Monthly Archives: November 2009

Use your loaf

We were on holiday in Umbria, and we were driving to a medieval, hilltop city called Cortona. So we put it into the SatNav and followed the directions.

The SatNav got us to Cortona okay, but I wasn’t sure about the route. It was taking us to the heart of the city.

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Editor’s blog: Buffett betting on rail

US railways are mostly used by freight, not people. But maybe the Sage of Omaha thinks that will change.

So Warren Buffett is betting the farm on the US railroad system. His Berkshire Hathaway vehicle has just spent $27 billion dollars – his biggest single punt ever – on the purchase of Burlington Northern Santa Fe, whose origins date back to 1849.

This came initially as a bit of a surpise to me, because most of the journeys I’ve made by train in the US have been pulled by steam engines on preserved tourist lines. I wouldn’t for one moment want you to get the impression that I’m a borderline autistic spectrum spotter in a cagoule, but, inside a week, I once clanked along at about 10mph on the Durango to Silverton, the Georgetown Loop and the Cumbres and Toltec. All three are in Colorado, where the state boasts a greater head of steam than a Chinese laundry.

The railway made America. As they pushed out West, the first problems faced by the rail pioneers were hostile Indians who resented iron horses on their hunting grounds. And a few of Kevin Costner’s irate native pals were nothing compared to the obstacles the palefaces met when they reached the foothills of the Rockies. Colorado has 75% of the area over 10,000 feet in the United States, with 53 peaks over 14,000 feet and locomotives cope poorly with slopes.

But the US nation fell out of love with railways in a big way, preferring road and air for both long and short hop travel. But the reason why Warren has made his move is that despite the fact that people don’t by and large use trains in the US – freight does. At 2820 billions of tonne kilometres their freight rail usage is the highest in the world.

So Warren is gambling on several things. Firstly, that the US economy will recover and those wagons will fill up with Chinese imports again. Second, that environmental concerns will further favour rail. Thirdly, he dislikes competitor-filled markets. And nobody in their right mind is going to start laying iron track to create a rival railroad. It’s the classic, long-term value investment and has been, yet again, derided as “boring.”

In the meantime our railways in the UK are in a fairly sorry state. Nobody wanted to invest in National Express’s rail franchise, forcing the government has been forced to take it over, while this week we saw the first ever £1,000 fare. To look at how we got left behind in the dash for high speed rail travel, have a read of Simon Caulkin’s interesting piece from this month’s MT. You’ll have noticed that Buffett isn’t investing in our rail network.

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Vodafone confides: There will be no iPhone price war

I’ve got bad news for anyone waiting for the much anticipated “price war” to erupt over the iPhone in the UK: it’s not going to happen.

There’s been much excitement about the iPhone being made available at lower prices ever since Apple announced it would not be extending its exclusive two-year iPhone deal with O2. But I’ve learnt it’s not going to happen any time soon due to one very specific reason.

The touch-screen operated iPhone is undisputedly the daddy of all mobile handsets right now. If you know someone who owns one, chances are you know someone who loves one.

Many admirers not on O2 have been waiting for the rollout of the iPhone across other networks, and the increase in competition is widely expected to act as a catalyst that will bring down the monthly cost of the iPhone.

There was notable disappointment when Orange, the UK’s third-largest mobile phone operator, unveiled its tariffs for its iPhone deal on Monday, and guess what, they are broadly in-line with those already being offered by O2 – around £30 a month for contracts, and an 18 month commitment.

Yes, there are slight variations over what is included in the monthly tariff, but the basic packages and, more importantly, the monthly cost to the consumer are very similar.

There’s a reason for this.

Those now pinning their hopes on Vodafone undercutting both O2 and Orange when it launches its iPhone package in the New Year will be equally disappointed.

A high-level Vodafone exec has told me the basic price ranges of the iPhone are being set by Apple at the negotiating table.

While some degree of variation is being allowed for, the general monthly costs, at least for the first round of contracts, have been stipulated by brand-protective Apple.

If you want an iPhone in 2010, it’s still going to cost you.

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The facts may not be the facts

At the beginning of the First World War, British soldiers went into battle wearing cloth caps. Obviously a lot of them died.

The government had to do something fast. So they issued every soldier with a tin helmet. They thought that would solve the problem.

But it seemed to make it worse. The number of injuries rose dramatically, and many more soldiers ended up in hospital.

At first they couldn’t work out what was wrong. Were the helmets restricting the soldiers’ vision? Were the helmets making them foolhardy? What was wrong?

It turned out that nothing was wrong. The helmets were working perfectly, which was why more soldiers were ending up in hospital. Because they weren’t dead.

The most lethal weapon in the early days of the war was the air-burst artillery shell.

As the troops were advancing, the shells would explode above the ground.

Shrapnel would go straight through the cloth caps and take their heads off.

But the shrapnel couldn’t penetrate the tin helmets. So it hit the rest of their body.

And they were wounded instead of killed. And hospital admissions showed a sharp upturn. Looking at the facts differently presents a completely different picture.

Later in the war it became apparent that Britain was in danger of losing the war to the U boats.

Britain is an island, it can only be supplied by sea. If the Germans cut this link, Britain could be starved into submission.

One answer was to form the cargo ships into large groups. Convoys that could be protected by Royal Navy warships. But when they looked at the numbers they saw there were thousands of ships sailing from British ports every day.

They couldn’t possibly arrange that many ships into convoys. So they didn’t try, and Britain nearly lost the war.

Until someone spotted that 90% of those ships were sailing across the English Channel to France.

The trip was so short they didn’t need protecting. The vital 10% of ships that were going to North America could easily be formed into convoys.

