Tag Archives: advertising

Experian’s latest marketing trick: clever…in a way that makes me want to take a shower

If you’ve had a pulse for the last few years, chances are you’ve seen one of Experian’s ads for FreeCreditReport.com.

I have to admit that most of the spots are generally engaging, funny, and memorable.  The fact that YouTube users have voluntarily viewed them millions of times is saying something.

Still, the method Experian uses to hawk its product is fairly sleazy, and it just got sleazier.

The reason, of course, is that federal law mandates that everyone has a right to receive a free credit report once per year from each of the 3 primary consumer credit reporting agencies in the US.  The site is annualcreditreport.com, and it is administered (by direction of the government) by the 3 credit reporting agencies themselves.

The issue with Experian’s ads is that the free credit report they’re promising is not part of the federally-mandated program, but rather as a teaser deal in conjunction with a subscription to the company’s $14.95/month ‘triple advantage’ credit monitoring service. Whether or not triple advantage is worth its costs is not the point here; the issue is offering a so-called ‘free’ product (which is in fact free from another site, with no strings attached) which actually can end up costing $180/year if the service isn’t canceled within an unreasonably short 7 day window.

Experian would argue that they have disclosed the strings attached to their offer.  “Disclosure” in this case has typically included an announcer’s speed reading “free with enrollment in triple advantage” in the last 1 second of the TV commercial, or a small mention/text link on the freecreditreport.com’s site.

Ok, slightly sleazy, right?  But it gets worse.

For a while now, the FTC has only mandated minimal disclosure for these “free with strings attached” offers.  But a few weeks ago the FTC mandated significantly more prominent disclosures, including large messages on the homepages of sites like freecreditreport.com which direct consumers to the government-mandated site.

Experian dodged the bullet, though. Now, they charge $1 for their ‘free’ credit report (and even that $1 is donated to charity). By charging a nominal amount, they are no longer offering the credit report for free, and thus (so they reason), they can also avoid those pesky consumer-friendly disclosures which would hurt their bottom line.

A message on FreeCreditReport.com implies that the government put a stop to its free reports. It says, “Due to federally imposed restrictions it is no longer feasible for us to provide you with a free Experian Credit Report.”  The company is also beginning to change its advertising to direct consumers to freecreditscore.com.  Unlike credit reports, credit scores have not been federally mandated to be available to consumers for free each year.

I will say this: Experian’s massive advertising for FreeCreditReport.com no doubt raised awareness about credit reports in a way that a government agency could never afford.  And this is the free market in action.  The other observation is that this is a great example of how quickly the free market can skirt the government’s attempts to regulate advertising & marketing practices.

Does anyone in Experian’s marketing department really feel good about what they do?

Small wonder they are fighting and adapting to retain profitable marketing initiatives.  Experian is a UK-based company, but their latest half year results indicate that North America accounts for 54% ($1 billion) of revenues and 64% ($307MM) of EBIT.

Here’s an excellent summary of the issue by the SF Chronicle.

McNeil’s Tylenol recall hurts all branded drug manufacturers

Most branded over-the-counter (OTC) medications offer one primary benefit over their functionally-equivalent generic alternatives: a consumer perception of superiority in quality and safety.  This is why McNeil’s most recent recall of Tylenol and 5 other medications, driven by both quality and safety issues, is a blow for all manufacturers of branded OTC drugs.

McNeil’s current recall is a result of an unusual moldy, musty, or mildew-like odor in the 6 different affected products (plus line extensions).  The smell was also associated in some cases with nausea, stomach pain, vomiting, or diarrhea.  The cause is attributed to a chemical applied to the wooden pallets used to transport packaging material.

This is, of course, not the first recall for Tylenol.  Its most famous recall was in 1982, when 7 people were killed by Tylenol that was deliberately laced with cyanide.  Whoever caused the issue was never caught.  Even before Johnson & Johnson (McNeil’s parent company) knew the cause of the problem at the time, they aggressively pulled all products from retail shelves in a move that was long heralded as a model for crisis management.  A smaller and less serious recall ocurred in 1986.

