, the real advantage for suppliers has to be the opportunities and scope for joint promotions that link Sainsbury’s and appropriate concessions in a multifaceted shopping mission.

Depending upon the category, promotions that lead on either the concession or Sainsbury’s products have to result in synergies and therefore increase their appeal for both retailers..

Other Sainsbury’s concession partners include Centre for Dentistry, Bupa, Johnsons Dry Cleaners, Explore Learning, Starbucks, RAC, and AA. Details on Sainsbury’s concession deal here