And, in two world wars, that was the system that won the Battle of the Atlantic. But, if no one had bothered looking at the numbers differently, we’d all be speaking German.

When I was at BMP, we were working on a COI account: Fire Prevention. In those days, most domestic fires were due to chip-pan fires.

David Batterby was our MD, and he came to see me, really excited. He said he and the planner had just had a great idea. Here it is:

Creative Leap

What measure will the COI use to evaluate if the fire-prevention campaign is successful?

Obviously, the only measure they’ve got is the number of times fire engines are called out.

So the real focus of the campaign is to
reduce Fire Brigade responses.

Creative Leap

How can we reduce the number of call-outs? Well if people could put the fire out themselves, they wouldn’t need to call the fire brigade. So let’s tell them how to put out a chip-pan fire.

Creative Leap

But this is a ‘fire prevention’ campaign.

So let’s show them how to put out a chip-pan fire in such a scary way that they never want to have one. So that was the brief the account group gave the creatives. After the campaign ran, Fire Brigade callouts to chip-pan fires went down by 40%.

We won a D&AD silver award for the ads. But the real creative work was done before the brief got anywhere near the creative department.

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Effects of social media on search

The relationship between search and social media is the subject I get asked the most about by advertisers and agencies at the moment. It’s a hugely complex area because both search and social media mean so many different things and work together in so many different ways.

To make matters worse, the last 18 months have seen radical developments in both. However, the two have an undeniably positive effect on each other and I believe that the secret to the most effective, integrated online campaigns lies at the heart of this relationship.

The IAB will be looking into this in far more detail in the future, but right now I wanted to share my own experience below and to gather some of yours. If you feel I’ve missed something, please email me or leave a comment below so that I can adapt it.

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Woolworths, Dixons – can big brands really live on in ‘Internet heaven’?

Should dying brands simply be left to expire in peace? Is it prolonging the agony to keep them on ‘life support’ in some vapid online guise? Obviously Dixons has pulled off a comeback with their controversial John Lewis baiting camaign and Woollies have got a new one in the offing. But can the brand still have the same significance in people’s lives – without a high street presence and a living, breathing sales force? Or is it just a rather sad exercise in ‘retro’. Surely it’s all too easy to buy up the name of a once great brand, stick it at the top of an Amazon imitator and expect the masses to come flocking? There’s probably a short-term novelty value of a famous face coming back from the dead, but is it sustainable into the future? My guess is that there’s going to have to be some serious brand re-engineering if its going to mean anything to anyone.

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Editor’s blog: Dealing with Britain’s fall from grace

Maybe it’s the rain, but it seems as if the last week has been one of the more depressing since the onset of the financial crisis. The first phase is now over: survivors are walking around in a daze and the smoke is clearing but there aren’t many green shoots in the bombed-out and blackened landscape.

First, there was the bad news that while other large economies are coming out of recession, we’re still stuck in the mire; paying the greater penalty for our more grievous sins of the Uk’s last decade. Rather than being in the best possible shape compared to our competitors going into a downturn, as Gordon Brown promised us, we are the poor sap with the weakened immune system who’s copped a dose of H1N1. Some are saying it could go on well into 2010, with Fathom sugegsting we may only get pathetic growth of 0.1 % next year. Consumers are trying to be virtuous by saving not spending; as the tax take drops further, the long-awaited belt-tightening by government has to come after the election – which sucks still more cash out of circulation. It all sounds alarmingly like the notorious Japanese debt deflation death spiral.

Then there are our state-owned banks which, following the enthusiastic interference of the EU competition prefects, appear to be on the verge of dismemberment. It’s hardly surprising that Stephen Hester is seriously peeved at what he’s being told he has to flog, because it will make his job getting RBS back onto a sound footing that much more difficult. These punishments all play well to the gallery, but subjecting RBS to a ritual public hanging, drawing and quartering make less sense if it means it ends up being less viable as a business. That way we are all going to lose out, because we’ll never get our cash back. If I’ve got to own a bank, I’d rather it was a good one with decent profit prospects than a cruelly humiliated and forlorn lame duck.

Just as my customary cheer levels were faltering – and I watched a couple of colleagues eating their home-made rather than Pret sandwich for lunch – I read yet another gloomy (but quite sensible) article, this time by Prospect editor David Goodhart. He says that the crisis has finally knocked us from the top table rudely onto the floor. ‘Great’ Britain, after a century of slow decline is now well and truly a thing of the past, and we just need to accept that we’re Little Britain and that ‘we are going to need a new, more modest story about Britain in the world.’ He doesn’t think this new, more realistic approach to our true national standing would do too much harm. The game is up for most of us in the West, anyway, as the Chinese are to be our true masters for the next few decades.

If that means we no longer go on sabre-rattling international adventures of the sort favoured by Blair, that mightn’t be a bad thing. I can see us quite happily kicking Trident into touch and saying ‘thanks but no thanks’ the next time the Americans want us shoulder-to-shoulder when they go into Iraq or Afghanistan. Goodhart thinks David Cameron ‘well suited to speak for a smaller, quieter land’.

With our national prestige at a low ebb, we’ve got to discover/rediscover what it is we’re good at as a nation and focus on these strengths. But are Goodhart’s suggestions – the English language, pop music and the Premier League – really as good as it gets for us in 2010?

Then again – how can we be too down-hearted in the week that Kai Wayne Rooney entered this world? He’s just 1000-1 to become Prime Minister one day, you know.

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Advertising doesn’t work like we think it does

A couple of years back, I noticed a lot of stories in the paper about a split in the Church of England.

Apparently, the C of E had run a campaign that had caused a controversy amongst bishops. I was quite surprised the C of E had such a high profile.

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