This time is different.  For one thing, J&J knew about complaints of the funky odor and resulting illnesses it caused as far back as 2008.  Yet they failed to either follow up aggressively or notify the FDA.  And the FDA is none too pleased about that, leading to the recent issuance of a scathing “warning letter” which J&J must address within 15 days.  In addition, unlike the 1982 case of deliberate tampering, this current issue seems to have been caused by sloppy manufacturing and logistics practices, plain and simple.

When you’re dealing with complex, regulated products and complicated distribution systems, occasional safety issues are bound to arise from time to time.  But when quality and safety are the very aspects of differentiation on which your branded product relies, slip-ups like McNeil’s current ones can really create some serious brand vulnerability.

Generic OTC products offer absolutely equivalent efficacy to their branded cousins.  So if the pricier brands aren’t perceived as truly safer than the generics, what’s left?  (devil’s advocate for a moment: the branded products do tend to innovate more often with packaging and delivery system innovations…but even these functional attributes, when successful, are always quickly copied by the generic manufacturers)  So fundamentally, branded OTC medications are primarily relying on their reputation and their perceived safety and quality.

There’s an old rule of thumb in advertising that it takes about 3 ‘impressions’ of a message before it starts to sink in for consumers.  It’s not implausible to apply that same logic to brand crises.  With at least 3 quality & safety-related recalls to date, Tylenol is beginning to send a real message that may start to sink in for consumers: branded OTC medications may be just as prone to safety issues as their generic equivalents.  And if that message sinks in, its good news for OTC generic manufacturers and bad news for the branded pharmaceutical industry in general.

Verizon phone books: the shameful waste

If you read no further, just consider the picture below.  It says it all.

This picture is worth the next 1,100 words.  Get it?

This picture is worth the next 1,100 words. Get it?

Let me be clear about 3 things right off the bat:

1) As a marketer, I understand the need to promote goods & services
2) Having previously marketed media, I also understand the need to maximize reported distribution/coverage of a marketing vehicle so that it’s appealing to potential advertisers
3) I’m not one of those internet snobs that thinks nobody should be using phone books.  Any consumer who finds them useful should get one, and any advertiser who finds them effective should benefit from this marketing vehicle.

Those things said, the distribution of Verizon phone books in Manhattan is an environmental waste, a burden on consumers who don’t want them, and a gross misrepresentation for the book’s advertisers.

Let me start with an analysis from my own small apartment building in lower Manhattan.  There are 7 apartment units in this building, which is clear from the 7 buzzers & name labels by the building’s front door.  Yet we’ve had a stack of 12 Verizon Yellow Pages books and 12 “Business to Business” directories by our front door for the last 4 days.

Fuzzy math: 7 apartments (and buzzers), but 24 phone books dumped on our building

Fuzzy math: 7 apartments (and buzzers), but 24 phone books dumped on our building

Forgetting that nobody in my building has taken a single one of these in 4 days, let’s consider that even if *everybody* in the building took one of each of the two directories, there would *still* be a 42% waste factor.

And, why was a *single* B2B directory delivered on our 100% residential block?  B2B, as explained on the directory’s cover, means “Business to Business.”

While walking to work yesterday, I took these pictures of stacks of directories in front of other buildings on my block.  This was 3 days after they were distributed.

Day 3 after the phone book drop.  See a pattern here?

Day 3 after the phone book drop. See a pattern here?

So who’s to blame for all this?  Surprise: it’s not really Verizon.  In a nod to the migration to internet searching for phone numbers (not to mention the need to fund its heavy investment in FIOS infrastructure), Verizon spun off its phone book business in 2006 to Idearc.

Since the spin-off, Idearc’s revenue has fallen about 8% (but at $3B, this is still big business). The problem?  Print directory advertising, representing 90% of Idearc’s total revenue, declined 10%.  Its internet advertising, while growing quickly, is still too small of a base to make up the difference.  Does this sound familiar?  It’s exactly what’s happening (or happened) to other print vehicles like magazines and newspapers.

But the real problem was the crushing debt of $9B that Verizon dumped on Idearc, ultimately causing Idearc to file for Chapter 11 Bankupty earlier this year after it broke its debt covenants with creditors.

Now in restructuring, Idearc must be under incredible pressure to fix things fast and book as much Yellow Pages advertising as humanly possible. Think of the pressure on their ad salespeople.

Small business advertisers, the core of Yellow Pages revenue, are likely attracted by a couple of things that a decent Idearc ad salesperson would try to convey: 1) a promise of mass distribution of their message, and 2) the tangible ability to see that message themselves.

Verizon’s Yellow Pages plays into both of these needs.  Idearc claims they have a distribution of 884,000 directories in Manhattan alone.  If you’re a small business in Manhattan, that seems like an awful lot, right?  And unlike internet ads or search advertising that may run “sometimes but not always”, it’s easy to verify your listing in the phone directory: just open the book, and there it is in black and yellow.

But if the experience on my block is any indication, Idearc is over-estimating the true distribution of their directories by a factor of perhaps 80-90%.  That’s bad news for advertisers and even more unfortunate for the environment: in the best case, the unwanted directories will immediately go in the recycling bin.  In reality though, many probably go straight into the garbage.

Ok, but there must be a way for consumers to say, “No thanks” to directory distribution, right? After all, we can opt out of email, as stipulated by federal CAN-SPAM laws.  Well, yes and no.

Here’s a resource to find the printed directory distributors in your area, so you can call them to opt-out in the future. Idearc’s number is 800-888-8448 (select Option 2).  I called them to opt-out and was connected in 15 seconds to a real person who promised to help.

Here’s the thing, though: there’s no way he could.

Did you notice anything in common with all the pictures of directories above?  They are all shrink-wrapped in lots of 12.  So even if 6 of the 7 apartments in my building had opted out of receiving the book, presumably we *still* would have had at least 12 dumped on us. (conversely, if they had broken open a pack to leave just one, it would have been soaked by this week’s rain)

It gets worse.  Yesterday I came across the people who were distributing directories on the next block.  It looked like a hard-working husband and wife team who were really hustling. To their credit, at one point I saw them debate among themselves whether to leave a stack in front of a brownstown that was clearly being gut-renovated, with only rafters showing and workers everywhere.  At least there was some thought to that (they ultimately decided to skip the house).

The root of the problem: no way to truly opt out.

The root of the problem: no way to truly opt out.

I approached these folks and politely asked them if they had a way to know who didn’t want to receive these directories.  They explained that “we don’t leave one if someone says they don’t want it.” But when I asked if they received any kind of list in advance for people who didn’t want them, they said, “oh no, nothing like that.”

Bottom line: opting out does nothing because the actual distributors dump packs of 12 books on each doorstep, and they have no list of who might have opted out, anyway.

I guess the whole thing would be a big joke if it weren’t so wasteful for the environment, frustrating for consumers, and misleading for advertisers.

Here’s a funny video showing one creative way to return your unrequested phone book.

Some parting thoughts & resources:

Hi Idearc:

I would like to permanently opt-out of receiving any of your printed directories.  The other 7 tenants in my Manhattan residential apartment building would like to do the same.

How do we proceed, please?

Thanks in advance,
Kelly Ford

New York, NY  10011

(email sent 10/15/09)

Update: Dec 26, 2009:

Idearc Media dropped white pages last week on my block.  Despite this blog post, despite my phone call to Idearc, despite Lisa Vilfordi’s comment here and subsequent direct emails between Lisa and me, despite Lisa’s personal assurances this would not happen again, they still screwed it up.

On the plus side, Idearc’s distributor dropped only the number of books which corresponded to the number of units/buzzers in my building: 7.  But they didn’t honor my multiple opt-out requests.  Assuming nobody else in my building had opted out, there should have been only 6 books dropped.  So, assuming that all other 6 tenants in my building wanted, took, and used the books (which is a laughable set of assumptions), we’re still talking a 1/7 = 14+% waste factor.

Idearc continues to ignore opt-out requests

I went on a trip out of town and came back 6 days later, and surprise: all 6 books were still there, now waterlogged.  They all ended up in the garbage.  Waste factor: 100%.

I sent an email to Lisa Vilfordi of Idearc to ask for her comment, but she didn’t reply.